Customs, Excise and Gold Tribunal - Mumbai
Mardia Chemicals Ltd. vs Commissioner Of Central Excise on 14 October, 2003
Equivalent citations: 2004(91)ECC409, 2003(158)ELT378(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. This appeal is pled against the Commissioner (Appeals) order denying credit on certain waiver for the reasons -
(a) "The next issue to be decided is whether credit is admissible on invoices marked 'non-modvatable', by the supplier. Inquiry conducted by Department revealed that supplier M/s. Indian Oil Corporation Limited does not pass on Modvat credit to the buyers on such invoices. The appellants' argument is that when any excisable goods are purchased on payment of duty and are utilised in the manufacture of final products, the buyer has every right to take Modvat credit of the duty borne by him on such goods irrespective of whether supplier (manufacturer) of such goods passed the credit or otherwise. In this regard, it is to be held that when the supplier issued invoices and puts a remark 'non-modvatable' on these invoices, the onus to prove that credit was still available should rest on nobody else but the recipient, the buyer who had procured the inputs covered under such invoices. Instead of treating such documents as valid duty paying documents just like any other documents, and taking credit without seeking any clarification from the supplier at the very moment when invoices came into their hands, is clearly an error of judgment on the part of appellants. It cannot be expected of the Department to question M/s. Indian Oil Corporation Limited as to why credit was not being passed on by them to the appellant on such invoices. It was for the appellant to comprehend the significance of these remarks and credit, if available, was taken only after the supplier providing a clarification or rectification of a mistake, if such printing was an act of inadvertence. Therefore, unable to accept the argument of appellant advanced in this regard, I disallow the credit on aforesaid invoices.
(b) In regard to availment of Modvat credit to the extent of full amount of duty shown in suppliers invoice despite having received lesser than actual quantity shown in the invoice, I find that the decision relied upon by the appellant is not squarely applicable to the facts involved in the present appeal and hence, while disapproving of its reliance, I uphold the view of the lower authority in asking the appellant to reverse the credit to the extent of quantity less received.
(c) It is then observed that credit is denied on two invoices that are enlisted at Serial Nos. 164 and 165 of the Annexure to show cause notice (although there is no mention of the invoice Nos.) on the ground that appellant failed to produce the original copies for defacement before the Range Superintendent. The appellant on the other hand seek to argue that invoices were duly produced before the Superintendent. The appellant has also produced a copy of Invoice No. 3611, dated 3-6-1996 of M/s. Grasim Industries Limited involving credit amount of Rs. 2,896/- from which it can be seen that Range Superintendent has duly placed his signatures under a remark 'Modvat credit taken under Rule 57A'. It would therefore become clear that at the time when credit was taken, the appellant was in possession of prescribed duty paying document and that such a copy was also provided to Superintendent, as is evident from his remark. Therefore, denial of credit does not appear justifiable so far as Invoice No. 3611 is concerned. The same cannot however be held as regard to another invoice enumerated at Sl. No. 165 for want of any documentary evidence akin to that discussed above. Ipso facto, credit on invoice at Sl. No. 165 of the Annexure involving credit amount of Rs. 18,050/- is rightly disallowed.
(d) It is pleaded on behalf of appellant that Additional Duty @ 20% was said by them while clearing the consignment of crude naphthalene imported per Bill of Entry No. 5355, dated 11-4-1996. They claim to have paid the above amount on 24-4-1996 through cash register (sic) although no documentary evidence to support the above claim is produced. I am therefore unable to accept the said contention and allow credit being sought thereupon. Credit is therefore rightly denied on the above bill of entry."
2. In view of the following submissions made no case is found to be in favour of upholding the Commissioner (Appeals) orders.
(a) The Id. Commissioner (Appeals) has disallowed the credit on the invoices issued by the Indian Oil Corporation Ltd. on which the remark 'non-modvatable' was made by the supplier only on the ground that the appellants ought to have taken an explanation from the Indian Oil Corporation Ltd. and the Department was not expected to question the Indian Oil Corporation as to why the credit was not being passed on to the appellants. In this regard, the Id. Commissioner (Appeals) has clearly failed to appreciate that it was not for the Indian Oil Corporation to say whether the duty recovered by them from the appellants was non-modvatable or not. The question whether credit of duty paid is allowable as Modvat credit under the rules required determination from the Department only keeping in view the provisions of law. In terms of Rule 57A read with Rule 57B, a manufacturer was entitled to take credit of duty paid on the inputs used by him in or in relation the manufacture of final product, The Id. Commissioner (Appeals) was expected to make determination of this question alone. It is submitted that the Id. Commissioner (Appeals) has singularly failed in determining the dispute in accordance with law and has rather tried to uphold the decision of the Assistant Commissioner only on the ground that the appellants ought to have made enquiries with the Indian Oil Corporation Ltd. for making such remarks. It is submitted that no such enquiry was required to be made by the appellants, because they have paid the amount of duty involved on the inputs received from the Indian Oil Corporation Ltd. Having said the amount of duty/ they were in their rights to take credit of the duty paid on such inputs used in or in relation to the manufacture of final products in accordance with the provisions of Rule 57A read with Rule 57B. As the Id. Commissioner (Appeals) has failed to follow the statutory provisions, the impugned order has been passed in a highly arbitrary and illegal manner. As such, the conclusions reached by the Id. Commissioner (Appeals) deserve to be quashed and set aside.
(b) With regard to the question of short receipt of quantity of inputs, it is submitted that the invoice at Sr. No. 139 is also covered in the ground mentioned above. As regards shortage, it is too meagre to be taken note of. Such variation in weight occurs due to weigh-ment at various weighbridges and also because of evaporation during transportation. Therefore, the impugned order deserves to be quashed and set aside.
(c) The Id. Commissioner (Appeals) has also disallowed credit amounting to Rs. 18,050/- on the ground that the appellants have not produced the invoices before the Id. Commissioner (Appeals) himself at the time of hearing, as is evident from the written submissions. It is, therefore, not correct to say that the appellants have not produced any documentary evidence. Therefore, the impugned order deserves to be quashed and set aside.
(d)ly, the Id. Commissioner (Appeals) has denied credit in respect of CVD paid vide Bill of Entry No. 5355, dated 11-4-1996 on the ground that the appellants have stated duty was paid on 24-4-1996 in cash but no documentary evidence to support the said claim was produced before him. The appellants had produced the said Bill of Entry for perusal of the Id. Commissioner (Appeals), and pointed out that in the column of total amount of duty Rs. 4,89,377/- had shown, which has been arrived at from the assessable value of Rs. 24,46,883/-. On computation of CVD @ 20%, duty amounting to Rs. 4,89,377/- has been paid under Cash Receipt No. 8047, dated 24-4-1996 of the Bombay Custom House. The said Bill of Entry also contains a stamp to the effect the "A.D.F. GR 7A C.V.D. PAID". This remark if duly signed by the proper officer of the Custom House. It is, therefore, not correct to say that the appellants have not produced any documentary evidence to support their claim that CVD was paid. If the remarks made on the Bill of Entry by the proper officer are not considered as documentary evidence, the Id. Commissioner (Appeals) is suggesting that the goods were cleared without payment of duty, which is not possible once a Bill of Entry is filed and assessed. Therefore, the order passed by him in this regard is highly arbitrary and illegal. On this ground also, the impugned order deserves to be quashed and set aside.
3. The appeal is allowed.