Appeal allowed: Modvat credit admissible for specific invoices per government notifications

LEELA CONFECTIONARY PVT. LTD. Versus COLLECTOR OF C. EX., CHANDIGARH

LEELA CONFECTIONARY PVT. LTD. Versus COLLECTOR OF C. EX., CHANDIGARH - 1997 (93) E.L.T. 111 (Tribunal)` Issues:
1. Admissibility of Modvat credit taken on the strength of various types of invoices.

Analysis:

The appeal was filed against the order of the ld. Commr. (Appeals) disallowing Modvat credit taken by the appellants. The dispute revolved around the admissibility of Modvat credit amounting to Rs. 65,326.08, which was challenged by the department. The appellants, manufacturers of Hard Boiled Confectionery, had availed credit of duty paid on inputs used in manufacturing confectionery. The department alleged that Modvat credit could not be taken based on invoices issued by consignment agents and original invoices. A show cause notice was issued, leading to the disallowance of the Modvat credit by the lower authorities.

The appellants' representative argued that they had taken Modvat credit on the strength of various documents. Firstly, they had taken credit of Rs. 1626.08 on the basis of GPIs endorsed within the specified period as per Notification No. 16/94. Secondly, in April 1994, they took Modvat credit based on original invoices, citing Notification No. 23/93 allowing such credit in case of lost transportation copies. The representative relied on a Tribunal decision to support their claim. Lastly, they availed credit of Rs. 42,500 on invoices issued by dealers along with endorsed manufacturer's invoices, arguing that they met the criteria of being wholesale dealers under Section 2(k) of the CESA, 1944.

The respondent, representing the Commissioner, conceded that Modvat credit based on endorsed gate passes was correctly taken. However, they argued against the admissibility of credit based on original invoices and endorsed manufacturer's invoices. The respondent contended that the documents did not meet the prescribed criteria for availing Modvat credit.

After considering the submissions, the judge made specific findings on each type of document in question. Firstly, regarding credit based on endorsed gate passes, the judge held that it was correctly taken within the specified timeline as per Notification No. 16/94. Secondly, concerning credit based on original invoices, the judge allowed the credit of Rs. 21,200 taken in April 1994, considering the newness of the scheme and lack of findings by the A.C. Lastly, for credit based on endorsed manufacturer's invoices and dealer invoices, the judge found that the credit of Rs. 42,500 was correctly taken as per the government's orders allowing Modvat credit on invoices issued by manufacturers or wholesale dealers.

In conclusion, the appeal was allowed, and the judge directed that any consequential relief be granted to the appellants as per the law.