2008 (8) TMI 74 - AT - Central Excise

Appeal granted for Modvat credit denial; importance of document verification highlighted

The Tribunal allowed the appeal, granting relief to the appellant, as the denial of Modvat credit for CVD paid in piecemeal was found unjustified. The ... Commissioner has denied the benefit of Modvat credit of CVD paid by the appellant on goods imported by them on the ground that the same has been taken not in one go but in piecemeal as and when the appellant received the goods in their factory - It is not the department’s case that appellants are not entitled to avail the credit at all - entire issue is revenue neutral - objection is only as regards timing of availment of credit, which cannot be made a basis for denial of the credit Issues:1. Denial of Modvat credit for CVD paid in piecemeal.2. Interpretation of Board's Circular No. 206/40/96-CX.3. Barred by limitation - de-facing of bills of entry.4. Correctness of documents and entitlement to credit.Analysis:1. The Commissioner denied the Modvat credit of CVD paid by the appellant for imported goods, stating it was taken piecemeal. Referring to Circular No. 206/40/96-CX, the Commissioner required the credit to be taken only when all inputs were received inside the factory, not in parts. However, the Tribunal noted that the circular applied to domestically produced goods, and the issue was revenue neutral. The objection was about the timing of credit availment, not the entitlement itself.2. The Tribunal found the demand barred by limitation as the bills of entry, on which credit was claimed, were de-faced by the Superintendent. The show cause notice was issued after the normal limitation period. The Commissioner's observation that de-facing was to verify document genuineness and duty payment correctness was challenged. The Tribunal disagreed, stating it was the Superintendent's responsibility to verify correctness before de-facing, and de-facing did not imply suppression or misstatement.3. Considering the above, the Tribunal set aside the Commissioner's order and allowed the appeal, granting consequential relief to the appellant. The decision highlighted the importance of correct verification of documents and entitlement to credit before de-facing bills of entry to avoid unjustified invocation of the longer limitation period.