Customs, Excise and Gold Tribunal - Mumbai
Bombay Dying And Mfg. Co. Ltd. vs Commissioner Of Cen. Excise And Customs on 14 February, 2002
Equivalent citations: 2002(82)ECC120
ORDER J.H. Joglekar, Member (T)
1. The facts involved in this appeal peculiar and need to be stated fully.
2. M/s. Bombay Dying & Mfg. Co. Ltd. had 2 units, one situated at Mumbai and the other at Jamnagar. These 2 units were separately registered as excise licences. The Bombay unit has purchased from M/s. J.C.T. Fibres Ltd., polyster staple fibre vide 3 Gate passes. These goods were purchased from August to September 1992. At the time of their receipt, the goods were not inputs in terms of Rule 57A. At a later date, i.e. on 1.3.94 these goods became eligible inputs.
3. On 7.4.94, Gate Pass Nos. 593 and 774 evidencing receipt of these goods were endorsed by the Bombay unit to Jamnager unit. These goods under these gate passes were received by Jamnagar unit in the first week of April 1994. This unit had filed a declaration as required under Rule 57G of the Rules earlier i.e. on 16.3.94. The credit of duty paid by these two endorsed gate passes was taken by Jamnager unit in their modvat account on 9.4.94.
4. In the same manner, the Bombay unit had received one more consignment of polyster staple fibre from M/s. J.C.T. Fibres Ltd. vide G.P. No. 747 dated 9.9.92. When the goods became eligible inputs with effect from 1.4.94, credit of the duty paid was taken by the Bombay unit in their account on 4.3.94. The date of the declaration filed under Rule 57G by the Bombay unit, if any, is not on record nor is it apparent from the discussion. Vide invoice No. 295 date 4.5.94 these inputs were cleared by the Bombay unit on payment of duty to their Jamnagar Unit. The credit of duty paid was taken by the Jamnagar unit on 8.5.95.
5. Show cause notice dated 7.7.94 sought reversal of such credit taken by the Jamnagar unit in terms of Rule 57l. The show cause notice alleged that the credit was taken prior to filing of the declaration. The second allegation made was that the credit taken by Mumbai unit was inadmissible in as much as the goods were received in 1992 i.e. much prior to the date on which goods were made eligible inputs. It was alleged that consequently, the credit taken by Jamnagar unit was inadmissible. As regards the taking of credit by the Jamnagar unit on the basis of the gate passes endorsed by the Mumbai unit, no separate allegation was made in the show cause notice.
6. The Asstt. Commissioner denied the credit on the endorsed gate passes on the observation that there was no provision for endorsement of Gate passes for availment of modvat credit after 1.4.94. He also reiterated the belief that the Mumbai unit could not have taken modvat credit when the inputs were received much beyond the admissible period of six months from the date of eligibility of the inputs. The Commissioner(A) reflected these sentiments in his order.
7. As regards the eligibility of the endorsed gate passes, I find that the show cause notice does not allege that the document was not sufficient to cover the arrangement so made. Secondly, there is substantial case law to show that gate passes issued prior to 1.4.94 could be endorsed thereafter also provided the credit was taken before 30.6.94 2001 (42) RLT 475 (Guj) CCE v. Gujarat Medicraft Pvt. Ltd. I further observe that the show cause notice does not cover the Mumbai unit at all but only targets the Jamnagar unit. As far as these endorsed gate passes are concerned, the Mumbai unit had not taken any credit of duty as evidenced by these gate passes. Ld. counsel submits that the jurisdictional Supdt. has certified the non-availment of modvat credit. The endorsement of gate pass was a routine activity permitted by the department subject to certain safeguards. It cannot be said that the Mumbai Unit was wrong in making the endorsement and that they had contravened any provision. As has been observed by me earlier, the only allegation made in the show cause notice as regards the goods received under the endorsed gate passes, is that the credit was taken before filing of the declaration. The show cause notice in paragraph 2 itself shows that the declaration was filed earlier to this. The orders of denial of modvat credit on these two counts therefore, do not survive.
8. As regards the goods on which the credit had been taken by Mumbai unit, I observe that such credit could have been taken only under Rule 57H of the Rules and in view of the very large gap between the physical receipt of the goods and the date of taking the credit, the credit taken was wrong. It, however, cannot become a ground for denial of modvat credit taken by the Jamnagar unit. It is the officers uncharge of the Mumbai unit who should have denied the credit and consequently the credit would not accrue to the Jamnagar unit. Provisions of Rule 57E would be sufficient in this case, where on denial of the credit taken by the Mumbai unit the variation in the credit taken by the Jamnagar unit would be effected. But it is improper to revers the credit taken by the Jamnagar unit on the basis of the valid document on the ground of infirmity in the credit taken by the Mumbai unit. It is significant that although the show cause notice alleges the scheme as devised by the Mumbai unit, it does not make them as noticees.
9. The Ld. Commissioner in his order described the entire operation as a denial modvat. The scheme may appear to be so but in the absence of proper allegation being made in the show cause notice, the consequential action of denial of modvat credit is wrong in law.
10. The appeal succeeds and is allowed with consequential relief, if any, as per law.