CESTAT rules in favor of respondents on Modvat credit eligibility in inter-unit transfers

The Appellate Tribunal CESTAT, New Delhi, ruled in favor of the respondents in a case concerning Modvat credit eligibility for goods transferred between units of the same company and the validity of invoices lacking the "duplicate for transporter" inscription. The Tribunal held that endorsed invoices are acceptable for claiming Modvat credit in such inter-unit transfers where no sale occurs. Additionally, the presence of a rubber stamp with the required wording on invoices was deemed valid, leading to the dismissal of the Revenue's appeal. The decision affirmed the respondents' entitlement to claim Modvat credit based on the endorsed invoices, establishing precedence for similar cases.

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Issues: Modvat credit eligibility for transferred goods, validity of invoices without "duplicate for transporter" inscription

In the judgment delivered by Shri K.C. Mamgain, Member (T) of the Appellate Tribunal CESTAT, New Delhi, the issue at hand was the eligibility of Modvat credit for goods transferred between units of the same company and the validity of invoices lacking the "duplicate for transporter" inscription. The Revenue argued that the Circulars related to Modvat credit were not applicable to goods transferred between units, emphasizing the need for regular invoices. On the other hand, the respondents contended that endorsed invoices were valid for transfer of indigenous goods without a sale, citing precedents supporting their position. They also presented rubber-stamped invoices as evidence, asserting their validity based on previous Tribunal decisions. Upon examination, the Revenue acknowledged the presence of the rubber stamp on the invoices, leading to the acceptance of the respondents' position.

Regarding the first issue, the Tribunal analyzed the nature of the goods transfer within the same company and established that in such cases where no sale occurs, endorsed invoices are acceptable for claiming Modvat credit. This interpretation was consistent with past Tribunal decisions, particularly citing the case of CCE v. Coimbatore Murugan Mills. Concerning the absence of the "duplicate for transporter" inscription on certain invoices, the Tribunal noted the presence of a rubber stamp with the required wording, which had been deemed valid in previous Tribunal rulings. Consequently, the Tribunal dismissed the Revenue's appeal, concluding that the grounds presented did not warrant disallowing the credit to the respondents based on the validity of the invoices. The decision was made in favor of the respondents, affirming the acceptability of endorsed invoices for Modvat credit in the context of inter-unit transfers within the same company.

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