Transit-point receipt of goods without passing credit does not require RG23D entry or modvatable invoices, and penalty fails.

Where goods are received only as a transit point and no modvat credit is intended to be passed on, the circular on RG23D entries does not require the registered person to make such entries or issue modvatable invoices. On those admitted facts, the procedural requirement was not attracted, so confiscation of the goods and penalty under Rule 209A could not be sustained. The tribunal therefore allowed the assessee's appeals, dismissed the Revenue's appeal, and granted consequential relief by setting aside the impugned order.

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Issues: (i) Whether a registered person receiving goods only as a transit point was required to enter the consignments in RG23D and issue modvatable invoices under the Central Excise Rules, 1944. (ii) Whether confiscation of the goods and penalty under Rule 209A of the Central Excise Rules, 1944 were sustainable.

Issue (i): Whether a registered person receiving goods only as a transit point was required to enter the consignments in RG23D and issue modvatable invoices under the Central Excise Rules, 1944.

Analysis: The circular governing maintenance of RG23D made the entry requirement applicable only where the registered person proposed to issue modvatable invoices. Where no modvatable invoice was intended and no credit was to be passed on, the circular itself stated that entry in RG23D was unnecessary. The facts showed that the goods were received only as a transit point, no credit was taken, and no modvatable invoice was issued or intended to be issued.

Conclusion: The assessee was not required to make RG23D entry or issue modvatable invoices in the facts of the case.

Issue (ii): Whether confiscation of the goods and penalty under Rule 209A of the Central Excise Rules, 1944 were sustainable.

Analysis: Since the statutory and circular-based procedural requirement was not attracted on the admitted facts, the foundation for confiscation and penalty did not survive. The Court distinguished the authorities relied upon by the Revenue, as they concerned different situations involving mandatory compliance for claiming a substantive benefit and not a mere transit arrangement without passing of credit.

Conclusion: The confiscation and penalty were not sustainable.

Final Conclusion: The assessee's appeals were allowed and the Revenue's appeal was dismissed, with consequential relief flowing from the setting aside of the impugned order.

Ratio Decidendi: Where goods are received only as a transit point and no modvatable invoice is proposed or credit is intended to be passed, the registered person is not obliged to make RG23D entries or issue modvatable invoices, and penal or confiscatory action cannot be sustained for non-compliance with that inapplicable requirement.

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