2015 (2) TMI 132 - AT - Central Excise

Revenue appeal denied for Modvat credit and penalty, emphasizing importance of legitimate credit rights

COMMR. OF C. EX., DELHI-IV Versus SETHI INDUSTRIAL CORPORATION

The appeal by the Revenue challenging the denial of Modvat credit and the penalty imposed on the respondent for excess seized goods was rejected. The ... Denial of CENVAT Credit - Held that:- details of inputs stand entered in the statutory records; non-entry of the same in the private records maintained by the respondent, when there is no obligation to maintain them, will not disentitle the assessee to avail credit, especially when there is no allegation or evidence showing non-receipt of such inputs. As regards credit of ₹ 7,75,427/-, lower authorities had denied the same on the ground that there was certain discrepancy on account of non-entry of certain particulars in the invoices. The appellate authority has observed that absence of some particulars in the invoices issued by the suppliers stands accepted by the assessee but inasmuch as same is mistake due to oversight, credit cannot be denied merely on doubt as regards non-receipt of inputs. He has further observed that the respondent has taken credit on the basis of invoices, which were issued and inputs were received under the cover of challan. - both the objections are technical nature and cannot result in denial of substantive right of availment of credit in respect of inputs received by the assessee. There is no justification to do so in the absence of any allegation or evidence to show that either inputs are not received or not duty paid or the same were not used in the manufacture of final products. Revenue is also aggrieved with the finding of appellate authority setting aside of penalty imposed on respondent in respect of excess found seized goods. The original adjudicating authority has not confiscated the goods and has imposed equal amount of penalty to the value of seized goods. The appellant authority has set aside the same on the ground that the goods were still in the factory. Inasmuch as the adjudicating authority has not confiscated the goods, I find no justification for imposition of penalty on such count and the same stands rightly set aside by the Commissioner (Appeals). - Decided against Revenue. Issues:1. Denial of Modvat credit by the original adjudicating authority.2. Appeal against denial of credit by the Commissioner (Appeals).3. Discrepancy in invoices leading to denial of credit.4. Setting aside of penalty imposed on the respondent for excess seized goods.Analysis:1. The original adjudicating authority denied Modvat credit to the respondent, which was confirmed by the Commissioner (Appeals) in part. The appeal by the Revenue challenges the denial of credit for certain items, specifically &8377; 2,26,269/- and &8377; 7,75,427/-.2. Regarding the credit of &8377; 2,26,269/-, the original authority based denial on the absence of material in private records. However, the Commissioner (Appeals) ruled that since the inputs were entered in statutory records, the lack of entry in private records does not disqualify the assessee from availing credit. The appellate authority's decision was upheld, emphasizing the lack of obligation to maintain private records and the absence of evidence indicating non-receipt of inputs.3. For the credit of &8377; 7,75,427/-, lower authorities denied it due to discrepancies in invoices. The appellate authority acknowledged the oversight in certain particulars but allowed the credit as the inputs were received under challan. It was emphasized that technical objections should not hinder the legitimate right to credit unless there is evidence of non-receipt, non-duty payment, or misuse of inputs.4. The Revenue contested the setting aside of the penalty imposed on the respondent for excess seized goods. The original authority had imposed a penalty equal to the value of seized goods, which was overturned by the appellate authority as the goods were still in the factory and not confiscated. The Commissioner (Appeals) rightly set aside the penalty, as there was no justification for its imposition in the absence of confiscation.In conclusion, the appeal by the Revenue was rejected, affirming the decisions of the appellate authority regarding the denial of Modvat credit and the setting aside of the penalty for excess seized goods.