Custom, Excise & Service Tax Tribunal
M/S Goradia Special Steels Ltd vs Cce, Raigad on 10 March, 2015
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. E/88239/13 (Arising out of Order-in-Appeal No. US/132/RGD/2013 dated 22.05.2013 passed by the Commissioner of Central Excise (Appeals), Mumbai.) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ========================================================
1. Whether Press Reporters may be allowed to see : No
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 :Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental :Yes
authorities?
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M/s Goradia Special Steels Ltd.
: Appellant
Versus
CCE, Raigad
: Respondent
Appearance
Shri Prashant Patankar, Consultant
: For Appellant
Shri V.K. Shastri, Asst. Commr. (A.R.)
: For Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of Hearing :
10.03.2015
Date of Decision:
.2015
ORDER No. .
Per: Ramesh Nair
The appeal is directed against Order-in-Appeal No. US/132/RGD/2013 dated 22.05.2013 passed by the Commissioner of Central Excise (Appeals), Mumbai, wherein the learned Commissioner while upholding the Order-in-Original No. Raigad/ADC/105 (DG)/12-13 dated 31.01.2013, rejected the appeal of the appellant.
2. The fact of the case is that the appellant M/s Goradia Special Steels Ltd. (formerly known as M/s Vipras Castings Ltd.) is registered with Central Excise Department in the name of M/s Vipras Corporation Ltd. The appellant has availed CENVAT credit in respect of input Furnace Oil on duty paying invoices which were issued in the name of M/s Vipras Corporation Ltd. M/s Vipras Corporation Ltd. endorsed the duty paying invoices in favour of the appellant. A show-cause notice No. V/PI/RGD/Gr-IV/12-33/2011 Part-I dated 03.04.2012 was issued to the appellant, proposing denial of CENVAT credit for an amount of Rs. 7,62,934/- on 19 invoices of Furnace Oil issued by three different suppliers, on the ground that the invoices are not permitted to be endorsed and CENVAT credit is not admissible on such endorsed invoices. In the adjudication, CENVAT credit was denied and also imposed penalty & interest. Aggrieved by the said order, the appellant filed appeal before the Commissioner (Appeals) who rejected the appeal of the appellant, therefore the appellant is before this Tribunal.
3. Shri Prashant Patankar, learned Counsel for the appellant submitted that the appellant took over the factory premises of M/s Vipras Corporation Ltd. and started the production activity in the said premises. As regard the taking over of forging unit by the appellant from M/s Vipras Corporation Ltd, the appellant had informed to the adjudicating Authority vide letter dated 10.08.2006 wherein the copy of agreement between both the unit was submitted. He submits that since M/s Vipras Corporation Ltd. was registered as a buyer with the supplier for supply of Furnace Oil. The supplier issued invoices in the name of M/s Vipras Corporation Ltd., however the location of the unit remain same which was being used by the appellant. It is his submission that there is no dispute that the input supplied under the said 19 invoices were purchase by the appellant only, the payment there against were also made by the appellant and all the purchases were accounted for in the books of account of the appellant. It is also not in dispute that on the said invoices neither M/s Vipras Corporation Ltd. nor any other party has availed CENVAT credit. He submits that as per the above facts, the input covered under the 19 invoices belongs to the appellant and the same was used by the appellant in the manufacture of the final product. He submits that it is permissible to avail the credit on the endorsed invoices, particularly in the above mention facts and circumstances. In support of his submissions he placed reliance on the following judgements:-
(i) Raj Rayon Vs. CCE, Vapi 2009 (274) ELT 808 (Tri.- Ahmedabad)
(ii) CCE, Coimbatore Vs. Coimbatore Murugan Mills 2003 (160) ELT 825 (Tri.-Chennai)
(iii) CCE, Noida Vs. Flex Industries Ltd. 2004 (178) ELT 1029 (Tri.-Delhi)
(iv) Zenith Weavers Pvt. Ltd. Vs. CCE, Surat 2004 (177) ELT 251 (Tri.-Mumbai)
(v) Gautam Weaving Mills Vs. CCE, Belapur - 2008 (230) ELT 147 (Tri.- Mumbai)
(vi) Union of India Vs. Marmagoa Steel Ltd. 2008 (229) ELT 481 (S.C.) He further submits that the demand is time barred for the reason that there is no suppression of fact on the part of the appellant. The issue whether CENVAT credit is admissible on the endorsed invoices have been dealt number of times in various judgment and also through Circular. Therefore the appellant was of a bonafide belief that the credit on the endorsed invoices is admissible. Hence, under such position of law malafide intention to evade payment of duty is not established in the present case. In this support he placed reliance on the following case laws:-
(i) Padmini Products Vs. CCE 1989 (43) ELT 195 (S.C.)
(ii) Chemphar Drugs & Liniments 1989 (40) ELT 276 (S.C.)
3. On the other hand Shri V.K. Shastri, learned Assistant Commissioner (A.R.) appearing on behalf of Revenue, reiterates the findings of the impugned order. He submits that the CENVAT credit on the endorsed invoices is not admissible. It is his submission that CENVAT credit can be taken only by the person in whose name the invoices were issued. He placed reliance on the following judgements:-
(i) Commissioner of Central Excise, Indore Vs. Shubham Thionyl 2005 (192) ELT 163 (Tri.-Del.)
(ii) P.C.C. Pole Factory Vs. Commissioner of Commissioner, Raipur 2004 (176) ELT 377 (Tri.- Del.)
4. I have carefully considered the submissions made by both sides. From the facts, I find that in the present case the input i.e. Furnace Oil was supplied to the unit of M/s Vipras Corporation Ltd. which was taken over by the appellant and they were carrying out manufacturing activity when received the input along with invoices which were raised in favour of M/s Vipras Corporation Ltd. The input supplied was received by the appellant and used in their manufacture. From the Books of Account of the appellant, it is found that all the 19 invoices in question were against purchase of Furnace Oil in appellants Books of Account. It is also not in dispute that the amount of all 19 invoices paid only by the appellant to the supplier. From these facts, it is clear that the buyer of the goods is the appellant and for this reason M/s Vipras Corporation Ltd. endorsed the invoices in favour of the appellant, it is also fact that M/s Vipras Corporation Ltd. is sister concern of the appellant. I am of the view that when the unit of M/s Vipras Corporation Ltd. was taken over by the appellant, the input received, thereafter in the premises of the unit which was taken over, the appellant is entitled for CENVAT credit, irrespective, the name of M/s Vipras Corporation Ltd. is appearing on the invoices. In Rule 10 of CENVAT Credit Rules, 2004, there is a provision that if a unit is taken over by some other entity, not only the current CENVAT credit but even the CENVAT credit balance which was earlier availed by the transferor of unit shall be available to the transferee entity. Therefore, I do not see any reason why on the current purchase made by the appellant should not be allowed. The judgement relied upon by the appellant are squarely applicable in the present case. Moreover, in most of the judgements the two units are separate and having different location, but in the present case, the most important fact is both sister concern and the unit of M/s Vipras Corporation Ltd. was taken over by the appellant. The relevant judgements are reproduced below:-
(i) Raj Rayon Vs. CCE, Vapi 2009 (274) ELT 808 (Tri.- Ahmedabad) 4.?After hearing the learned SDR Shri J.S. Negi. I find that there is no dispute about the factual position. The inputs were actually received by the appellant and utilised by them in manufacture of final product. Admittedly, the inputs were duty paid and covered by the invoices, which were in the name of M/s. Raj Rayon only. There was difference in the address of the recipient inasmuch as the address of Unit 3 was shown instead of Unit 2. As per the remarks on the invoices, Unit 3 diverted the entire consignment to the present appellant who actually received in their factory. As such, it cannot be said to be a case of endorsement of invoices. Tribunal in case of Zenith Weaves Pvt. Ltd. v. CCE Surat 2004 (177) E.L.T. 251 (Tri.-Mum.), has held that invoices addressed in respect of assessees kim factory, but goods delivered at Surat factory, cannot be made basis for denial of Modvat credit. To the same effect, is Tribunals decision in case of CCE, Noida v. Flex Industries Ltd., 2004 (178) E.L.T. 1029 (Tri.-Del.).
(ii) CCE, Coimbatore Vs. Coimbatore Murugan Mills 2003 (160) ELT 825 (Tri.-Chennai) 4. We have considered the submissions made by? both sides. In normal circumstances, when there is a sale by one assessee to another independent assessee, the endorsed modvatable invoices have been held as not proper documents for the purpose of Modvat credit by the Larger Bench decision of the Tribunal rendered in the case of Balmer and Lawrie Ltd. [2000 (116) E.L.T. 364 (Tri.)]. However, in the instant case, the situation is different inasmuch as it is a transfer of the consignments of the inputs by two sister concerns of the same parent unit namely National Textile Corporation Ltd. There is no sale between the two units. Hence, the ratio of the Larger Bench decision will not be applicable. Revenue has not doubted nor disputed that the consignments of the inputs in question was duty paid and was duly received in the Respondents factory and utilised in the manufacture of their final product which was cleared on payment of duty. In these circumstances, we do not find any infirmity in the impugned order passed by the Commissioner (Appeals) and accordingly we reject the Revenue appeal.
(iii) CCE, Noida Vs. Flex Industries Ltd. 2004 (178) ELT 1029 (Tri.-Delhi) 4. I find that when the goods are transferred from one factory to the other factory of the same company, then there is no sale of the goods and in such a situation, if the goods are transferred by making endorsement on the invoices, then such invoices can be taken as valid document for taking Modvat credit. This has been consistent view of the Tribunal and is supported by the Tribunals decision in the case of CCE v. Coimbatore Murugan Mills (supra). Regarding the other issue that on two invoices, there is no print of duplicate for transporter, I find that there is a rubber stamp on the invoice duplicate for transporter and such a rubber stamp has been accepted as valid by the Tribunal in the various decisions. Therefore, only on this ground, credit cannot be disallowed to the respondents. In view of this, there is no merit in the appeal of the Revenue and the same is rejected. Ordered accordingly.
(iv) Zenith Weavers Pvt. Ltd. Vs. CCE, Surat 2004 (177) ELT 251 (Tri.-Mumbai) 7. We have? considered the submissions of both the sides. As regards the first issue, we find that the endorsement on the invoices is by the depot of the same manufacturer. The Tribunal in the case relied upon by the appellant has held that when there is no in between buyer of the inputs and the endorsement is by the manufacturers own depot, the ratio of the Larger Bench decision would not be applicable. As regards the other invoices, it is seen that though the address on the invoices is that of their Kim factory, the said invoices mentioned that the inputs are to be delivered at the Surat factory. In these circumstances, the Tribunals decision in the case of Larsen & Toubro Ltd. holding that when the invoices have been issued in the name of the office but the goods are received in the factory, the same would constitute proper modvatable documents, have to be applied. As regards the Modvat credit taken on the basis of certificates issued by the Superintendent prior to 31-3-1994, it is seen that the notification itself provides for taking credit on the basis of such documents provided the credit is taken before 30-6-1994. As such, we do not find any lapse on the part of the appellant to avail the credit on the basis of the said documents especially when there is no doubt or dispute about the receipt of the inputs by the appellants in their factory, their utilisation in the manufacture of the final product and clearance of the final product on payment of duty.
8. We also take? note of the Larger Bench decision in the case of Kamakhya Steels Ltd. v. CCE - 2000 (121) E.L.T. 247 wherein the Tribunal, after taking note of the Boards circular, has observed that the minor procedural lapses, if any, should not be made the basis for denial of the benefit of the Modvat credit, if the assessees jurisdictional Assistant Commissioner is otherwise satisfied about the receipt of the inputs. In the absence of any doubt to the above fact, we are of the view that the impugned orders are liable to be set aside.
(v) (Gautam Weaving Mills Vs. CCE, Belapur - 2008 (230) ELT 147 (Tri.- Mumbai) 2. I have heard both sides and find force in the submission of the appellants that credit taken on strength of endorsed invoice is admissible to them in the light of the judgment of the Honble Bombay High Court in Simplex Mills Co. Ltd. v. CCE, Mumbai-IV - 2007 (81) RLT 331 (Bom) following the earlier judgment of the same High Court in Marmagoa Steel Ltd. v. UOI - 2005 (192) E.L.T. 82 (Bom.). The High Court has held that if there is no dispute regarding the duty paid nature of the inputs and the inputs have undisputedly been received in the factory and the assessee has taken credit, that is sufficient for the purpose of availment of credit and the deficiency in the duty paying document is not to be held against the assessee for the purpose of denying the substantive benefit of Modvat credit. Following the ratio of the above judgments, I set aside the denial of credit of Rs. 76,913/- to the appellants. However, the penalty is not required to be set aside in toto for the reason that the other contraventions of law, viz. availment of credit twice on the same goods and no discharge of duty liability on certain finished goods, have already been upheld, and accepted by the appellants. The penalty imposed on these two counts is Rs. 45,816/-. I accordingly reduce the penalty to Rs. 45,816/-.
5. From the above judgements, I find that the appellants case is on better footing on comparison with cited judgements and facts of the present case, therefore the ratio of the judgements are squarely applicable. As regard the case laws of Shubham Thionyl (supra) and P.C.C. Pole Factory (supra) relied upon by the learned A.R., on carefully reading, I find that in case of Shubham Thionyl (supra) the endorsed invoice was issued by the intermediary purchaser. Whereas in the present case the invoice was endorsed by the sister concern of the appellant and the premises of which the goods were consigned is under the possession of the appellant, therefore the facts of the Shubham Thionyl (supra) case is different from the facts in the present case, hence the same is distinguished. As regard P.C.C. Pole Factory case (supra) the judgement was passed relying on the judgement of Balmer Lawrie & Co. Ltd. Vs. Commissioner of Central Excise, Kanpur 2000 (116) ELT 364 (Tri.-Delhi) passed by the Larger Bench of this Tribunal. It is found that the Larger Bench judgement of Balmer Lawrie & Co. Ltd. (supra) case has been overruled by the Hon'ble High Court of Gujarat in the case of Vimal Enterprise Vs. Union of India 2006 (195) ELT 267 (Guj.), wherein it was held:-
19. The Larger Bench decision of the Tribunal in case? of Balmer Lawrie & Co. Ltd. v. Commissioner of Central Excise (supra) on which reliance was placed by revenue merely lays down that registration has been made mandatory only with a view to eliminate bogus, fictitious, fraudulent, benami traders/dealers from the commercial market and to bring more transparency in the trade and to avoid misuse. Even while accepting the aforestated objective, as already stated hereinbefore, if the identity of supplier and the genuineness of the transaction is established there is no reason why the assessee should be denied what is legitimately due to it. The inference drawn by the Tribunal that the invoice issued by a dealer who had failed to get himself registered upto 31-12-1994 cannot be legally treated as a valid document is not supported by a plain reading of the Circular accompanied by various Notifications. In fact the Larger Bench of the Tribunal has failed to assign any reason for drawing any such inference except for stating the object with which the amendment has been brought about. The said decision therefore cannot assist the case of the revenue. In view of above discussion and settled legal position, I am of the considered view that the appellant is entitled to CENVAT credit.
6. The appeal is allowed, with consequential relief, if any, in accordance with law.
(Pronounced in Court on ..............2015) Ramesh Nair Member (Judicial) Sp/ 10