Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Customs And Central ... vs National Steel Industries on 14 December, 1999
Equivalent citations: 2000(68)ECC618, 2000ECR445(TRI.-DELHI)
ORDER G.R. Sharma, Member (T)
1. By the impugned order Ld Commissioner dropped the proceedings under the impugned SCN for disallowing of Modvat credit. Revenue has filed the captioned appeal against the findings of the Ld. Commissioner.
2. The facts of the case in brief are that the respondents are engaged in the manufacture of Galvanised Coils/Sheets falling under Chapter 72 of the Central Excise Tariff Act 85. They are also availing themselves of Modvat credit in terms of Rule 57A of the Central Excise Rules, 44. During the scrutiny of R.T. 12 returns, it was noticed that the respondents had availed Modvat credit amounting to Rs. 16,95,418. The documents were not found appropriate inasmuch as for the credit for Rs. 3,45,451, the gate passes on the strength of which this credit was taken, did not bear any endorsement for transfer in favour of the respondents.
3. In respect of Modvat credit amounting to Rs. 8,40,627 it was noticed that the respondents had taken Modvat credit on the strength of Annexure issued under Rule 57F(2). If was alleged that these documents do not bear any endorsement in favour of the respondent.
4. In regard to Modvat credit of Rs. 3,20,027 it was found that this credit was taken on the strength of Bill of Entry of M/s. Industrial Metals which was not found endorsed in favour of the respondent.
5. The respondent had also taken Modvat credit of Rs. 1,87,313 on the strength of invoice of dealers of Bombay and Delhi and the respondent could not produce any proof evidencing transportation and receipt of the goods at the unit. Therefore, a SCN was issued proceeding under which were dropped by the Ld. Commissioner.
6. Shri Mewa Singh, Ld. SDR arguing the case submits that in terms of Rule 57G(2), credit can be taken on the inputs received in the factory under the cover of Gate Pass/Invoice issued under Rule 52A or a Bill of Entry or such other document as may be prescribed by the Board; that during the material time the Gate Pass could be endorsed by the buyer of goods if the entire quantity covered by the Gate pass was sold to another manufacturer; that the name and address the consignee in the Gate Pass is an essential requirement of law; that the ratio of the Tribunal's judgment in the case reported in 1986 (26) ELT 57 cited and relied upon by the assessee is not applicable to this case as there was no indication in the Gate Pass/Bill of Entry that the goods were meant for the respondent; that in the instant case neither the receipt of goods in question was verified by the proper officer nor the mistake in the G.P.I./Bill of Entry was rectified before taking the credit. Ld. DR submitted that the Ld. Commissioner has failed to appreciate that duties paid on imports by third party, Modvat credit cannot betaken by the buyer/manufacturer even if Bill of Entry is available, subsidiary Gate Passes could be got issued from the concerned Range Supdt. for the goods sold after verification of the goods being same as covered by the Bill of Entry. Ld. DR submitted that the Ld. Commissioner did not follow Sub-rule 2 of Rule 57 G as also the conditions in Board's letter 345/5/91 dt. 7.7.92. He therefore, prayed that the impugned order may be set aside and the appeal may be allowed.
7. Shri V. Lakshmi Kumaran, Ld. Counsel appearing for the respondent submits that the first allegation in respect of availment of Modvat of Rs. 3,47,451 was that Gate Passes are not endorsed by M/s. Puma Ispat in favour of National Steel Industries Ltd. Ld. Counsel submitted that invoices of M/s. Puma Ispat indicate that goods after receipt at Indore by M/s. Puna Ispat were diverted to M/s. National Steel in same truck; that this is evident from letter dt. 27.1.97 of M/s. Puma Ispat confirming sale of goods in question to M/s. National Steel. He submitted that non-endorsement of Gate Pass is a remedial defect as held by this Tribunal in the case of Amal Rasayan . Ld. Counsel also submitted that the Tribunal further held that non-endorsement of gate pass is only a technical defect which should be got rectified. He referred to the judgment of the Tribunal in the case of Eicher Tractor Ltd. . He also submitted that in another decision, this Tribunal in the case of Maniar & Co. held that if endorsement is subsequently obtained, credit is not disallow able.
Ld. Counsel sumitted that the second allegation of the Department was that Modvat credit of Rs. 8,40,627 was taken on gate passes of M/s. Mohta Electro Steel Ltd., Biwadi issued in favour of M/s. Mohta Electro Steel, Bombay and that these gate passes are not endorsed in favour of M/s. National Steel. Further that entries in R.G.23A Part I was made on the basis of 57F(2) Challans only. It was also alleged that 57F(2) Challans showed goods sent for job work as "HR Coil" while goods were in duty paying documents were "CR Coils". Ld. Counsel submitted that Modvat credit in R.G. 23A Part II was taken on the basis of gate passes only; that goods moved directly from Mohta Electro, Bombay to Nippon Denro & gate passes were received alongwith the job work challans; that an affidavit was filed stating that description in 57F(2) Challan was mistakenly mentioned as HR Coil instead of CR Coil. On the allegation that G.P1 No. 477 dt 25.2.97 was endorsed for part consignment and that for part consignment subsidiary gate pass was necessary and that no gate pass was endorsed on which a certificate issued for part quantity has been endorsed. For this the Department referred to Board Circular No. 14/89/CX-8 dt. 17.4.89. Ld. Counsel submitted that Supd. Central Excise, Nagpur under whose jurisdiction the job worker was located in his verification report confirmed that goods received under challans were CR Coil. Ld. Counsel submitted that endorsement for part of consignment falling under category of remnant is permissible. In support of his contention he cited and replied upon the decision of this Tribunal in the case of CCE v. Kevin Enterprises .
8. We have heard the rival submissions. We have also perused the case law. The first allegation is about the endorsement of gate passes in favour of the appellants. We note that this issue came up before the Tribunal in the case of Amal Rasayan and in the case of Usha Associates. In these cases Modvat credit was availed on un endorsed gate passes and this Tribunal held that non-endorsement of gate pass is a remedial defect, Modvat credit is not deniable due to mere non-endorsement thereof and that it can be availed of later a gate pass is got endorsed. Thus, we find that in the case of Eicher Tractor Ltd. this Tribunal held that the Tribunal accept the plea of the appellant that the gate pass which was intended for the unit as Faridabad and mat the same would have been re-endorsed for the appellant. Similarly, we find that in the case of Maniar & Co. this Tribunal held that if endorsement is subsequently obtained, credit is no disallowable. In the instant case we note that sale of goods was not in dispute receipt of the goods in the factory of the respondents herein was not in dispute, duty paid character of the goods was not in dispute and the finding of the Tribunal that non-endorsement of gate pass is a remedial defect. We hold that Modvat credit will be admissible to the respondents.
9. In the case of disallowance of Modvat credit of Rs. 9,30,647 we note that the objection was that these gate passes are not endorsed in favour of M/s. National Steel and that entries in R.G. 23 Part -I was made on the basis of 57F (2) Challans only. It was submitted before us that credit of duty in R.G. 23A Part-II was taken on the basis of gate passes only. It was explained by the Counsel for the respondents that the goods directly moved from M/s. Mohta Electro, Bombay to Nippon Denro and that the gate passes were received along with the job work Challans. The second allegation on this score was that the challans issued under 57F(2) showed that the goods sent to job worker were HR Coils while goods as per duty paying documents were CR Coils. We note that in this case the goods were coming directly to job worker. The challans issued under 57F(2) erroneously showed that as HR Coils but they were actually CR Coils. Ld. Counsel submitted that this was a clerical error and an affidavit was filed by the respondents stating the description of the goods was CR Coils. Other allegation in respect of disallowance of Modvat credit was that G.P1 was endorsed for part consignment and that endorsements were for part consignment, part consignments were not permitted in G. Pls. It was submitted before us that Supd. of Central Excise, Nagpur confirmed that goods received under challans were CR Coils. We note that the Tribunal the case of CCE, Baroda v. Kevin Enterprises and relied upon by the respondent held that if the Collector was satisfied that transfer of consignment falling under the category of remnant then Modvat credit will be admissible on such endorsed invoices and gate passes. In the instant case we note that the Supdt. of the concerned range in whose jurisdiction job worker was located confirmed that the goods were received in the factory. Hence we hold that Modvat credit will be admissible to the respondents.
10. Insofar as disallowance of Modvat credit of Rs. 3,20,027 is concerned, the allegation of the Department was that Bill of Entry was not endorsed in favour of National Steel. The appellants submitted invoice of M/s. Industrial Metals. The importer's invoice for sale of goods and certificate from M/s. Industrial Metals confirmed that the goods of Bill of Entry was sold against above invoices. It was argued before us that the lapse is not obtaining the endorsement is procedural and condonable. We note that in the case of New India Cabe Corpn. This Tribunal observed that in the Bill of Entry endorsement on reverse was made by the importer but customs endorsement was wanting; that is was a procedural lapse and held that the Bill of Entry may be accepted as duty paying document for Modvat credit and lapse noticed by Department was only of a procedural nature and condonable.
11. Looking to these facts of the case we hold that Modvat credit would be taken on the strength of this type of documents in the circumstances of the case.
12. In view of the above findings, we do not find any infirmity in the impugned order. Therefore, the impugned order is upheld and the appeal is rejected.