2010 (10) TMI 168 - HC - Central Excise

Court denies modvat credit due to procedural errors & lack of evidence. Upheld Revenue-Respondents' position.

STERLING COACH BUILDERS (P) LTD. Versus COMMR. OF C. EX., MUMBAI-III

The Court upheld the denial of modvat credit to the Appellants due to procedural irregularities in claiming the benefit, emphasizing the corrections made ... Cenvat credit – Assessee not in a position to produce octroi receipts - Transfer of goods from one unit to other unit - no material on record evidencing payment of octori duty – Held that: - Cenvat credit not allowed - no merit in the Appeal - Appeal is dismissedIt is a common knowledge that if the goods are to be removed from one Municipal or Corporation area to another Municipal or Corporation area, the entry tax, namely; Octroi is required to be paid. Had goods been transported from Nashik to Thane, the octroi duty ought to have been paid by the Appellants. The very fact that, there is no material on record evidencing payment of octori duty leads us to conclude against the Appellants defence that goods were taken from Unit at Nashik to Unit at Thane. The findings recorded by all the authorities below thus, cannot be faulted with. Issues involved:1. Interpretation of procedural irregularity in claiming modvat benefit.2. Validity of claiming credit despite procedural irregularity.Analysis:Issue 1: Interpretation of procedural irregularity in claiming modvat benefitThe case involved the interpretation of procedural irregularity in claiming modvat benefit. The Tribunal had to determine whether the benefit of modvat could be denied for procedural irregularity even if the inputs were used for producing the final products. The Appellants had used duty paid inputs in their factory at Thane, substituting the Nashik address with that of Thane on the invoices. However, the correction made in the invoices did not comply with Rule 173G(2)(vi) of the Central Excise Rules. The authorities found that the corrections were made after the goods were removed, leading to the denial of modvat credit. The Appellants argued that the inputs had entered the factory and were consumed in the manufacturing process, but the authorities held that the corrections were not made at the time of removal of goods, thus upholding the denial of modvat credit.Issue 2: Validity of claiming credit despite procedural irregularityThe second issue revolved around the validity of claiming credit despite procedural irregularity. The Appellants failed to produce octroi receipts as evidence of the transfer of goods from the unit at Nashik to the unit at Thane. The absence of octroi receipts led the authorities to conclude that the goods did not travel from Nashik to Thane. The Court noted that the payment of octroi duty is required when goods are transported between Municipal or Corporation areas, and the lack of evidence of such payment weakened the Appellants' defense. As a result, the Court upheld the findings of the lower authorities, emphasizing that the absence of the best evidence must lead to an adverse inference against the Appellants. Ultimately, the Court dismissed the Appeal, ruling in favor of the Revenue-Respondents and against the Appellants.In conclusion, the judgment delved into the nuances of procedural irregularities in claiming modvat benefit and the importance of producing necessary evidence to support claims in excise matters. The decision highlighted the significance of complying with rules and regulations in excise procedures to avoid the denial of benefits and penalties.