Custom, Excise & Service Tax Tribunal
Sgs India Pvt. Ltd vs Cce Thane I on 10 March, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/209/10 Mum
Arising out of Order-in-Original No. 28/BR-24/Th-I/2009 dated 29.09.2009 passed by the Commissioner of Central Excise, Thane I.
For approval and signature:
Shri. Ashok Jindal, Member (Judicial)
Shri. P.R. Chandrasekharan, Member (Technical)
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 :
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?
SGS India Pvt. Ltd.
:
Appellant
Versus
CCE Thane I
Respondent
Appearance Shri T. Vishwanathan, Advocate for appellant Shri W.L. Hangshing, Jt. CDR For Respondent CORAM:
Shri. Ashok Jindal, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 10.03.2011 Date of Decision : 10.03.2011 ORDER NO.
Per : Ashok Jindal The appellants are in appeal against the impugned order wherein the demand of duty and penalty has been confirmed on the ground that the appellants had availed credit of additional duty in the month of June, 2008, of the material procured in the year 2006-07 and 2007-08 on the basis of Bills of Entry which were issued prior to one year under which the inputs were received prior to one year in their own factory and further on the ground that the appellants have availed CENVAT credit on the basis of various Bills of Entry wherein the name of the importer given as M/s. SGS India Pvt. Ltd., Usha House, 210, Okhla Industrial Estate, Phase III, New Delhi indicating that the inputs covered by the said Bills of Entry were received at the assessees other unit. Aggrieved from the said order, the appellants are before us.
2. The learned Advocate for the appellants submits that the demands confirmed in the impugned order is not sustainable in the eyes of law as for confirmation of demand on account of Bills of Entry are not endorsed in the name of the appellants by relying on the case law in the case of Marmagoa Steel Ltd. vs. CCE 2004 (178) ELT 480 (Tri-Mum). The said decision has been reversed by the Honble Bombay High Court as reported in 2005 (192) ELT 82 (Bom) which has been confirmed by the Honble apex court in the case of Union of India vs Marmagoa Steel Ltd. 2008 (229) ELT 481 (SC).
3.1 On the other issue the learned Advocate submitted that in a series of decisions, this Tribunal has held that if the appellant does not take credit immediately, the credit cannot be denied for that reason alone. To support his contention, he placed reliance on Boards Circular dated 29.08.2000 and Philips India Ltd. vs. CCE 2007 (213) ELT 584 (T) and prays that the impugned order be set aside.
4. On the other hand the learned Jt. CDR Shri W.L. Hongshing for the Revenue submitted that as per the Boards Circular dated 29.02.1996 the assessee is not entitled to take the credit on the strength of the Bills of Entry unless and until its entries are in the name of the person who is taking the credit. He further submitted that the intent of the legislature is that the assessee should take credit immediately on procurement of inputs and, if he failed to take the credit as early as possible then it should not be open to the assessee to take the credit after five or ten years. It is admitted that the appellants have not taken the credit immediately hence, the adjudicating authority has rightly denied the credit. At this juncture, Shri A.K. Prasad, Jt. CDR also contended that the matter should be referred to the Larger Bench as the decision relied upon by the learned Advocate is distinguishable and same cannot be relied upon, and this Tribunal has ample power to refer the judgement by differentiate from the decision in the case of Philips India Ltd. (supra).
5. Heard and considered.
6. On careful examination of the submissions made by both the sides, we find that the impugned order has relied on the decision of this Tribunal in the case of Marmagoa Steel Ltd. (supra) which has been reversed by the Honble Bombay High Court and the same has been confirmed by the apex court. Moreover, we have seen at Annexure B of the show-cause notice wherein the Bills of Entry are in the name of the appellants themselves. The only change is that the inputs have been procured at their factory instead of their Head office. Moreover, we have also observed that in the show-cause notice the same Bills of Entry are mentioned in Annexure A for denying credit as the same has not been availed immediately. Therefore the credit was denied on the grounds mentioned above with regards to same Bills of Entry in both the Annexures to the show-cause notice. In the light of the decision the honble apex court in the case of Marmagoa Steel Ltd. wherein the honble apex court has held as under:-
10. On reading Rule 52A the position which emerges broadly is that the said Rule refers to eligibility for claiming MODVAT Credit, whereas Rule 57G refers to procedure to be observed by the manufacturer for taking credit for the duty paid on the inputs received by him. A bare reading of Rule 52A shows that no excisable goods shall be delivered from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorised agent. Rule 52A, therefore, applies to a situation where goods are cleared from a factory or a warehouse to the place of assessee. For such a situation the proviso in Rule 57G stipulates that no credit shall be taken unless the inputs are received in the factory under the cover of an invoice issued under Rule 52A. However, that situation does not arise in this case for the simple reasons that the importer M/s. Essar Gujarat Ltd. had loaned the goods to the assessee (which transaction is not doubted in the show-cause notice). Further the goods were transferred directly by the importer to the Unit of the assessee from the Port. Therefore, the goods never went to the manufacturing unit of M/s Essar Gujarat Ltd. For such a situation the proviso to sub-rule (2) of Rule 57G states that the relevant document indicating payment of duty would be Bill of Entry.
11. Now in the present case, as far as Bills of Entry dated 30th May, 1994 and 31st May, 1994 are concerned, Bills of Entry were produced by the assessee which indicate that M/s Essar Gujarat Ltd. had paid duty at the time of import and, therefore, the assessee was entitled to take MODVAT credit for the duty paid on the imported goods. However, when we come to the 3rd Bill of Entry dated 6th June, 1994, only the above Certificate at Page No. 42 of the Paper Book was relied upon and the triplicate copy of the Bill of Entry was not produced. In the circumstances, in our view, the respondent had wrongly availed of MODVAT Credit of Rs.1,78,582/- on the quantity of 212.659 MT scrap referred to in the above chart. We find that the input covered in the Bills of Entry have been received in the factory of appellant. Therefore, in view of the observations of the Honble apex court here-in-above, we hold that the order of denial of credit on the ground of the Bills of Entry are not in the name of the appellants, is not sustainable.
6.1 Coming to the second issue, we are not in agreement with the contention of Shri A.K. Prasad Jt. CDR to refer this matter to the Larger Bench as we have examined the Board Circular dated 29.8.2000 and find that the para 10 of the Circular deals with the situation which is reproduced herein as under:-
10. Rule 57AC provides that CENVAT credit may be taken immediately on receipt of inputs in the factory. Some apprehensions have been expressed that if the CENVAT credit is not taken immediately, like within 24 hours or so, the field officers may deny the CENVAT credit. The idea is that if the manufacturer desires he can take the CENVAT credit at the earliest opportunity when the inputs are received in the factory. This, however, does not mean, nor is it even intended that if the manufacturer does not take credit as soon as the inputs are received in the factory, he would be denied the benefit of CENVAT credit. Such an interpretation is not tenable. From the reading of the said Circular, it is clear that the intent of the legislature is that the manufacturer should not be denied the credit of the inputs procured by them within the provisions of law. Further, we find that in the case of Philips India Ltd. (supra) this Tribunal has dealt with the issue and thereafter arrived at decision which is reproduced herein as under:-
3. We find force in the contention of the appellants that at the time of availment of credit i.e. in March and April 2001, the CENVAT Credit Rules, 2001 were inforce and these did not contain any time limit for taking credit. The only condition is that credit can be availed immediately on receipt of input into factory inputs were brought in the factory between December 2000 and April 2001 and credit taken in March and April 2001 i.e. soon after the receipt of the full consignment of inputs in the factory. In this view of the matter, we hold that credit is admissible to the appellants and hence set aside the impugned order and allow the appeal without recording any finding on the other pleas raised before us such as the restriction in Rule 57G(5) being inapplicable to credit taken on the strength of Bill of Entry which is not a document issued, and that the relevant date for computing the six months period is 10-1-01 which is the date on which SAD was paid etc. 6.2 Therefore, we are of the view that if the appellant has not taken the credit immediately on receipt of the goods, the appellant cannot be deprived from taking the credit later-on. In fact in our view, if the appellant has not taken the credit immediately, it is affecting the appellant not the Revenue because the appellant may fail to take credit in future or atleast they are not having credit balance in the CENVAT credit account. We are in agreement of the Board Circular as well as the decision in the case of Philips India Ltd. (supra). Therefore, we do not find any force in the contention of Shri A.K. prasad, Jt. CDR to refer this matter to the Larger Bench. Therefore, the request is denied. As we discussed above, we hold that the appellants are entitled for CENVAT credit and they cannot be denied the CENVAT credit merely on the ground that they have not taken the credit immediately. Therefore, on this ground also the impugned order is not sustainable.
7. With these observations, we set aside the impugned order and allowed the appeal of the appellants with consequential relief, if any.
(Pronounced in open Court) (P.R. Chandrasekharan) Member (Technical) (Ashok Jindal) Member (Judicial) nsk 7