2007 (10) TMI 646 - AT - Central Excise

Modvat credit denied for non-duty paid scrap invoices overturned by Tribunal

The Tribunal set aside the denial of modvat credit to the appellant based on invoices from a registered dealer supplying non-duty paid scrap instead of ... MODVAT/CENVAT credit - denial on the ground that they have availed cenvat credit on the basis of the invoices supplied by the registered dealer, who has not supplied duty apid inputs but has supplied non duty paid scrap to appellant - Held that: - the Revenue has not considered the fact that the appellant had received and consumed the inputs in the factory premises and paid for the same. There is also no contrary evidence to show that the appellant had not paid the supplier's invoices raised on them - appeal allowed. Issues:Denial of modvat credit based on invoices supplied by a registered dealer who provided non-duty paid scrap instead of duty paid inputs.Analysis:The appeal was filed against the order-in-appeal dated 8.8.2006, which denied modvat credit to the appellant. The issue revolved around the appellant availing cenvat credit based on invoices from a registered dealer who supplied non-duty paid scrap instead of duty paid inputs. Upon reviewing the submissions and records, it was found that the appellant had received and consumed the inputs in the factory premises, having paid for them. The Revenue failed to consider that the appellant had paid the supplier's invoices. The decision of the Tribunal in the case of M/s. Rishabh Industries and R.S. Industries was cited to support the appellant's case. The Tribunal emphasized that if the receipt of goods under the cover of invoices is not disputed, and the invoices contain duty paying particulars, modvat credit cannot be denied. The Tribunal also highlighted that Rule 57-I of the Central Excise Rules, 1944, allowed for the recovery of credit taken due to errors or misconstructions, which was not the case for the appellant. The Tribunal set aside the disallowance of modvat credit and the recovery of the amount from the appellant, allowing the appeal based on the precedents of Rishabh Industries and R.S. Industries.In conclusion, the judgment followed the precedents set by Rishabh Industries and R.S. Industries, setting aside the impugned order and allowing the appeal with any consequential relief. The decision was based on the principle that if the receipt of goods under invoices is not disputed and the invoices contain duty paying particulars, modvat credit cannot be denied. The Tribunal also clarified the application of Rule 57-I of the Central Excise Rules, 1944, in cases where fraud, suppression, or willful misstatement are not established.