Customs, Excise and Gold Tribunal - Bangalore
Bhoruka Engg. Indus. Ltd. vs Cce on 11 October, 1995
Equivalent citations: 1996(63)ECR312(TRI.-BANGALORE)
ORDER V.P. Gulati, Member (T)
1. By this application the applicants have sought for dispensation of pre-deposit of duty of Rs. 9,85,275. The learned lower appellate authority in the impugned order has held that the applicants had irregularly availed of the MODVAT credit equivalent to the amount above, as the credit was taken on the strength of the delivery challans of M/s Rastriya Ispat Nigam Ltd., Vishakapatnam, which has been held not to be the prescribed document for taking MODVAT credit under Rule 57G(2) of the Central Excise Rules.
2. The learned Advocate for the applicants pleaded that there is an instruction from the Board under which the MODVAT credit has been allowed to be taken against the document viz. delivery challans issued from the Depots of the Public Sector Undertakings like Steel Authority of India Ltd. and there was no reason why the document issued by Rastriya Ispat Nigam Ltd. should not have been accepted in this background and referred to the Trade Notice No. 79/91 dated 26.8.1991 issued by the Indore Collectorate, under which it has been clarified that certificates issued by Rastria Ispat Nigam Ltd. is a valid document for availing MODVAT credit. He has pleaded that even Bangalore Collectorate has also issued a Trade Notice in this regard. He pleaded that in the light of the practice prevailing in other Collectorates and also the Bangalore Collectorate's Trade Notice issued subsequently the applicants' prayer for waiver of pre-deposit of the amount may be granted and the matter may be remanded to the original authority for re-consideration of the matter in the light of the Trade Notices issued.
3. The learned DR for the Department was asked to produce a copy of the Trade Notice, which has been now produced, and the same is reproduced below for convenience of reference:
OFFICE OF THE COLLECTOR OF CENTRAL EXCISE, CENTRAL REVENUE BUILDING: QUEEN'S ROAD, BANGALORE-560001 CENTRAL EXCISE TRADE NOTICE No. 41/93 DATED 16.8.1993 Sub: C. Ex.--Modvat--Iron and Steel products purchased from stock yards of Vishakapatnam Steel Plant, Vishakapatnam--reg.
The Trade is hereby informed that the case of Iron and Steel items cleared from the stock yards of Rashtriya Ispat Nigam, Vishakapatnam (RIN), Modvat Credit can be availed by the purchasers on the basis of certificate given by the stock yards of RIN on the invoice/delivery challans in the following proforma.
Certified that excise duty has been paid on...(name of the material) covered by this invoice/delivery challan at the rate of Rs. ...per metric tonne under GP No. ...dated...(Name of the integrated steel plant).
2. The certificate must, however, be signed in full by anyone of the following stock yard Officers, authorised in this regard by RIN, with their name and designation.
Name Designation
S/Shri
(1) C.S. Thampi Branch Manager
(2) Y.V. Prasad Junior Manager (MKTG)
3. The contents of this Trade Notice may be brought to the notice of your constituent members.
Sd/-
(H. Narayan Rao) Collector
4. We observe that the instructions of the Board cited by the learned Advocate only indicates that the certificates issued by public sector undertakings/canalising agencies like M.M.T.C./S.T.C, could be accepted as a document evidencing payment of duty for the purpose of Rule 57G(2) for availing the MODVAT credit. The Bangalore Collectorate has clearly set out the form and format in which the certificate was required to be filed. In the present case we find the documents in the proceedings before us are in the nature of delivery challans not the certificate. There is certainly a difference between the certificate and the delivery challan. The certificate is required to be signed by a certain competent authority and in the case of Bangalore Collectorate it has been required to be signed by the Branch Manager or Junior Manager (Marketing). Likewise the Indore Collectorate also talks of issue of certificate. Prima facie, therefore, we find that the documents produced cannot be taken to be the one in the nature of a certificate envisaged in the instructions. We also observe that the learned lower appellate authority has made a legal observation that the Trade Notices issued cannot override the legal requirements and has also stated that Trade Notice issued by the Bangalore Collectorate will have only prospective application. We observe that the applicants have not shown us any Notification issued under Rule 57G(2) under which the delivery challan or even the certificate issued could be taken to be prescribed as a document under which MODVAT credit could be taken. However, since the Board is competent authority to issue the Notification under Rule 57G(2) prescribing the valid document for Modvat purpose and in case the instructions issued by the Board and Trade Notices issued based on that, taking a liberal interpretation under Rule 57G(2) it can be said that the competent authority had issued the necessary instructions. However, the position of facts in the present case as to the nature of the document, as mentioned above, is quite different and the learned lower authority's order denying the benefit of MODVAT credit cannot be taken to be suffering prima facie from any infirmity.
5. The applicants have filed their Balance Sheet. It is seen from the Balance Sheet that they earned a net profit of Rs. 12.12 lakhs for the year ending 31.3.1993 and after making an allowance for depreciation of Rs. 30.16 lakhs on total sales and conversion charges aggregating to Rs. 266.41 lakhs and Rs. 108.29 lakhs respectively. Taking into account the financial position of the applicants, we hold that the interests of justice would be served if the applicants are called upon to pre-deposit Rs. 5,00,000 (Rs. Five lakhs) on or before 30th March, 1995 and report compliance on 31st March, 1995 and subject to which pre-deposit of the balance amount of duty shall stand dispensed with pending appeal. The matter will be called on 31st March, 1995 for reporting compliance.
Sd/-
(V.P. Gulati)
Dt. 18.1.1995 Member (T)
S. Kalyanam, Member(T).
6. I have perused the order recorded by learned Brother V.P. Gulati, Member (T) and since I am not able to persuade myself to agree with the same I am recording a separate order.
7. The issue for consideration in the petitions is for grant of waiver of pre-deposit of a duty of Rs. 9,85,275/-
8. Shri G. Sampath, the learned Counsel for the petitioners submitted that MODVAT Credit availed by the petitioners in respect of inputs i.e. wire rods of non-alloy steel received from Rastriya Ispat Nigam Ltd., a Public Sector Undertaking on the strength of the certificate issued by them is valid under law and therefore duty demanded in respect of the same in terms of Rule 57 is not prima facie sustainable either in law on or facts. It was submitted that the principles laid down by the Government for taking MODVAT Credit under delivery challans issued by Public Sector Undertaking is equally applicable to the inputs received from M/s Ispat Nigam Ltd. Reliance was placed on the Trade Notice No. 71/91 dated 26.8.1991 issued by the Indore Collectorate and also Trade Notice No. 41/93 dated 18.8.1993 issued by the Bangalore Collectorate in support of the plea. It was urged that delivery challan and invoice are one and the same equivalent to gate pass and practice of taking MODVAT Credit on the strength of delivery challan-cum-invoice from Rastriya Ispat Nigam Ltd. is in vogue in other Collectorates and therefore, the petitioners cannot be discriminated against. It was submitted mat as early as 26.8.1991 the Indore Collectorate issued a Trade Notice and practice of availing MODVAT Credit in similar circumstances was allowed and the Madras Collectorate also as per their letter dated 1.7.1992 had allowed availment of MODVAT Credit on the basis of the certificate issued by Rastriya Ispat Nigam, Ltd. and this practice is also further continued in Bangalore Collectorate as evidence by their Trade Notice No. 41/93 dated 6.8.1993. The learned Counsel therefore on prima facie grounds prayed for waiver of pre-deposit of duty and stay of recovery of the amount pending appeal.
9. Shri J.M. Jeyaseelan, the learned D.R. adopted the reasoning in the impugned order and contended that availment of MODVAT Credit is not permitted on the basis of the delivery challans issued by M/s Rastriya Ispat Nigam.
10. I have gone through the records and considered the submissions made before me. The period of dispute involved in this case is July 1992 to January 1993. It would be seen that during March 1992 to June 1992 the petitioners availed MODVAT Credit on the strength of the invoice-cum-delivery challan issued by the Visakhapatnam Steel Plant duly endorsed by the consignee and the documents were defaced by the Supdt. of Central Excise and RT 12 returns were assessed and sent to the petitioners as early as May 1992 and June 1992 without any objection for the credit taken on the basis of the said documents. This plea of the learned Counsel is not controverted. In my view when duty paid nature of the inputs are not disputed, in the absence of any Revenue implication or loss to the Department when all other ingredients have been satisfied under the MODVAT Scheme, the petitioners cannot be denied the benefit of MODVAT Credit even if there is procedural infraction or irregularity and this position in law is well settled by a catena of decisions. In my view the petitioners have substantially complied with all necessary requirements under the MODVAT Scheme and has indeed availed the MODVAT Credit on the strength of the certificate issued by a Public Sector Undertaking viz. M/s Rastriya Ispat Nigam and as per the Trade Notice No. 79/91 of the Indore Collectorate and Trade Notice No. 41/93 dated 16.8.1983 of the Bangalore Collectorate, and the letter dated 1.7.1992 of the Madras Collectorate, the certificate issued by M/s Rastriya Ispat Nigam Limited is a valid document for availing MODVAT Credit prima facie. The letter of the Madras Collectorate dated 1.7.1992 reads as under:
To The Assistant General Manager (Finance) Visakhapatnam Steel Plant Project Office Complex Visakhapatnam-530 031 Sir, Subject: C. Ex. Modvat--Iron & Steel Products purchased from Stockyards of Visakhapatnam Steel Plant, Visakhaptnam--Reg.
Please refer to your letter No. VSP/FIN/ED/MODVAT dated 22.4.1992.
2. The issue regarding allowing MODVAT Credit to the manufacturers in this Collectorate on the inputs if Iron and Steel products based in Invoice/Delivery challans issued by the stockyards of your integrated steel plant has been reconsidered by the Collector.
3. Collector has accorded permission to allow Modvat Credit on the Invoices/Delivery Challans containing the Certificate reproduced below and issued by your stock yards duly signed in full with name and designation of the authorised officer. This is for your information.
CERTIFICATE Certified that excise duty has been paid on...(name of the material) covered by this challan at the rate of Rs. ...per metric tonne under page No. ...dt...at....
Yours faithfully, Sd/-
(N. Viswanathan) Superintendent (Tech.) The Trade Notice No. 79/91 dated 26.8.1991 issued by the Indore Collectorate reads as under:
8. 12-9 Steel products purchased from Rastriya Ispat Nigam--It has been clarified that in the case of iron and steel items cleared from the stockyards of Rastriya Ispat Nigam, Visakhapatnam (RIN) MODVAT credit can be availed by the purchasers on the basis of a certificate given by the stockyards of RIN on the invoice/delivery challans in the following proforma:
Certified that excise duty has been paid...(Name of the material) covered by the invoice/delivery challan at the rate of Rs. ...per metric tonne under GP No. ...dated...at (name of the integrated steel plant).
The Certificate must, however, be signed in full by the stockyard officer authorised in this regard, and must indicate his name and designation.
This Bench of the Tribunal in the case of M/s Matty Wires and Metals by order dated 5.5.1994 dealing with similar issue has held as under:
The issue in the appeal is whether the appellant is entitled to MODVAT Credit on the strength of the certificate issued by Stockyard of M/s Rastriya Ispat Nigam, Ltd, Visakhapatnam Steel Plant. In this connection Shri G. Sampath, the learned Counsel for the appellant submitted that Trade Notice No. 41/93 has been issued by the Central Excise Collectorate, Bangalore permitting MODVAT Credit in respect of such goods. Shri Sampath, further submitted that similar Trade Notice has also been issued by Indore Collectorate vide No. 79/91 dated 26.8.1991. We also find clarification in favour of the assessee has been issued by the Madras Collectorate by their communication dated 1.7.1992. This evidence has not been considered by the lower appellate authority in the impugned order. We, therefore, set aside the impugned order and remand the matter to the original authority for reconsideration of the issue afresh in accordance with law.
11. Therefore in the above circumstances, I am of the view that MODVAT Credit availed by the petitioners cannot be said to be irregular or against law and in this view I grant waiver of pre-deposit of duty and also stay of recovery of the amount pending appeal.
Sd/-
(S. Kalyanam)
Dt. 2.2.1995 Vice-President
POINTS OF DIFFERENCE
Whether in the facts and circumstances of the case for the reasons stated in the order recorded by Vice-President, the petitioners can be granted waiver of pre-deposit of duty and stay of the recovery of the amount pending appeal, OR In the facts and circumstances of the case, for the reasons recorded by Member (Technical) the petitioners should be directed to make a pre-deposit of Rs. 5,00,000/-
Sd/- Sd/- (V.P. Gulati) (S. Kalyanam) Member (T) Dt. 4.2.1995 Vice-President K. Sankararaman, Member (T)
12. This matter has been referred to me as the 3rd member to resolve the difference between the views of learned Vice-President and the learned M(T) as to whether stay should be granted to the applicants M/s Bhoruka Engineering Industries Ltd. while the learned Vice-President has taken the view that the applicants can be granted waiver of pre-deposit of duty and stay of recovery of the same pending appeal, the learned Member (T) has taken the view that they should be directed to make the pre-deposit of Rs. 5,00,000/-.
13. I have heard Shri G. Sampath, the learned Counsel for the petitioners and Shri S. Murugandi, learned DR who appeared for the respondent-Collector. Shri Sampath took me through the facts of the case and explained that the applicants had purchased the inputs in question from various dealers who had themselves received the same from Bangalore depot of Rashtriya Ispat Nigam, Visakhapatnam. The depot had received the supply against gate passes issued by the factory at Visakhapatnam factory. The dealers had sold the entire material covered by respective delivery challans issued by the said Bangalore depot. The applicants had taken MODVAT Credit on the strength of such endorsements. Objection had been taken by the department and that decision had been upheld by the Collector (Appeals) on the ground that delivery challans were not the duty paying documents prescribed by the Central Board of Excise & Customs under Rule 57G(2) of the Central Excise Rules, 1944. The learned Counsel however contended that the said Rashtriya Ispat Nigam is a public sector undertaking and the certificate issued by them would stand covered by the orders issued under Rule 57G(2). He also specifically referred to the decision of the Tribunal reported in 1994 (72) ELT 290 wherein the Tribunal had observed in para 4 thereof that Trade Notice No. F. 267/17/88/CX B dated 19.2.1988 according to which certificate issued by public sector undertaking and canalising agencies like MMTC and STC are treated as duty paying documents. Shri Sampath contended that Bangalore Collectorate had also issued trade notices in 1993 while other Collectorates had issued similar trade notice much earlier and hence the finding reached by the Collector (Appeals) that trade notice issued by Bangalore Collectorate cannot have retrospective effect will have to be set aside since Trade Notice issued by the different Collectorates are based on the instructions issued by the Central Board of Excise & Customs and the instructions laid down by them would have universal application. Just because Bangalore Collectorate had issued their trade notice only in 1993 that cannot have effect of denying the benefit following from the direction of the Central Board of Excise and Customs till the date of issue of trade notice by that Collectorate.
14. Shri S. Murugandi, the learned Departmental Representative opposed the contentions raised by Shri G. Sampath. He pleaded that as MODVAT Credit had been taken and utilised by the applicants against documents which had not been prescribed by the Central Board of Excise & Customs, as duty paying documents, the denial of credit by the lower authorities was in order. He supported the order recorded by learned Member (T) and pleaded that the same be agreed to and the applicants directed to make the pre-deposit as per his order.
15. I have considered the submissions. I have gone through the record and the two orders passed by the learned Vice-President and the learned Member (T). I find that the learned Member (T) has noted the fact that the Collector (Appeals) had made a legal observation that trade notices cannot override legal requirements and had also stated that trade notice issued by Bangalore Collectorate will have only prospective effect. While a trade notice cannot have the effect of over riding a statutory provision, this situation in present case had not arisen. The trade notices in question are by way of extending a liberal beneficial treatment. A trade notice issued by way of clarification cannot be said to have only prospective application. As regards the further observation of the learned Member (T) that the applicants had not shown any notification issued under Rule 57G(2) under which delivery challans or even certificate issued can be taken to be prescribed document under which MODVAT Credit would be taken it would be noticed that government had permitted certificates issued by Public sector undertaking including canalising agencies such as MMTC and STC to be treated as valid duty paying documents. Specific mention of the these two Institutions was only by way of illustration and it was not the intention to limit it to only these two Institutions. As long as Rashtriya Ispat Nigam is a public sector undertaking of the Government of India, the certificate issued by them would be covered by the instructions. In fact the Collectorate itself had fallen in line with instructions issued and spelt out the contents of the certificate to be issued by the competent officers of the depot. I find that the learned Vice-President had extracted relevant portion of a previous order relating to the same issue in his order. In that order the matter was remanded for de novo examination as the different instructions had not been considered in the concerned impugned order. In the present case, though these had been mentioned they were not found to be acceptable. The arguments advanced by Shri G. Sampath supports their case.
16. In view of above, I agree with the view taken by the learned Vice-President that the petitioners can be granted waiver of pre-deposit of duty and stay of recovery of amount pending appeal.
17. The file may now be placed before the original Bench for passing appropriate order.
Pronounced and dictated in open Court.
Sd/-
Dt. 6.10.1995 (K. Sankararaman)
Member (T)
FINAL ORDER
In the light of the majority view, we grant waiver of pre-deposit of duty demanded in terms of the impugned order and also stay recovery of the same pending appeal.