2006 (2) TMI 384 - AT - Central Excise

Modvat credit granted despite gate pass issue, Tribunal criticizes Revenue's appeal as lacking merit.

The Tribunal overturned the Commissioner (Appeals) decision and allowed the appellant's appeal, granting Modvat credit on inputs despite unauthenticated ... Cenvat/Modvat - Duty paying documents - Strictures against department Issues:1. Denial of Modvat credit on inputs due to lack of pre-authentication on sale document.2. Appeal against Commissioner (Appeals) order allowing revenue's appeal.Analysis:1. The appellant, a central public sector undertaking, purchased inputs from a State Government public sector unit, and Modvat credit was denied due to the sale document not being pre-authenticated by Central Excise Officers despite bearing the stamp of the Superintendent of Central Excise. The Deputy Commissioner allowed the credit, noting that duty paid goods were received and utilized in the factory. The Commissioner (Appeals) reversed this decision, stating that the unauthenticated gate passes rendered the credit inadmissible, even though the respondent argued that the lapse was curable. The appellant contended that pre-authentication was not mandatory for factories issuing over 6000 gate passes annually and cited relevant notifications to support their case. The Tribunal found the denial of credit contrary to the law, as there was no dispute regarding duty payment on the inputs, and the procedural violation allegation was unfounded. The Tribunal criticized the Revenue's appeal as lacking merit and set aside the Commissioner's order, allowing the appeal and granting consequential relief to the appellant.2. The appeal challenged the Commissioner (Appeals) decision favoring the Revenue's appeal, which contended that the unauthenticated gate passes made the Modvat credit inadmissible. The appellant argued that pre-authentication was not mandatory for factories issuing a certain number of gate passes annually and cited relevant notifications to support their position. The Tribunal found the denial of credit unjustified, as duty payment on the inputs was not in question, and the procedural violation claim was baseless. The Tribunal criticized the Revenue's appeal as lacking merit and set aside the Commissioner's order, allowing the appeal and providing any necessary relief to the appellant.