Parda Steel Pvt. Ltd. Vs. Indore - Court Judgment

Excerpt:
1. the appellants have been issued with 2 show-cause notices proposing disallowance of modvat credit and imposition of penalty. the main allegation was that the format of the invoices (on the strength of which the inputs were received) was not in accordance with the format prescribed under rule 52-a, 173g and duty-paid character of material received under the invoices issued from the disposal store of bhillai steel plant was not ascertainable.2. the appellants submitted appropriate reply to both the show-cause notices and explained that even if some discrepancies exist in the duty-paying document, which can be attributed on part of the manufacturer/dealer, the credit cannot be denied. the lower authorities viz. asstt. commissioner and commissioner (appeals) did not agree with the appellants and the denial of credit as proposed in the show-cause notice was confirmed. the impugned order is under challenge in the instant appeal.4. the ld, counsel invited attention to the findings of the appellate authority wherein though, in terms of board's circular no. 86/86/94.cx dated 12.12.94, he has accepted that the invoices issued by the supplier have been recognized for modvat credit purposes/ he finds that there is a requirement that the depot should be registered under rule 57-gg and the invoices have to be issued containing details required under rule 57-gg. he further finds that the required duty payment particulars have not been incorporated in the documents and ecc number has not been indicated therein, which suggests that, the depot has not been registered. he further states that, he had also examined the matter with a view to find out if duty payment particular could be corroborated with the invoice issued from the disposal stores to extend the benefit of modvat credit and on such examination, he comes to a conclusion that, the cumulative duty amount against invoices under question works out to rs. 1,81/860. however/ against the delivery advices/invoice numbers mentioned in the letter dated 13.7.95, the total duty payment had been indicated to rs. 2,97,034. thus, there is no correlation between duty paid as indicated in the da/invoices.5. the aforesaid observations are without any basis. on going through the corresponding delivery advices relating to invoices against which credit has been raised, it is apparent that delivery advices could cover the quantity received by the disposal store, the invoices issued to the appellants will only be confined to the quantities and the duty payment thereon in the respective invoices. therefore, the quantities reflected in the delivery advices are likely to be more than the quantities indicated in the respective invoices issued to the appellants. the balance quantity would pertain to some other purchases.therefore, this could hardly be a ground to suggest that the invoices were not relating to the duty payment indicated on the quantities reflected in the delivery advices and disposal stores of steel authority of india. the absence of ecc code in the duty paying document or any other discrepancy is a curable defect in the duty-paying document. as long as duty paying nature of the inputs and its utilization in the manufacture of finished goods is not in dispute, which is apparently so, in this case, the credit of duty cannot be denied. corresponding pla entries showing the duty paid against the invoices has also been certified. accordingly, prima facie, the credit appears to be admissible to the appellants.6. ld. dr however, submits that this matter is required to be determined by the commissioner (appeals).7. accordingly, i allow the appeal of the appellants by way of de novo remand to the commissioner (appeals), who shall pass appropriate orders after considering the invoices as admissible documents and determine the eligibility of the credit after affording the appellants reasonable opportunity to plead their case and pass orders thereon in accordance with the law.

Judgment:
1. The appellants have been issued with 2 show-cause notices proposing disallowance of Modvat credit and imposition of penalty. The main allegation was that the format of the invoices (on the strength of which the inputs were received) was not in accordance with the format prescribed under Rule 52-A, 173G and duty-paid character of material received under the invoices issued from the disposal store of Bhillai Steel Plant was not ascertainable.

2. The appellants submitted appropriate reply to both the show-cause notices and explained that even if some discrepancies exist in the duty-paying document, which can be attributed on part of the manufacturer/dealer, the credit cannot be denied. The lower authorities viz. Asstt. Commissioner and Commissioner (Appeals) did not agree with the appellants and the denial of credit as proposed in the show-cause notice was confirmed. The impugned order is under challenge in the instant appeal.

4. The Ld, Counsel invited attention to the findings of the appellate authority wherein though, in terms of Board's Circular No. 86/86/94.CX dated 12.12.94, he has accepted that the invoices issued by the supplier have been recognized for Modvat credit purposes/ he finds that there is a requirement that the depot should be registered under Rule 57-GG and the invoices have to be issued containing details required under Rule 57-GG. He further finds that the required duty payment particulars have not been incorporated in the documents and ECC number has not been indicated therein, which suggests that, the depot has not been registered. He further states that, he had also examined the matter with a view to find out if duty payment particular could be corroborated with the invoice issued from the disposal stores to extend the benefit of Modvat credit and on such examination, he comes to a conclusion that, the cumulative duty amount against invoices under question works out to Rs. 1,81/860. However/ against the Delivery Advices/Invoice numbers mentioned in the letter dated 13.7.95, the total duty payment had been indicated to Rs. 2,97,034. Thus, there is no correlation between duty paid as indicated in the DA/invoices.

5. The aforesaid observations are without any basis. On going through the corresponding Delivery Advices relating to invoices against which credit has been raised, it is apparent that Delivery Advices could cover the quantity received by the disposal store, the invoices issued to the appellants will only be confined to the quantities and the duty payment thereon in the respective invoices. Therefore, the quantities reflected in the Delivery Advices are likely to be more than the quantities indicated in the respective invoices issued to the appellants. The balance quantity would pertain to some other purchases.

Therefore, this could hardly be a ground to suggest that the invoices were not relating to the duty payment indicated on the quantities reflected in the Delivery Advices and disposal stores of Steel Authority of India. The absence of ECC code in the duty paying document or any other discrepancy is a curable defect in the duty-paying document. As long as duty paying nature of the inputs and its utilization in the manufacture of finished goods is not in dispute, which is apparently so, in this case, the credit of duty cannot be denied. Corresponding PLA entries showing the duty paid against the invoices has also been certified. Accordingly, prima facie, the credit appears to be admissible to the appellants.

6. Ld. DR however, submits that this matter is required to be determined by the Commissioner (Appeals).

7. Accordingly, I allow the appeal of the appellants by way of de novo remand to the Commissioner (Appeals), who shall pass appropriate orders after considering the invoices as admissible documents and determine the eligibility of the credit after affording the appellants reasonable opportunity to plead their case and pass orders thereon in accordance with the law.