2003 (11) TMI 240 - AT - Central Excise

Tribunal upholds credit recovery, penalties; dismisses interest claim in Moraya Global v. FMC Aroma case

The appellate tribunal upheld the recovery of credit and penalties but dismissed the claim for interest in the case involving M/s. Moraya Global (P) Ltd. ... Cenvat/Modvat - Duty paying documents - Penalty Issues involved:1. Whether a new company could avail transfer of credit from another company after taking over its assets.Analysis:The case revolved around the question of whether a new company, M/s. Moraya Global (P) Ltd., could avail the transfer of credit from M/s. FMC Aroma (P) Ltd. after taking over its assets. The appellants faced a show cause notice disallowing the credit obtained on invoices issued by M/s. FMC Aroma (P) Ltd. post their surrender of registration to the Excise Department. The key issue was the validity of the invoices (No. 34 dated 1-11-1995 and No. 35 dated 15-11-1995) for availing credit. The law stipulated under Rule 57G(3) required the invoices to be issued by a registered manufacturer under Rule 174. As M/s. FMC Aroma (P) Ltd. had surrendered their registration, the invoices were deemed invalid for credit availment, especially considering no goods were claimed to have moved under them. Consequently, the credit availed was deemed ineligible, leading to the confirmation of penalties but the disallowance of interest under Section 11AA, which was clarified to be for duty and not credits.The appellate tribunal upheld the order of recovery of credit and penalties while dismissing the claim for interest. The decision highlighted the importance of adherence to registration requirements for availing credit and the consequences of utilizing invalid documents for credit purposes. The judgment emphasized the significance of proper documentation and compliance with registration regulations to ensure the validity of credit transactions in excise matters.