Custom, Excise & Service Tax Tribunal
M/S. Indian Oil Corporation Ltd vs Commissioner Of Central Excise, ... on 18 August, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
Appeal No. E/154/2010, E/155/2010.
(Arising out of the order in original No. 02/CE/Commr./Kol-vi/2009 dated 30.11.2009 passed by the Commissioner of Central Excise, Kolkata-Vi
FOR APPROVAL AND SIGNATURES OF
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER
SHRI H.K.THAKUR, HONBLE TECHNICAL MEMBER
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities?
M/s. Indian Oil Corporation Ltd
APPLICANT(S)
VERSUS
Commissioner of Central Excise, Kolkata- Vi
...RESPONDENT (S)
APPEARANCE:
SHRI Dr. S. Chakarbarty Advocate FOR THE Applicant SHRI S. Sharma, Commr (AR) for the Respondent CORAM:
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER SHRI H.K.THAKUR, HONBLE TECHNICAL MEMBER Date of Hearing: 18.08.2015 Date of Decision: 18.09.2015 ORDER No. FO/A/75610-75611/15 Per Shri H.K.Thakur Appeals No. E/154/2010 & E/155/2010 have been filed by appellant M/s. Indian Oil Corporation Ltd against OIO No 03/CE/Commr/Kol-VI/2009 dt 15/12/2009 & OIO No. 02/CE/Commr/Kol-VI/2009 dt 30/11/2009 respectively passed by Commissioner of Central Excise Kolkata-VI Commissionerate as Adjudicating authority. Appeal No. E/147/09 has been filed by the appellant M/s Bharat Petroleum Corporation Ltd (BPCL) against OIO No. 09/Commissioner/ CE/ Kol-VII/ ADJM/ 2008- 09 at 29/12/2008 passed by Commissioner of Central Excise. Kolkata-VII. As the issue involved in all these appeals is the same therefore all are being taken up for disposal under this Commissioner order.
Sh. S. Chakrabarty (Advocate) & Sh. Ravi Ragavan (Advocate) Appeared on behalf of appellants IOCL & BPCL respectively. Sh. S. Chakrabarty appearing on behalf of IOC argued that issue involved in the present proceeding is taking of cenvat credit on the basis of endorsed bills of entry. Learned Advocate Submitted that Indian Oil Blending Ltd [IOBL] was a 100% subsidiary of IOC until the merger of the former with IOC on 10/05/2006 in accordance with the provisions of the Companies Act 1956. That appellant IOCL procured inputs Additives from both indigenous & imported Sources. That imported additives are imported & controlled by IOCL head office in Mumbai and bills of entry are filed by IOCLS marketing division. That after payment of duty the bills of entry are endorsed to IOCL who took Cenvat Credit on the basis of endorsed bills of entry. That show cause notices were issued to the appellant IOCL that the Credit taken was improper as the same was taken on the basis of on invalid document not proscribed under the Cenvat Credit Rules. That against the confirmation of demands the present appeals have been filed by the appellant. That as per the provisions of Rule- 57 G of Central Excise Rules 1944, Rule-7 of Cenvat Credit Rules 2001/02 & the existing Rule- 9 of the Cenvat Credit Rules 2004 the prescribed document for taking Modvot/ Cenvat Credit is a bill of entry /triplicate copy of bill of entry. That a bill of entry /triplicate copy of bill of entry remains a bill of entry even after endorsements thereof. That endorsement on the bills of entry is only an identification of the person who has procured / purchased the inputs from the manufacture of the finished goods. That the procedure of endorsement was only procedural requirement and can not take away the substantial right of the appellant to take credit if the duty paid inputs are received in the factory & used in the manufacture of finished goods cleared on payment of duty. That cenvat credit Rules, 2001-2002 & 2004 prescribe be the cenvatable document only as a bill of entry and does not even prescribe duplicate or triplicate copy of bill of entry. That the main cenvat credit Rules put no condition that after endorsement of a bill of entry it stops being a bill of entry. That as per CBEC Circular No. 276/109/96 Cx dt 26/11/1996 it has been clarified that for availing such credit the earlier procedure prescribed under CBEC Circular No. 179/13/96- cx dt 20/2/1996 can be, mutatis mutandis, followed. It was strongly argued by the Learned Advocate that each & every consignment imported by IOCL, before merger, was duty endorsed in favour of IOBL, received in Orginal packing Straight from the port of importation and used in the manufacture of dutiable finished goods. That all the inputs are duly reflected in the statutary records maintained by the appellants. That CBEC can not impose any restriction by way of Circular No. 179/13/-96/cx dt 29/02/1996 when all other conditions of the cenvat credit / Modvat Rules are fullfiled. That it has been constantly held in various judicial pronouncents that minor procedural lapses can not be made the basis for denying cevat credit. He relied upon the following case laws:-
(i)CCE. Vs Pepsi foods Ltd [2010(254)ELT 284 (P&H)]
(ii) Vimal Enterprise vs UOI [2006(195) ELT 267 (Guj)]
2.1 Learned Advocate further argued that after September 1996 requirement of endorsed of bill of entry was done away with and also there was no power with CBEC to prescribe any other document for taking cenvat credit. That by such amendments carried out w.e.f 1/9/1996 Revenue itself is of the opinion that there is no difference between bill of entry & endorsed bill of entry. He relied upon the case law of Bando India (P) Ltd vs CCE [2010(262)ELT 1103 (T) ] to argue that there is no difference in the bill of entry & endorsed bill of entry & that the significance of endorsement is only to identity the person in whose name B/E has been endorsed. It was also his case that in the case of Maramgoa Ltd vs (UOI)[2005 (192) ELT (Bom)], affirmed by Supreme court [2008(229)ELT 481(SC)], there was even no endorsement on the B/E & still it was held that credit is admissible. That larger Bench CESTAT judgment, in the case of Balmer lawrie & Co. Ltd vs CCE Kanpur [2000 (116) ELT 364 (T)], is not applicable to the present proceedings as the same is misplaced as per the order of Bombay high court in Maramgoa Steel Ltd UOI (Supra) and Gujarat High court order in the case if Vimal Enterprise vs UOI (Supra) That other cases relied upon by the Revenue are also not applicable as they were only with respect to Credit on Central Excise invoices & not endorsed bills of entry.
2.2 Learned Advocate appearing on behalf of appellant IOCL also argued that demand under Show cause notice dt 25/03/1999, amounting to Rs. 5,14,10,914.84, for the period march 97 to August 1998, is partly time barred as extended period under Sec. 11A can not be invoked in the present case. It was his case that all the relevant endorsed bills of entry were submitted to the department for defacing and the monthly statutory returns verified in time and returns filed have also been duly assessed by the Jurisdictional Range authorities. Further it was argued that there were judgments on this issue giving conflicting views. That as per the following case laws extended period can not be invoked as there can not be any intention to evade duty in the light of conflicting views :-
(a) Jaiprakash Industries Ltd vs CCE [2002(146)ELT 481(SC)]
(b) UOI vs Bharat Aluminum Co. Ltd. [2002(146)ELT 481] That no penalties upon IOCL (earlier IOBL) can be imposad under Cenvat Credit Rules prevailing at the relevant time as there is no intention to evade payment of duty or knowingly taking wrong credits.
3 Sh. Ravi Raghavan (Advocate) appearing on behalf of appellant BPCL argued that the period of demand is from December 1994 to July 1996 when all the 46 bills of entry, imported by appellants head Office, were duly endorsed in the name of his client under Rule- 57 G of the Central Excise Rules 1944. That appellant BPCL were filing regular RT-12 returns and furnishing copies of RG-23A Part-1 account, alongwith copies of invoices & bills of enter on the strength of which credit was taken. That all the impugned 46 bills of entry were defaced by the field formations. He brought to the notice of the bench CBEC Circulars issued on the subject from time to time. That SCN was issued on 28/07/1999 is predominantly time barred. On merits be relied upon the following case laws to argue that endorsed bill of entry was proper documents for taking credit:-
(i) Maramgoa Steel Ltd vs UOI [2005(192)ELT82(Bom)]as Affirmed Supreme Court [2008(229)ELT)481(SC)]
(ii) CCC vs JCT Limited [2003(151)ELT 508 (P&H)]
(iii) Banto India Ltd Vs UOI[2010(262)ELT(103(1)]
(iv) Twenty First Century Printers Vs CCE [2009(234)ELT 277]
(v) CCE Vs National Steel Industries [2000(38)ELT 449]
(vi) Vimal Enterprise Vs UOI [2006(195)ELT 267(Guj)]
5. Sh. S. Sharma Commissioner (AR) appearing on behalf of the Revenue argued that with effect from 01/9/96 CBEC had no power to specify any other document to take cenvat credit under Rule 57 G of the Central Excise Rules 1944 as per substitution made under Notf No. 14/96-CE (NT) dt 23/07/1996. He made the bench go through Paras 3.7 to 3.11 of the OIO dt 30/11/09. It was also his case that CBEC Circulars No. 441/7/99-CX & 179/13/96-cx dt 29/02/1996 also prescribed endorsement attestation of bills of entry by proper officer of Customs. That in the absence of such endorsements credit availed by the appellants has been correctly rejected. That procedure prescribed for taking Credit are mandatory as has been held in the following case laws:-
(i) CCE Chandigarh Vs Karam Chand Appliance [2009(238)ELT 706 (HP)
(ii) CCE Vs Speetra Electronics [2009(235)ELT 795 (H.P)]
(iii) M/s Chandra Laxmi Tempered Glass Co. Ltd[2009(234)ELT 245 (H.P.)] 5.1 That as per the above case laws ratio laid by Bombay High Court, in the case of Maramgoa Steel Ltd Vs UOI (Supra), affirmed by Supreme court, is not applicable to the facts of the present case as it pertained to the period prior to 1/9/96. It was also argued by the Learned AR that the Claim of the appellants that entire consignments were received & utilized by the appellants in the manufacture of dutiable finished goods, was not raised before the Adjudicating authorities.
6. Heard both sides and perused the case records. The issue involved in these proceedings is whether credit is admissible to the appellants after 1/9/96 on the endorsed bills of entry and whether with respect to the demands issued to the appellants extended period is invokable. It is the case of the Revenue that endorsed bill, of entry was not a valid document for taking credit prior to 1/4/1994 as per the documents prescribed under Rule 57 G (3) of the Central Excise Rule 1944, It is also the case of the Revenue that a bill of entry and endorsed bill of entry are separate categories of prescribed documents. It is further observed from Para-3.7 of the OIO dt 31/11/2009 that endorsed bill of entry was a prescribed document up to 11/9/96. However as a result of Notf No. 14/96-CE(N.T) dt. 23/07/2006 & Notf No. 6/97-CE (N.T) dt 1/3/1997 only triplicate bill of entry was kept in the list of prescribed documents. Under the cenvat credit Rules any copy of bill of entry is a valid document. CBEC vide Circular No. 179/13/96- cx dt 29/2/96 has issued following clarification on the issue of endorsement & taking of credit under Rule- 57G/ 57T of the Central Excise Rules 1944:-
Subject:- Problems faced in availing Modvat on bill of Entry /52A invoice in the name of registered Office/Head Office but credit to be availed by the factory Regarding.
Attention of the Board has been invited to the difficulties faced by the manufacturers in availing the credit under rule 57G/57T where:-
(i) The Bill of Entry has been filed in the name of the registered office of the manufacturer for the inputs to be used in his factory.
(ii) Imported goods lying in customs dock area/ bonded warehouse are diverted to manufacturing units in whose name Bill of Entry has not been filed.
(iii) Domestic duties paid goods consigned to a manufacturing unit are diverted in whole or part from a duty paid godown of the manufacturer or such diversion is affected in transit.
2. The issue has been examined by the Board
3. It has been decided that credit should not be denied where the Bill Of Entry is in the name of the registered office/head office provided that:-
(a) The entire consignment covered by the said Bill of Entry is received in the factory in original packed conditions.
(b) Triplicate copy of Bill of Entry/duplicate copy of the Bill of Entry generated on EDI system is endorsed by the registered office/head office to the effect that consignment covered by the bill of Entry are delivered to the manufacturing unit for availing credit.
4. Where the imported goods. Are still in Customs dock area and the manufacture/importer decides to divert/transfer the goods. A declaration by the manufacture/importer can be made on the reverse of triplicate copy of bill of Entry duplicate copy of the bill of Entry generated on EDI system by the manufacturer/importer that consignments are being delivered to the unit (name of the unit) for availing credit and endorsed by the proper Officer of Customs for enabling the manufacturing unit to avail credit.
5. In cases where the imported goods are lying in the bonded warehouse from where diversion takes place either of entire consignment or part consignment, credit can be permitted provided ex-bond bill of Entry is filed for such entire/part consignments and that a declaration is made on the reverse of the said ex-bond triplicate copy of the bill of Entry/ duplicate copy of the bill of Entry generated on EDI system to the effect that consignments are delivered to a unit ( name of the unit ) for availing credit.
6. in all cases duty paying documents on the basis of which credit has been availed in aforesaid cases, should be submitted to the Range superintendent for the necessary verification and defacing/endorsement.
7. In case of split consignments and other type of cases not covered by the preceding paragraphs the inputs can be cleared on the payment of duty as envisaged under rule 57F/57S and on the basis of such duty paying documents credit can be availed. 6.1 Arguments were also made by the appellants that in view of CBEC No. 441/07/99- cx dt 23/2/1999 credit is not required to be disallowed for procedural lapses and that efforts are required to be made by the department to reduce litigations. Bombay High Court in the case of Marmagoa Steel Ltd vs UOI (Supra) held that endorsement of bill of entry is not essential and made following observations to hold that receipt of inputs by the appellant and its use in the manufacture of dutiable finished goods is important:-
9.Perusal of Rule 57G of the Central Excise Rules, 1944, clearly shows that the credit of duty can be taken on inputs received by establishing that the duty has been paid on the said inputs on the basis of documents such as invoice, AR-1, Bill of Entry, etc. In the present case, it is not in dispute that the appellant had received 3314.159 M.T. of imported shredded steel scrap from M/s. Essar Gujarat Ltd. on which countervailing duty has been paid by M/s. Essar Gujarat Ltd. It is also not in dispute that M/s. Essar Gujarat Ltd. has not taken credit of the duty paid on 3314.159 M.T. of shredded steel scrap which is given on loan to the appellant. It is also not in dispute that the appellant has used the said shredded steel scrap taken on loan from M/s. Essar Gujarat Ltd. as inputs in its factory. The certificate issued by the Superintendent of Central Excise, Surat to the effect that the importer namely M/s. Essar Gujarat Ltd. has not taken credit of duty paid on the said 3314.159 M.T. is not doubted by the Excise authorities. Similarly, the certificate issued by the Superintendent, Central Excise, Panaji, Goa to the effect that the quantity of 3314.159 M.T. shredded steel scrap received by the appellant from M/s. Essar Gujarat Ltd. has been used as inputs in the factory of the appellant is also not doubted by the Excise authorities. In these circumstances, we are of the opinion, that in the facts of the present case, the appellant has established that the credit of duty on receipt of 3314.159 M.T. of imported shredded steel scrap from M/s. Essar Gujarat Ltd. has been taken in accordance with law.
10.?For availing the credit of duty, what is required to be established under Rule 57G is that the inputs received are in fact duty paid. The procedure set out in Rule 57G of the Central Excise Rules is to ensure that the credit is taken on the basis of duty paid documents. The bill of entry is one such document set out in Rule 57G. The said rule does not require that the bill of entry should be in the name of the person claiming credit of duty. It is not in dispute that the goods imported and cleared on payment of duty by one person can be used as inputs and credit of duty can be claimed by another person by establishing that the imported duty paid goods have been received as inputs and that the importer has not taken credit of that duty. In the present case, it is established that the duty paid goods are received as inputs, however, the credit is denied on the ground that the Bill of entry is not endorsed in the name of the appellant. Rule 57G does not require that for taking credit of duty, the bill of entry should be endorsed in the name of the claimant. Counsel for the revenue could point out any provision of law in the Act or the Rules regarding the endorsement of bills of entry. In the absence of any provision regarding endorsement on the bill of entry, the credit of duty cannot be denied on the ground that the bill of entry is not endorsed in the name of the claimant. As stated hereinabove, what is required to be established for taking credit of duty is that the goods used as inputs are duty paid and that the credit of duty paid on the said goods has not been taken. In the facts of the present case, the evidence on record i.e. the bills of entry together with the certificates issued by excise authorities at Surat and Goa, clearly show that the goods imported and cleared under the bills of entry on payment of duty were received and utilised by the appellant as inputs in its factory and that the importer has not utilised the credit of duty paid on the said goods. Thus, the appellant has established that the inputs received under the bills of entry were duty paid and, therefore, the authorities below were not justified in denying the credit of duty to the appellant. The two decisions relied upon by the Tribunal do not support the case of the revenue. In the case of Balmer Lawrie & Co. (supra), the issue was not relating to the endorsement on the bills of entry and, therefore, the said decision is distinguishable on facts. Similarly, the decision of the Tribunal in the case of Tata Iron & Steel Co. Ltd. (supra) is also distinguishable on facts as the said decision is based on erroneous concession made by the Counsel for the appellant therein, that in the case of Balmer Lawrie & Co. it is held that the Modvat credit is not available on the basis of endorsed copies of bills of entry. 6.2 Relying upon the above case law CESTAT Delhi in the case of Bando India (P) Ltd Vs CCE Delhi-III [2010 (262) ELT 1103 (Tri-Del) held as follows in Para- 31 for valid document under cenvat credit Rules 2002 & 2004.
31.?The contention of the department that there is no provision for endorsement of the credit and therefore the appellants are not entitled to claim credit on the basis of the endorsement is devoid of substance for more than one reason. Firstly, the credit is taken not because of endorsement but on the basis of bill of entry which also disclosed the name of the appellant, apart from the fact that the goods accompanying the Bill of entry were subjected to the payment of duty, and on clearance, were directly transported to the appellants factory premises and were utilized by the appellants for installation of their factory, and no credit in respect of duty paid on those goods was taken by the contractor. Secondly, the effect of endorsement is only to amend the name of consignee and nothing more. Blacks Law dictionary depicts the term endorsement as amendment of the installment signifying the same being made referable to a person other than the one disclosed earlier. And, it is not the case of the department that on endorsement of the Bill of entry in favour of the appellant, it was, in any manner, rendered to be invalid document or that the import under such document become unlawful. 6.3 Similar View was again expressed by CESTAT Delhi in the case of Sono Koya Steering Systems Ltd Vs CCE Delhi- III Gurgaon [2013 (296) ELT 481 (Tri-Del)]. In view of the above case law there is no difference in the bill of entry & endorsed bill of entry. The only effect of endorsement is to amend the name of the consignee, when the entire consignment is sold / sent to the consignee. As per the settled proposition of law prescribed under Bombay High Courts order in the case of Maramgoa Steel Ltd Vs UOI (Supra) more important is duty paid nature of inputs, their receipt in the appellants unit and utilisation of the some in the manufacture of dutiable finished goods. The above law laid down has also been upheld by Apex Court as reported at 2008(229) ELT 481 (SC.). CBEC Circular No. 441/7/99-cx dt. 23/02/1999 also clarified that procedural requirements should be ingnored to reduce litigations. In the present appeals appellants have infact endorsed the bills of entry on the basis of which credit was taken. It is accordingly held that credit taken on the basis of endorsed bills of entry was correctly taken by the appellants. So for as the applicability of extended period is concerned it is observed that appellants were taking credit on the basis of documents which were submitted to the department for defacement. In the light of existing factual matrix it can not be said that there was any intention on the part of the appellants to evade payment of duty. Further conflicting judgments were being given on this issue by various courts. Accordingly we are of the opinion that extended period can not be invoked in the present proceedings and no penalties are imposable upon the appellants. However, Learned AR during his arguments submitted that the factum of receipt of entire consignments and their use in the manufacture of dutiable finished goods was not examined by the Adjudicating authorities. In the interest of justice we remand their case to the Adjudicating authorities only with respect to verification of receipt of entire consignments & their utilisation in the manufacture of dutiable finished goods. Needless to say that appellants should be granted a personal hearing before deciding the case in remand proceedings and appellants should produce all the records available with them to justify that the entire consignments were received & utilised in the manufacture of dutiable finished goods.
7. Appeals filed by the appellants are allowed by way of remand to the Adjudicating authority only on the limited verifications in view of the observations contained in Para 6.4.
(Pronounced in the court on ..) (D.M.MISRA) (H.K. THAKUR) JUDICIAL MEMBER TECHNICAL MEMBER Tushar kumar 11