2005 (9) TMI 523 - AT - Central Excise

Tribunal allows Modvat credit despite lost documents, emphasizes proper examination

The Tribunal ruled in favor of the appellants, allowing them to claim Modvat credit despite the loss of duty-paying documents in transit. The ... Cenvat/Modvat - Loss of duty paying documents in transit Issues:Denial of Modvat credit based on lost documents; Imposition of penalty for double credit; Appeal against denial of credit by Revenue; Legal position on availing Modvat credit when documents are lost in transit; Finality of penalty imposition.Analysis:The appellant was denied Modvat credit based on 48 documents, including gate passes and bills of entry, that were lost in transit. The Assistant Commissioner initially accepted the appellant's plea of document loss due to theft during transit, dropping the show cause notices seeking to deny credit. However, a penalty of Rs. 15,000/- was imposed for taking double credit under one bill of entry, even though the appellants reversed the credit. The Revenue challenged the decision, arguing that credit should not have been allowed on lost documents. The Commissioner (Appeals) sided with the Revenue, leading to the present appeal.The key issue revolved around whether an assessee can claim Modvat credit when duty-paying documents are lost in transit. The Tribunal noted that the department did not dispute the credit was taken on prescribed documents but argued they were not defaced by the Superintendent. The Assistant Commissioner's satisfaction of document loss in transit was deemed sufficient for allowing credit, supported by precedents. The Commissioner's decision to disallow credit was overturned as not properly considering the legal position. Regarding the penalty, since no appeal was filed against its imposition, the Assistant Commissioner's decision stood final.In conclusion, the Tribunal held that the appellants were entitled to the Modvat credit despite document loss. The Commissioner's decision to disallow credit was set aside, and the Assistant Commissioner's order was restored. The judgment clarified the legal stance on claiming Modvat credit in cases of lost documents in transit and emphasized the importance of proper examination of such situations.