2001 (8) TMI 358

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....d 3-9-1998 from M/s. Kunal Metal (P) Ltd. [in short, M/s. Kunal] who had imported the said goods in July 1998. M/s. Naveen were a dealer registered under Rule 174 of the Central Excise Rules, 1944 for the purpose of dealing in aluminium scrap as on the date on which they issued the aforesaid invoice to the appellants. However, M/s. Kunal were not registered with the department as dealer under Rule 174 for the purpose of dealing in aluminium scrap as on the date on which M/s. Naveen issued invoice to the appellants. The department proposed to disallow the Modvat credit to the appellants on the ground that the invoice dated 28-9-1998 on the strength of which the credit was taken was not valid for the purpose inasmuch as it was issued by a dea....

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....ter (M/s. Kunal) is a second stage dealer. Admittedly, on the date on which they issued the invoice to the appellants, M/s. Naveen were registered under Rule 174 in respect of aluminium scrap and the department has no case that the invoice was not duly authenticated. Nevertheless, the adjudicating authority held that the invoice issued by the second stage dealer was invalid for Modvat purpose as it was issued on the basis of an invalid invoice issued to that dealer by the first stage dealer, the latter invoice having been issued at a time when the dealer who issued it was not competent to do so for want of registration with the department under Rule 174 in respect of the goods. The lower appellate authority upheld the original authority's d....

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....ct that M/s. Kunal (the first stage dealer) applied for registration in respect of aluminium scrap only on 25-9-1998, i.e. after issue of invoice dated 3-9-1998 to M/s. Naveen. Rule 174 had clearly provided that a dealer was authorised to deal in any excisable goods only after having applied for registration for such purpose under the Rule. Therefore, the invoice dated 3-9-1998 issued by M/s. Kunal to M/s. Naveen was unauthorised and invalid for Modvat purpose. However, I do not find anything in the Modvat Rules for supporting a view that the invalidity of the first stage dealer's invoice would invalidate the second stage dealer's invoice for Modvat purpose. The credit in question was taken on the strength of the invoice issued by second st....