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<h1>Modvat credit allowed on aluminium scrap despite initial invalid invoice</h1> The appeal was allowed in favor of the appellants as the Tribunal held that the Modvat credit claimed on aluminium scrap based on a valid invoice from a ... Modvat - Aluminium scrap Issues:Validity of Modvat credit on aluminium scrap based on invoices from registered dealers under Rule 174.Analysis:The case involved a dispute regarding the Modvat credit claimed by the appellants on aluminium scrap received under an invoice dated 28-9-1998 from a dealer registered under Rule 174. The goods were initially imported by another dealer, who was not registered at the time for dealing in such goods. The department disallowed the credit, leading to appeals and subsequent rejections.Upon examination, it was found that the Modvat credit was taken based on an invoice issued by a second stage dealer registered under Rule 174, which was in accordance with the provisions of Rule 57G(3) of the Central Excise Rules. The lower authorities held the invoice invalid due to the initial invalid invoice issued by the first stage dealer, relying on a previous Tribunal decision.The appellant's representative argued that the invoice was valid for Modvat purposes as the dealer was registered and the document duly authenticated. Conversely, the department contended that the validity of the invoice was affected by the previous transaction between the dealers, citing the Tribunal decision for support.The judgment emphasized that the invalidity of the first stage dealer's invoice did not automatically invalidate the second stage dealer's invoice for Modvat purposes. The credit was taken based on a valid invoice from a registered dealer, unaffected by the source of goods. The Tribunal distinguished the present case from the precedent cited by the department, as the invoice in question was issued by a registered dealer under Rule 57G.Consequently, the impugned order disallowing the Modvat credit was set aside, and the appeal was allowed in favor of the appellants.
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