2017 (8) TMI 584 - AT - Central Excise

Tribunal allows Modvat credit appeal, citing rectification of issues.

The Tribunal overturned the disallowance of Modvat credit on various grounds. It ruled in favor of the appellant, finding that the denial of credit based ... MODVAT credit - denial on the ground that invoices issued by unregistered dealer - Held that: - the Hon'ble High Courts of Ahmedabad as well as Punjab and Haryana in the case of COMMISSIONER OF C. EX., DELHI-III, GURGAON Versus MYRON ELECTRICALS PRIVATE LIMITED [2006 (11) TMI 213 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH], has held that credit cannot be denied even though the invoices are issued by a dealer from unregistered premises - dis-allowance of credit unjustified. Credit has been denied on the ground that appellants have availed excess credit - Held that: - The excess credit availed would be ₹ 47,144/- only. Instead of disallowing this excess credit of ₹ 47,144, the department has disallowed the entire credit of ₹ 17,684/-. The appellants admittedly having debited the excess credit of ₹ 47,144/-, the disallowance of credit on this ground is unjustified. CENVAT credit - denied on the ground that the parent quantity mentioned in invoices is only 275 kgs., whereas, the quantity supplied to the appellants is 675 kgs - Held that: - the parent invoices was in fact for 850 kgs, and only by mistake the same has been mentioned as 275 kgs - denial of credit unjustified. The disallowance of credit for the reason that the quantity of inputs was received was not entered in Part-1 RG 23A register is also explained by the appellants, which according to us is acceptable and tenable. CENVAT credit denied also on the ground that the appellants have taken only less credit of ₹ 2,375/- against the duty paid to the tune of ₹ 2,500/- - Held that: - The same has been explained by the appellants stating that during the relevant period N/N. 14/90 permitted only 95% credit to be availed, Needless to say that disallowance of credit is unjustified. Appeal allowed - decided in favor of appellant. Issues Involved:1. Disallowance of Modvat credit on various grounds.Analysis:1. The first issue pertains to the disallowance of Modvat credit due to the BPCL Depot not being registered as a dealer. The appellant argued that despite the lack of dealer registration, Modvat credit should not be denied if the nature of the input and its use in manufacturing are not in dispute. Legal precedents were cited to support this argument, highlighting that credit cannot be denied solely based on dealer registration. The Tribunal agreed with this argument, overturning the disallowance of credit on this ground.2. The second issue concerns the alleged excess Modvat credit claimed by the appellant. The department proposed disallowing a specific amount, but the appellant contended that the excess amount was lower than claimed. Detailed invoice-wise documentation was presented to support this claim. The Tribunal found that the appellant had rectified the excess credit issue by debiting the amount, rendering the disallowance of the entire credit unjustified.3. The third issue involves the denial of credit due to an incorrect quantity mentioned in the invoice from M/s. Colour Chem, Pondicherry. The appellant clarified that the error was acknowledged by the supplier and rectified, providing supporting documents. The Tribunal deemed the denial of credit on this ground unjustified.4. The fourth issue relates to the denial of credit for a stock transfer from Howrah to Pondicherry due to an incorrect consignee name on the invoice. The appellant explained the nature of the transfer and argued that the credit should not be denied based on this technicality. The Tribunal agreed with the appellant's argument, ruling that the Modvat credit should not be denied in this scenario.5. The fifth issue concerns the non-entry of inputs in the Part-1 RG 23A register, leading to the denial of credit. The appellant clarified the circumstances of receiving and returning defective goods, emphasizing that the credit availed was correct. The Tribunal accepted the explanation, stating that the denial of credit on this ground was unwarranted.6. The final issue involves the denial of credit for availing less than the permissible amount as per the supplier's invoice. The appellant explained the applicable regulations and the reason for availing a lower credit amount. The Tribunal found the denial of credit on this ground unjustified, as the appellant had complied with the relevant provisions.In conclusion, the Tribunal found the disallowance of Modvat credit on various grounds to be without legal and factual basis. The impugned orders disallowing the credit were set aside, and the appeals were allowed with consequential relief.