2004 (7) TMI 413 - AT - Central Excise

Tribunal Upholds Modvat Credit Eligibility: Emphasizes Procedural Compliance

The Tribunal upheld the Commissioner's decision allowing Modvat credit based on endorsed Bill of Entry, citing compliance with Board orders and circulars. ... Cenvat/Modvat - Duty paying documents - Validity of Issues:1. Validity of an endorsed Bill of Entry as a duty paying document for Modvat credit.2. Non-observance of procedural requirements for availing credit.3. Interpretation of relevant Board orders and circulars regarding credit eligibility.4. Applicability of High Court reference in a pending case.Issue 1: Validity of endorsed Bill of Entry for Modvat credit:The Revenue challenged the Commissioner's decision upholding the validity of an endorsed Bill of Entry for availing Modvat credit. The Assistant Commissioner had allowed the credit, citing Board orders and circulars. The Commissioner found no procedural lacunae and relied on previous tribunal decisions regarding input receipt and duty payment. The Revenue contended that the importers should have issued invoices for credit eligibility, emphasizing procedural compliance. However, the Tribunal upheld the Commissioner's decision, citing Board orders permitting such credits for goods diverted to manufacturing units without a filed Bill of Entry, as long as proper declarations and endorsements were made.Issue 2: Non-observance of procedural requirements:The Revenue argued that the importers' failure to issue invoices for the imported goods under High Seas Sales Basis constituted a procedural lapse, affecting credit eligibility. They referenced a Supreme Court decision to support their stance. However, the Tribunal found no procedural non-compliance in the case at hand, as the necessary declarations and endorsements were made as per the prescribed procedure, allowing for credit eligibility.Issue 3: Interpretation of relevant Board orders and circulars:The Tribunal analyzed various Board orders and circulars, including Order 96/7/95-CX and Circular No. 33/33/94-CX, to determine the eligibility of credit on an endorsed Bill of Entry. They highlighted the provisions allowing credit for goods diverted to manufacturing units without a filed Bill of Entry, emphasizing the importance of proper declarations and endorsements for availing credit. The Tribunal found that compliance with the prescribed procedure and absence of non-compliance allegations justified upholding the credit eligibility in this case.Issue 4: Applicability of High Court reference in a pending case:The Revenue mentioned a pending High Court case involving M/s. Plastic Weave Industries as a reference point. However, the Tribunal noted that no contradictory decisions to the Board orders or pending cases were presented, strengthening their decision to dismiss the Revenue's appeal due to lack of merit. The Tribunal's decision was based on the clear provisions of the Board orders and circulars regarding credit eligibility on endorsed Bills of Entry, coupled with the absence of procedural irregularities in the case at hand.