1998 (9) TMI 197 - Commissioner - Central Excise

Summary

Issues:
1. Eligibility of availing credit of duty based on invoices from registered dealers.
2. Validity of invoices issued by second stage dealers.
3. Interpretation of 'sale' in the context of stock transfer for availing credit of duty.

Analysis:

Issue 1: Eligibility of availing credit of duty based on invoices from registered dealers
The case involved an appeal by a company against the disallowance of availing credit of duty on goods purchased based on invoices from registered dealers. The appellants argued that the goods were used in manufacturing excisable goods and relied on a similar case where Modvat credit was allowed. The Commissioner examined the facts and found that the invoices were issued by registered dealers, making the credit of duty admissible. The goods were received in the factory and used in manufacturing, meeting the criteria for availing duty credit under the rules.

Issue 2: Validity of invoices issued by second stage dealers
Regarding the first case involving a credit of Rs. 1,65,970, the goods were initially imported by a dealer who sold them to another registered dealer before reaching the appellants. The Commissioner determined that the invoices issued by registered dealers were valid documents, as per the relevant rule, and the duty paid character of the goods was not in dispute. As the goods were used in manufacturing final products, the credit of duty was deemed admissible based on the invoices from registered dealers.

Issue 3: Interpretation of 'sale' in the context of stock transfer for availing credit of duty
In the second case, the lower authority disallowed a credit of Rs. 10,398 based on invoices from a dealer involved in stock transfer that did not involve a direct sale. The Commissioner disagreed with this view, citing the definition of 'sale' under the Central Excise Act, which includes any transfer of goods in the ordinary course of trade or business. As stock transfer falls within this definition, the Commissioner allowed the appeal and set aside the lower authority's order disallowing the credit based on stock transfer invoices.

This judgment clarifies the eligibility criteria for availing credit of duty based on invoices from registered dealers, emphasizes the validity of invoices issued by second stage dealers, and interprets the definition of 'sale' to include stock transfers for the purpose of availing duty credit.