Customs, Excise and Gold Tribunal - Delhi
Steel Tubes Of India Limited vs Commissioner Of Central Excise on 24 July, 2003
Equivalent citations: 2004(92)ECC541, 2004(164)ELT438(TRI-DEL)
ORDER S.S. Kang, Member (J)
1. Heard both sides.
2. Appellants filed this appeal against the adjudication order passed by the Commissioner of Central Excise. The adjudicating authority disallowed the Modvat credit of Rs. 45,19,748/- and imposed the penalty of equal amount on M/s. Steel Tubes of India Ltd. and penalty of Rs. 10 lakhs on M/s. STI Sanoh India Ltd. on the ground that M/s. Steel Tubes of India Ltd. wrongly availed the credit on the strength of invoices which were issued in the name of M/s. STI Sanoh India Ltd.
3. Brief facts of the case are that appellants M/s. Steel Tubes of India Ltd. are engaged in the manufacture of C.R. Sheet and Steel Tubes and were availing the benefit of Modvat Scheme in respect of the duty paid inputs such as H.R. Sheet/Sheets. The appellant availed the credit of Rs. 45,19,784/- on H.R. Coils on the strength of invoices issued by the manufacturer in the name of M/s. STI Sanoh India Ltd. which is their sister concern. M/s. STI Sanoh India Ltd. diverted these consignment to M/s. Steel Tubes of India Ltd. during the transit as they were not in need of the material.
4. The contention of the appellants is that as M/s. STI Sanoh India Ltd. was not in need of the material in question so the same was sold to M/s. Steel Tubes of India Ltd. and necessary permission was obtained from the Range Supdt. for diverting the goods. M/s. STI Sanoh India Ltd. made a request to Range Supdt. for diversion of the goods and the same was allowed by making an endorsement on the invoices. The appellants also relied upon the Central Board of Excise & Customs Circular No. 96/7/95-CX., dated 13-2-95 which were further clarified by CBEC Circular No. 207/11/96-CX., dated 1-5-96 where by such sale in transit is permissible.
5. The contention of the Revenue is that the appellants M/s. Steel Tubes of India Ltd. wrongly availed the Modvat credit on the strength of invoices which were in the name of M/s. STI Sanoh India Ltd. and had not followed the procedure.
6. We find that admitted facts of the case are that the manufacturer of the inputs supplied the goods to M/s. STI Sanoh India Ltd. and the goods were diverted during the transit to Ms. Steel Tubes of India Ltd. M/s. STI Sanoh India Ltd. made a written request to the Range Supdt. for a diversion of the consignment. The Supdt. of Central Excise made the following endorsement on the invoices :
"As per the assessee's request the consignment covered under the invoices for M/s. STI Sanoh India Ltd. is allowed to divert to M/s. Steel Tubes of India Ltd."
7. Further, we find that Circular No. 96/7/95-CX., dated 13-2-1995 allowed the transit sale and procedure was prescribed in the Circular. The relevant portion of the Circular is reproduced below :
"A registered person places an order on a manufacturer for supply and delivery of goods directly to a consumer and the goods are accordingly transported from the manufacturer's premises to the user's premises without being brought to the registered person's premises. In such a situation manufacturer will issue an invoice under Rule 52A. This invoice under Rule 52A will contain, in addition to the prescribed details including the consignee's name and address, mentioned therein, the registered person's name and address, on account of whose instructions the goods have been dispatched. The consignee in this case will be the end-user. In such a situation the registered person's invoice is not required for availment of Modvat credit. The duplicate copy of the manufacturer's invoice under Rule 52A will serve as cover for transport and for availment of Modvat by the end-user.
In case the goods have been consigned directly by the manufacturer to the consignee/end-user under the instructions of the registered person and the end-user refuses to receive the goods, then the registered person could approach the Range Superintendent of the original consignee. The Range Superintendent on received of request from the registered person can divert the consignment to a new destination as requested by the registered person. The duplicate and triplicate copy of the manufacturer's invoice will be endorsed by the Range Superintendent showing new destination."
Vide Central Board of Excise and Customs Circular No. 207/11/96-CX., dated 1-5-96, the procedure in respect of transit sale was further clarified. The relevant portion of the Circular is reproduced below :
"In the above connection, it has been reported that Board's Circular No. 96/7/95-CX., dated 13-2-95 provides under the heading "Transit Sale" that where the end-user refuses to receive the goods, the registered person could approach the Range Supdt. of the original consignee for endorsing the duplicate and triplicate copy of the invoice to the new destination and thereafter the goods could be so diverted. Similar instructions have been requested to be issued with reference to the situation where the goods cleared by a manufacturer are required to be diverted to a consignee other than the original consignee.
The matter has been examined by the Board and I am directed to say that the guidelines laid down in para 2 of the heading "Transit Sale" of the aforesaid Circular with respect to registered person issuing invoice under Rule 57G above will mutates mutandis also apply in the case of manufacturers issuing invoices under Rule 57A."
In the present case M/s. STI Sanoh India Ltd. applied to the Supdt. of Central Excise for diversion of the consignment to M/s. Steel Tubes of India Ltd. which was duly allowed by the jurisdictional Supdt. of Central Excise. On the strength of these certificates issued by the jurisdictional Supdt. of Central Excise, the appellants availed the credit and the transit sale of the goods is permissible in view of the Central Board of Excise & Customs Circular mentioned above. Therefore, when the inputs were diverted with the permission of the jurisdictional Supdt. who was competent to permit such diversion of the goods, the Revenue cannot deny the benefit of credit to M/s. Steel Tubes of India Ltd. In these circumstances, the impugned order is set aside and the appeals are allowed.