Judgment:
1. This case was posted for hearing of the stay application. Shri Rajesh Chibber, Ld. Advocate, submitted that during the pendency of the stay application the appellants had voluntarily reversed the amount of Modvat Credit in dispute. He placed on record photo copy of the RG 23A Part II Register which shows the reversal and refers to the Order-in-Original under dispute. Ld. Advocate submitted that the main appeal could be taken up for disposal today. Shri Nank Chand, JDR, had no objection. The case was accordingly taken up for final hearing.
2. The dispute relates to whether the two gate passes under which Modvat Credit was taken were eligible documents or not. Shri Rajesh Chibber, Ld. Advocate submitted that the duplicate copy of invoice No.5, dated 8-4-1994 issued by M/s. Prakash Platinum Ltd., Bombay was lost in transit. An application was made to the Assistant Collector for taking credit on the strength of the original invoice on 3-8-1994. The Credit had earlier been taken by them after informing the suppliers of the loss vide their letter dated 20-4-1994. The Assistant Collector did not react to their request but issued a Show Cause Notice for reversal on 24-10-1994. Ld. Advocate submitted that the belief of the Assistant Collector and of the Collector (Appeals) that the power to accept the original copy was given to the Assistant Collector only on amendment of Rule 57G on 20-5-1994 was not correct. A procedure was already in existence whereby under executive instructions the Assistant Collector had the power to condone such lapse. In this case the fact of physical receipt of duty paid inputs was not disputed and, therefore, Modvat was admissible. The other issue involved in the second case was that the goods were manufactured by GACL and were covered under gate passes dated 1-12-1993 issued to their consignment agents. This gate pass was further endorsed to M/s. Parkash Chemicals and by them to the appellants. These very goods were also covered under an invoice issued by M/s. Sam International. The Assistant Collector rejected the Modvat claim on the ground that there was no co-relation between the invoice and the gate pass. Ld. Advocate stated that M/s. Sam International had organised a transaction between M/s. Prakash Chemicals and the assessee whereby the goods moved from M/s. Parkash Chemicals to the assessee but the money invoice would be made by M/s. Sam International. He submitted that this was a normal trade practice and should not be suspected by the Department. In support of this claim he relied upon the case of Collector of Central Excise, Bombay v. Goodlass Nerolac Paints Ltd., 1986 (26) E.L.T. 57.
3. Shri Nanak Chand, Ld. JDR stated that where the documentations were not as prescribed under the relevant rules the credit taken thereunder amounts to wrong and irregular credit. He justified the orders of the lower authority.
5. As regards the denial of Modvat credit taken on the basis of original copy of the invoice, I find that both the lower authorities had presumed wrongly that the Assistant Collector had no power to accept the original copy of the invoice as the eligible document before amendment of Rule 57G. Loss of eligible documents in transit is not an unusual phenomenon. In 1986 the Board had issued executive instructions to cover this situation. Every Collectorate had issued Trade Notices advising the assessees of the procedure. Trade Notice No. 83/86-CE was issued by the Delhi Collectorate on 19-12-1986. The procedure prescribed was that on loss of original GP-1 in transit being reported, the credit would be allowed on a copy certified by the Range Supdt. in charge of the factory of production. The inputs could be used in the meanwhile. Immediate credit was also available if the assessee filed an indemnity bond. Here the assessee had applied for such permission but the Assistant Collector did not take cognizance of the request. It is correct that the assessee had taken credit before getting the permission from Assistant Collector. But this mistake was rectifiable.
The Assistant Collector could have asked them to file the Bond or could have asked them to freeze the equivalent amount in the RG 23A Part II Book until receipt of the certificate of the jurisdictional officer of the manufacturer factory. In this case credit has wrongly been denied to the appellants.
6. In the second case the first observation of the Assistant Collector that the gate pass was endorsed after 1-4-1994 and, therefore, it was not the eligible document, is no longer valid, in view of the findings of the Tribunal in the case of Moosa Haji Patrawala, 1996 (83) E.L.T.7. I have carefully examined the gate pass and also the invoice issued by Sam International. The plea of the appellants that the invoice from Sam International could be disregarded and credit could be allowed on the strength of original Gate Pass 1 does have force. The gate pass has been endorsed twice which was permissible at the material time. The gate pass shows the link between the original manufacturer and the present appellants. The fact of physical receipt of the input is not in doubt, therefore, the observation that an invoice which represents separate financial transaction does not refer to the Gate Pass 1 is not sufficient to deny Modvat credit.
8. In the result, the appeal succeeds. The lower orders are set aside.
The issue is remanded to the Assistant Collector who shall proceed to permit availment of Modvat Credit amounting to Rs. 55,750/- in both the cases after conducting such documentary verification as he deems fit.