Customs, Excise and Gold Tribunal - Mumbai
Marmagoa Steel Ltd. vs Commissioner Of Customs And Central ... on 11 August, 2004
Equivalent citations: 2004(178)ELT480(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. The appellant is a manufacturer of Steel Billets and rolled products of steel, falling under Chapter Heading 7207.90 and 7228.20 of the Schedule to CETA respectively. In the impugned order the Commissioner confirmed a demand of Rs. 27,82,198/- being the credit taken in contravention of Rule 57G and imposed a penalty of Rs. 7 lakhs under Rule 173Q (1) (bb) of CER, 1944. He also imposed a penalty of Rs. 1 lakh on the appellant under Rule 173Q (1) (a) for contravention of Rule 9, 173F, 173G of Central Excise Rules, 1944. The allegation is that the appellant undervalued steel billets sent for job work and have also failed to include the loading/unloading charges while determining the assessable value in this connection with the clearance of steel billets for conversion on payment of Central Excise duty by under valuing them and for non inclusion of loading and handling charges in the assessable value.
2. Heard both sides.
3. In regard to the demand for Rs. 27,82,198/- the Commissioner's contention is that the appellant has wrongly availed of credit of duty paid on scrap received in the factory under delivery challans and not under an invoice prescribed under Rule 52A. It appears that one M/s. Essar Steel, Surat, imported a consignment of 4426.796 MT of shredded scrap and cleared the same under three bills of entry. Out of this quantity 3314.159 MT of shredded scrap seemed to have been supplied to the appellant on which the importer (M/s. Essar Steel) had not availed of modvat credit. The fact of non availment of modvat credit on this quantity was confirmed by the Range Supdt. having jurisdiction over the importer's premises. The Triplicate copies of Bills of Entry covering the above said quantities were also received by the appellant from M/s. Essar Steel, Gujarat Ltd. Hazira. The point for consideration is whether the appellant is right in taking credit of duly of CVD paid by another importer without the cover of a proper document. As could be seen the bills of entry are in the name of another person and were not even endorsed to the appellant. Under Rule 57G an assessee can avail of credit of the duty paid on the inputs received in his factory only under proper document prescribed under that rule. The appellant has taken credit on the basis of the letter written by a Superintendent and delivery challans, which are not prescribed documents for the purpose of taking credit. The Tribunal has been consistently holding that modvat credit cannot be taken on documents other than the ones prescribed in Rule 57G of the erstwhile Central Excise Rules. The Tribunal in the case of Balmer Lawrie & Co. Ltd v. Commissioner of Central Excise, Kanpur [2000 (116) E.L.T. 364 (Tribunal)] held that taking credit on a document that is not prescribed is not merely a technical lapse. The Tribunal held that non-observance of a procedural condition which of a technical nature can alone be condoned while non-observance of substantive condition cannot be brushed aside to allow a substantive benefit such as modvat credit. Further the Supreme Court dismissed the Civil Appeal filed by Tata Iron and Steel Company Ltd. v. CEGAT Order No. A-1934/CAL/2000 dt. 23.11.2000 wherein the Tribunal held that credit cannot be taken on the strength of endorsed bills of entry. It is not disputed that in the present case the bills of entry are not even endorsed in the name to the appellant. We sec no infirmity in the order of the Commissioner who denied the credit taken on inadmissible documents.
4. The Commissioner also imposed a penalty of Rs. 7 lakhs while denying the credit. In our view the penalty is excessive viewed in the light of the fact that the appellant had taken credit of duty paid inputs even though such duty was paid by someone else. In view of this we reduce the penalty to Rs. 2 lakhs (Rupees Two Lakhs only).
5. The other issue in the appeal is regarding under valuation of excisable goods manufactured by the appellant. The allegation revolves round the fact that the appellant has dispatched his product to job workers by computing the value which is lower than wholesale price at which the same goods arc sold at the factory gate. It is further alleged that he has not included the loading and unloading charges while computing the assessable value of the product. The appellant seemed to have agreed that the value has not been correctly computed and debited the differential duty. The Commissioner in the impugned order had still imposed a penalty of Rs. 1 lakh for violation of the Central Excise Rules cites supra. We observe that since the appellants have already debited duty even before the issue of show cause notice a penalty under the various rules is not call for. We therefore set aside the penalty of Rs. 1 lakh imposed on this count
6. The appeal is thus partly allowed. The demand for modvat credit wrongly taken is upheld. Penalty of Rs. 7 lakhs is reduced to Rs. 2 lakhs. Penalty of Rs. I lakh imposed on the ground that the appellants undervalued the goods is set aside.
(Pronounced in Court)