2019 (7) TMI 1463 - AT - Central Excise

MODVAT/CENVAT Credit - credit denied on the basis of supplier s private register - credit denied alleging short receipt of inputs vis- -vis figures shown in invoices evidenced by so called private register of M/s Vinayak Metal Chemicals - credit denied alleging non-entry of receipt of goods on the basis of appellant s gate register. Maintenance of Gate Register - HELD THAT - It is not a statutory register and is being maintained by the Guard at the Gate. The Guards were mostly illiterate and they record the details in a very casual manner and sometimes do not record at all. It is further observed that the allegation raised by the Department regarding availment of modvat credit of ₹ 91,917/- is on the basis of investigation of the third party documents - further Department had seized all the documents evidencing to receive the materials at the factory premises of the appellant and there is no dispute regarding genuineness of all the documents and accordingly, it cannot be held that the modat credit has wrongly been availed. Short receipt of materials - allegation based on gate register maintained at the gate of the factory premises of the appellant by the security guard - HELD THAT - It is observed that the security guard of the Company are not educated and during change of shift etc., there is every possibility of any entering the details in the gate register. Further, all the documents evidencing the receipt of materials, such as, transport receipt, bills, challans etc. of materials, were available with the appellants and most of these documents were already seized by the Department. Thus, the denial of benefit of modvat credit merely on the basis of non-recording of entries in the so-called gate register maintained by the security guard at the gate, is not justifiable. Department has not pointed out any instance of non-receipt of materials, non-uses of materials for final production or manufacture and has not disputed the documents supporting the receipt of materials. Since the gate register is not a prescribed document in terms of Cenvat Credit Rules, 2004 and the purposes of which is only to show the receipt of the materials at the factory gate, it cannot be held to be a conclusive evidence so as to arrive at the finding of the non-receipt of the goods - Further, when the goods have been entered in the statutory records, modvat credit cannot be denied. When the details of inputs stand entered into the statutory register, non-entry of the same in the private record maintained by the third party, will not dis-entitle the appellant assessee to avail credit, specially, when there is no allegation or evidence showing non-receipt of such inputs. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Denial of Modvat credit based on supplier's private register
2. Denial of Modvat credit due to alleged short receipt of inputs
3. Denial of Modvat credit based on non-entry of goods in the gate register

Analysis:
1. The first issue revolves around the denial of Modvat credit amounting to ?3,37,321 based on discrepancies in the supplier's private register. The appellant argued that the details of invoices were recorded in RG 23D, and the proprietor of the supplier confirmed proper recording of transactions. The Tribunal found no evidence to discredit the authenticity of the invoices or the authorship of the private register, ultimately ruling in favor of the appellant.

2. The second issue concerns the denial of Modvat credit due to alleged short receipt of inputs compared to the figures in invoices. The Tribunal noted that the transporter's statement was not recorded, highlighting a procedural gap. Despite this, the Tribunal did not find discrepancies in certain invoices and emphasized that if invoices match statutory records, reliance on third-party private registers is unnecessary for determining Modvat credit eligibility.

3. The third issue involves the denial of Modvat credit based on non-entry of goods in the gate register. The Tribunal observed that the gate register, maintained by illiterate security guards, was not a statutory document. It highlighted that all documents supporting receipt of materials were available and seized by the Department, emphasizing that non-entry in the gate register does not justify denying Modvat credit when statutory records confirm receipt and usage of inputs.

In conclusion, the Tribunal set aside the impugned orders and allowed the appeal, emphasizing the importance of proper documentation and adherence to statutory requirements for claiming Modvat credit.