2024 (4) TMI 960 - AT - Central Excise

MODVAT Credit denial overturned despite documentation lapses when goods were duty-paid and received for manufacturing

CESTAT Kolkata allowed the appeal regarding MODVAT Credit denial. The appellant availed credit based on challans-cum-invoices from SAIL stockyards that ... MODVAT Credit - proper duty paying documents or not - challans-cum-invoices issued by M/s. SAIL, do not contain the duty payment details - HELD THAT:- N/N. 15/1994-C.E.(N.T.) dated 30.03.1994 provides relaxation to avail MODVAT Credit on the basis of challans-cum-invoices issued by stockyards of manufacturers subject to the condition that such challans-cum-invoices shall contain all the duty payment particulars. In the present case, it is alleged that the challans-cum-invoices based on which the appellant availed credit did not contain the details of payment of duty and accordingly, the MODVAT Credit has been disallowed. There is no allegation in the Show Cause Notice or the impugned Order-in-Original that the appellant had not received the goods in the premises of the factory. There is no allegation that the supplier viz. M/s. SAIL has not made payment of duty. If there was any doubt regarding payment of duty by M/s. SAIL, then the Department should have demanded the duty from M/s. SAIL and not from the appellant. As far as the appellant is concerned, they have received the goods into the factory on payment of appropriate duty and utilized the same in the manufacture of their finished products based on the challans-cum-invoices issued by the depots of M/s. SAIL. Thus, we observe that there is no dispute regarding the duty-paid nature of the goods. The substantive benefit of MODVAT Credit cannot be denied due to procedural lapses. Thus, the substantive benefit of MODVAT Credit cannot be denied on the ground of procedural lapses. Accordingly, the appellant is eligible for the MODVAT Credit on the basis of the challans-cum-invoices issued by the depots of M/s. SAIL - the impugned order is set aside. Appeal allowed. Issues involved: Denial of MODVAT Credit based on lack of duty payment particulars in documents.Facts: The appellant availed MODVAT Credit based on challans-cum-invoices from M/s. SAIL, but the Revenue contended that these documents did not meet the requirements under Notification No. 15/1994-C.E.(N.T.). The duty payment details were deemed insufficient, leading to denial of credit.Legal Provisions: MODVAT Credit under erstwhile Rule 57A of the Central Excise Rules, 1944 was based on invoices with duty details. However, Notification No. 15/94-C.E.(N.T.) allowed credit on challans-cum-invoices from stockyards, provided they contained necessary particulars.Appellant's Arguments: The appellant highlighted that the documents were valid as per communication from M/s. SAIL and argued that procedural lapses should not bar substantive benefit of MODVAT Credit. They cited precedents to support their stance.Revenue's Response: The Authorized Representative for the Revenue supported the findings in the impugned order, emphasizing the lack of duty payment particulars in the challans-cum-invoices.Tribunal's Observations: The Tribunal examined whether the challans-cum-invoices without duty payment details were sufficient for availing MODVAT Credit. Notably, there were no disputes regarding the duty-paid nature of the goods received by the appellant.Decision: Relying on previous decisions and considering the absence of allegations regarding non-receipt of goods or non-payment of duty by the supplier, the Tribunal held that substantive benefit of MODVAT Credit cannot be denied due to procedural lapses. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.Conclusion: The Tribunal's decision emphasized that procedural lapses should not hinder the substantive benefit of MODVAT Credit, especially when there are no disputes regarding the duty-paid nature of the goods.