Per Justice R.K. Abichandani: The Revenue has appealed against the order of the Commissioner (Appeals) dated 22.11.2004 by which the order of the Assistant Commissioner dated 26.7.2004, disallowing the modvat credit of Rs.63,819/-, ordering its recovery, and imposing penalty of equivalent amount, was set aside.
2. According to the Revenue, the assessee availed modvat credit of Rs.63,819/- on 13.4.1995 on MS plates on the strength of the invoice dated 10.4.1994, issued by M/s. Jain Udyog, who was the original noticee No.4 and that on verification it transpired that the invoice was only an accommodation invoice, issued to facilitate availment of fraudulent modvat credit. The adjudicating authority, on the basis of the material on record, held that the noticee No.4, M/s. Jain Udyog, was not eligible to avail modvat credit and did not have the capability of rolling hot rolled products of non-alloy iron and steel in the factory and that they did not subject the said material to rolling for manufacture of hot rolled iron and steel products. It was also held that the transporter had not transported the goods in question to the factory of Jain Udyog and that it was not the actual purchaser and recipient of goods, but only appeared to have acted as an agent. It was held that the goods could not have been manufactured by the said noticee No.4, and therefore, when the source from where such goods were consigned under the cover of such invoice is disputed and the transaction was questionable, the availment of modvat credit by noticee No.1, i.e., the present respondent was incorrect and liable to be disallowed.
3. The learned authorized representative for the department strongly contended that there was no valid reason for the Appellate Commissioner to interfere with the order-in-original, which was based on cogent grounds. He submitted that the proviso to rule 57G(2) of the Central Excise Rules, 1944, placed the onus on the manufacturer who was availing the credit to ensure that the duty as indicated in the modvatable documents accompanying the input, had actually been paid by the consignor and the person with whom the transaction was entered into was reliable.
4. The material on record indicates that the finding of the original authority that no goods were transported to M/s. Jain Udyog, was not justified. As recorded in paragraph 5 of the impugned order of the Appellate Commissioner, it had transpired from the statement of the transporter that he had transported the goods more than once to the present respondents unit. It also appears from the record that the delay in producing the documents under which the goods were received in the factory was duly explained. The goods were weighed on 8.4.1995, and were in fact received in the factory on 10.4.1995. Merely from the fact that the goods were weighed on 8.4.1995, it could not be inferred that the goods were not received in the factory on 10.4.1995. All the documents and the copies of RC books showing the receipt of the goods were produced. The assessee was able to refute the allegation of the Revenue that the goods were transported in a two-wheeler, by producing copies of the RC book. Even the details of payments made through bank, bill of the transporter and the goods receipt note, were produced. The goods were said to have been surplus stock of plates received from M/s Jain Udyog under rule 57f(1) of the said rules. Such removal did not take the duty paid character of the goods. In fact the duty paid character of the goods was never in question. Therefore, when the goods had been received in the factory, the benefit of modvat credit could not have been disallowed, as rightly held by the Commissioner (Appeals). There is, therefore, no warrant for interference with the impugned order. The appeal is, therefore, dismissed. [Dictated and pronounced in the open Court on 7.2.2007] [Justice R.K. Abichandani] President