1998 (12) TMI 217 - Commissioner - Central Excise

Appellant's Improper Modvat Credit Reversed Due to Lack of Verification & Evidence

The appellant's availing of Modvat credit on a xerox copy of an invoice without original duty paying documents was deemed improper due to the lack of ... Modvat - Duty paying documents Issues:1. Availing Modvat credit on xerox copy of invoice without original duty paying documents.2. Entitlement for Modvat credit on invoices issued by dealer without a godown.Analysis:Issue 1:The appellant availed Modvat credit on a xerox copy of an invoice without producing original duty paying documents. The judgment referred to Rule 57G(6) allowing credit on inputs based on original invoices if the duplicate copy is lost in transit, subject to the Assistant Commissioner's satisfaction. It mentioned CBEC Circular No. 68/68/94 requiring written permission for such cases. The judgment highlighted that Modvat credit should be based on duplicate invoices under Rule 52A or Rule 57GG, with original invoices used only in exceptional cases of duplicate copy loss, after proper scrutiny and Assistant Collector's satisfaction. The judgment noted the lack of proper verification leading to the appellant's credit availed on a xerox copy without evidence of intimation to the Assistant Commissioner about the duplicate copy loss. It directed the reversal of Modvat credit unless documentary evidence and transport details are produced.Issue 2:Regarding the entitlement for Modvat credit on invoices issued by a dealer without a godown, the judgment referenced Eveready Inds. India Ltd. v. CCE, Hyderabad, highlighting that the absence of a godown was a later requirement introduced by a trade notice, not the appellant's mistake. It emphasized that while the dealer could face consequences for non-compliance, the appellant, receiving goods under valid invoices establishing duty payment, should not suffer. The judgment stated that failure to comply with the trade notice's godown requirement did not render invoices invalid for Modvat credit, especially if issued before the notice. However, it stressed the need for documentary evidence to verify goods receipt, transportation, and utilization in the appellant's factory for final product manufacture.In conclusion, the appeals were disposed of based on the directions outlined in the judgment, emphasizing compliance with Modvat credit rules and the necessity of proper documentation for availing such credits.