Customs, Excise and Gold Tribunal - Delhi
Heinz India Pvt. Ltd. vs Commissioner Of Central Excise on 29 February, 2000
Equivalent citations: 2000(69)ECC508, 2000(118)ELT509(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. In the impugned order ld. Commissioner (Appeals) held "In view of the above discussions, I uphold the order of the Addl. Commissioner as legal and proper. However the adjudicating authority is directed to examine if the appellant has actually reversed the amount of Rs.15,653/-, the same may be deducted from the confirmed demand, and rest amount is payable by the appellant".
2. The Addl. Commissioner in the Order-in-Original had held "M/s. Glaxo India Ltd. were taken as a going concern by M/s. Heinz India (P) Ltd., and the change required to be indicated in records in the necessary Central Excise statutory books of accounts and documents. But the party intimated about the change vide their letter, dt. 24-9-1994, whereas the relevant invoices regarding the duty paid capital goods were out during the month of June, August & Sept, 1994. It appears that the change was not immediately brought to the notice of the department but since the unit was taken as a going concern by M/s. Heinz India (P) Ltd., the normal manufacturing activity went on regularly, duty was also paid, commercial activity did not stop and the factory establishment also continued to function this aspect has been taken into account, in all such take-overs there is a continuity the change is made as existing law and relevant rules and regulation but for the necessary permission. Even at the time of hearing no such permission was produced. Accordingly the credit of Rs. 19,768.91 cannot be permissible despite their request, dt. 24-9-1994. The assessee also took credit of Rs. 15,653.00 on HOPE woven laminated bags but this credit was not admissible to them in terms of Notification No. 35/90 (N.T.), dt. 17-9-1990. Accordingly, the same is disallowed. The excess credit of Rs. 74,160/- has already been reversed by them for the entry No. 236, dt. 18-10-1994 and 271, 272, 273, dt. 31-12-1994. Therefore, the entry is liable to pay back an amount of Rs. 5,43,988.37 as the Modvat credit irregularly availed by them. Accordingly, I pass the following order. Keeping in view the aforesaid facts and circumstances, I hereby confirm an amount of Rs. 5,43,988.37 which the assessee M/s. Heinz India Pvt. Ltd., Aligarh shall pay under the provision of Section 11A of Section 11A of Central Excises & Salt Act, 1944 read with Rule 57-I and 57G of Central Excise Rules, 1944 within 10 days of receipt of this order. I also impose a penalty of Rs. 10,000/- under Rule 173Q ibid on M/s. Heinz India (P) Ltd. for the aforesaid infringement".
3. The facts of the case in brief are that the appellants took Modvat credit on LDO which was used to run the boiler and therefore, it was alleged could not be termed as an input utilised in the manufacture or in relation to the manufacture of the finished product. In this case M/s. Heinz India had taken over M/s. Glaxo India. The authorities below disallowed Modvat credit on the ground that prior permission was not taken from the Asstt. Commissioner for taking Modvat credit in respect of invoices in the name of predecessor company namely Glaxo India Ltd. from whom the factory was taken over by M/s. Heinz India Pvt. Ltd.
4. Arguing the case for the appellants Shri K. Kumar, ld. Counsel submits that in so far as the admissibility of Modvat credit on change in management is concerned, their case is fully covered by the decision of this Tribunal in the case of Usha Iron & Ferro Metals Corpn. Ltd. v C.C.E., Vishakhapatnam reported in 1997 (90) E.L.T. 512. He submits that in so far as admissibility of Modvat credit on LDO is concerned, their case is covered by the decision of the Larger Bench of this Tribunal in the case of Ballarpur Industries reported in 2000 (116) E.L.T. 312 wherein furnace oil used in generators for producing electricity which is further used in the manufacture of the final product has been considered as admissible for Modvat. He submits that in so far as taking Modvat credit on the original copy of the gate pass is concerned, the period in the instant case is 1994 whereas marking 'original' and 'duplicate' etc. came into existence only with the issue of the Notification 2/95. He submits that Trade Notice issued by Bombay-III Collectorate and also by Vadodara Collectorate on 2-9-1994 giving certain clarifications against S. No. 12 observed in the form of issue and clarification. Issue was formulated as whether it is essential that the invoice should be prepared in number of copies and one should mark the copy as 'original', 'duplicate', 'triplicate' etc. Further, whether any particular copy only should be sent to the customer which will be held valid for Modvat purposes. The clarification on this issue is given as dealers issuing the invoices should mark invoice copy as 'original', 'duplicate', 'triplicate' etc. Further, the original copy of the invoice will only be valid for availing the Modvat credit. Ld. Counsel submits that in view of this clarification nothing remains and that Modvat credit was correctly taken on the strength of the original copy of the invoice during the year 1994. He, therefore, submits that on all the allegations, the appellant had rebutted the contention of the Revenue. He, therefore, prays that the appeal may be allowed.
5. Shri M.M. Dubey, ld. DR submits that in so far as the admissibility of Light Diesel Oil to Modvat credit is concerned, he has nothing much to add in view of the decision of the Larger Bench of this Tribunal reported in 2000 (116) E.L.T. 312.
In regard to the duty paying document, he submitted that credit could be taken on the basis of the transporter's copy only as was prescribed under Notification No. 23/94 (N.T.), dt. 20-5-1994. He submitted that in the Collector's conference the matter was discussed and minutes were drawn which clarified that Modvat credit was not admissible on LDO. He submits that since the decision was taken by the Collectors in conference, therefore, it should prevail over the clarifications given.
In regard to the successor taking the credit of the predecessor, he submits that since there was a change in management, the credit was not automatically passed to the successor. The successor should have applied for such a change which in the instant case was not done. Ld. DR, therefore, submitted that the appeal has no merits and therefore, prayed that the same may be rejected.
6. We have heard the rival submissions. The first issue for determination is whether LDO is admissible for Modvat credit. We find that the Larger Bench of this Tribunal in the case of Ballarpur Inds. cited above held that furnace oil if used for generation of electricity which is further used for producing the goods will be admissible to Modvat credit. In the instant case LDO is used for producing steam which is further used for keeping the rollers hot for manufacture of complan. The facts in the two cases are similar and therefore, the ratio of the decision of the Larger Bench of this Tribunal shall be applicable to LDO also and we hold accordingly.
In so far as taking of credit on original copy of the invoice is concerned, we find that the position was very clear inasmuch as Trade Notices of two Collectorates clearly indicated that Modvat credit could be taken by the assessee on the strength of original copy of the invoice. In view of the fact that Trade Notices were in existence during the material period clarifying the position, we hold that Modvat credit was rightly taken by the appellant on the strength of original copy of the invoice. This view finds confirmation from the Apex Court in the case of Steel Authority of India v. CC - 2000 (115) E.L.T. 42 (S.C.).
7. In so far as availment of Modvat credit by successor unit when the management had changed is concerned, we note that this Tribunal in the case of Usha Iron & Ferro Metal Corpn. Ltd. cited above has already held that change in management will not effect unutilisation of credit and that credit continues to be admissible when same specified goods are manufactured out of the same inputs inspite of change of management of the company. We find that facts in the present case are similar and therefore, the ratio of that decision is equally applicable to the facts of the present case.
8. In the light of the above discussions, we allow the appeal. Consequential relief, if any, shall be admissible to the appellants in accordance with law.