2001 (1) TMI 483 - AT - Central Excise

Tribunal Upholds Revenue Appeal on Modvat Credit Disallowance & Penalty - Procedural Compliance Key

The Tribunal allowed the Revenue's appeal against the Commissioner (Appeals) order, disallowing Modvat credit and imposing a penalty. The Tribunal ... Adjudication order, finality of in absence of appeal - Modvat - Invoices limitation in regard to credit Issues:- Disallowance of Modvat credit by Assistant Commissioner- Imposition of penalty- Appeal by Revenue against Commissioner (Appeals) order- Time-bar for availing Modvat credit- Jurisdiction of Assistant Commissioner's order- Admissibility of re-credit of dutyDisallowance of Modvat credit by Assistant Commissioner:The case involved an appeal by the Revenue against the order of the ld. Commissioner (Appeals) allowing the assessee's appeal against the disallowance of Modvat credit of Rs. 1,58,071/- by the Assistant Commissioner. The Modvat credit had been taken by the respondent based on invoices issued by Steel Authority of India Ltd. The Deputy Commissioner had initially disallowed the credit on the grounds of invalid documents, leading to a subsequent reversal of the credit by the party. The Assistant Commissioner then disallowed the credit and imposed a penalty of Rs. 10,000/-, which was appealed by the assessee and allowed by the Commissioner (Appeals).Time-bar for availing Modvat credit:The main argument raised by the Revenue was that the Modvat credit taken by the party on 7-7-98 was beyond the prescribed period of six months as per Rule 57G (5). The Revenue contended that after 29-6-95, assessees were not entitled to avail input credit beyond six months from the date of issue of duty-paying documents. The Tribunal's Larger Bench decision in Kusum Ingots & Alloys Ltd. was cited in support of this argument.Jurisdiction of Assistant Commissioner's order:The Consultant for the Respondent argued that the Assistant Commissioner's order allowing the party to avail the credit under Rule 57H had become final and binding, as it was not reviewed by any competent departmental authority. It was contended that the Assistant Commissioner's order under Rule 57H should prevail over the subsequent order passed under Rule 57G, citing the Tribunal's decision in Hindustan Everest Tools Ltd. v. Collector.Admissibility of re-credit of duty:The Tribunal found that the Deputy Commissioner's order disallowing the Modvat credit had not been appealed against by the assessee, and the subsequent order by the Assistant Commissioner allowing the credit was deemed to be without jurisdiction. The re-credit of duty taken by the respondent pursuant to the Assistant Commissioner's order was considered to be without legal sanction. Additionally, the re-credit taken on 7-7-1998 was found to be inadmissible due to the time-bar provisions under Rule 57G (5).Conclusion:The Tribunal set aside the impugned order and allowed the Revenue's appeal, emphasizing that the Assistant Commissioner's decision was not entirely beyond the scope of the show-cause notice, as it was based on the time-bar issue raised in the SCN. The judgment highlighted the importance of adhering to procedural requirements and time limitations in availing Modvat credit under the relevant rules and regulations.