Customs, Excise and Gold Tribunal - Tamil Nadu
Tulsyan Nec Ltd. vs Cce on 22 March, 1999
Equivalent citations: 1999(84)ECR394(TRI.-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. This is an appeal against Order-in-Appeal No. 160/97(M) dated 29.8.1997 passed by Commissioner (Appeals), wherein, he has upheld the Order-in-Original No. 40/97 dated 8.4.1997 passed by Assistant Commissioner of Central Excise. In the said Order-in-original, Mod vat credit of Rs. 20,29,260/- was ordered to be recovered, having been wrongly taken and a penalty of Rs. 20,000/- was imposed under Section 173Q on the appellants. This was done on the grounds:
a) that the Modvat credit has been taken much after 6 months from the date of payment of duty on Bill of Entry No. 47084 dated 21.9.1995 and that since the Bill of Entry was not in appellant's name but was endorsed by the importer of the goods in favour of the appellant, therefore, it was not a valid document on which Modvat credit could be taken.
2. Heard Shri S.S. Radhakrishnan, for the appellants. He submitted as follows:
i) As alleged, the reversal of Modvat credit under Rule 57(i) is only on the ground that the credit was taken after expiry of 6 months from the date of payment of duty on the Bill of Entry. In the Order-in-original the learned Assistant Commissioner has not at all given a finding on this allegation and instead he has confirmed the demand and imposed the penalty on a new ground which was not alleged in the show cause notice i.e. the endorsed Bill of Entry was not proper document to take Modvat credit. On this count alone the Order-in-original goes beyond the jurisdiction and scope of the show cause notice.
ii) When this fact was submitted before the learned Commissioner (Appeals), during the first appellate proceedings, the Order-in-Appeal impugned has considered for the first time the question of 6 months limitation but has ruled adversely against the appellants.
iii) Learned Advocate submits that as far as the time limit of 6 months is concerned, firstly the same is not with reference to date of payment of duty but with reference to date of issue of documents as per Rule 57(G)(5). In this connection, he submits that the facts are that the goods were imported originally by some other importer. In view of certain disputes the parties went in writ to the Hon'ble High Court of Madras. The Hon'ble High Court vide their interim order dated 14.9.1995 ordered that the goods should be discharged and stored in any port trust area or in any other area controlled by customs, pending finalisation of the issue. The stay was ordered by the Hon'ble Court on removal i.e. clearance of the goods i.e. from this area without specific orders. Thereafter, by order dated 26.4.1996 (received by the importers on 14.5.1996) the Hon'ble High Court permitted that the goods can be sold by the original importer to the present appellants as a local sale. Thereafter, in view of this decision of the Hon'ble High Court the original importer endorsed the duplicate Bill of Entry that the goods have been sold to the present appellants vide their endorsement dated 19.7.1996. Thereafter, the goods were removed to the appellant's factory premises and the entire consignment finally reached them by 26.9.1996 and the last part of the consignment was dealt with for taking credit in the RG 23 Part II on 27.9.1996.
iv) Since the period from the date of payment of duty on the Bill of Entry viz., 16.10.1995 to the Hon'ble High Court's permission to sell the goods dated 26.4.1996 was covered by a judicial stay of the Hon'ble High Court of Madras, therefore, in view of the well settled law in this regard, the said period needs to be excluded from the time limit of 6 months. In fact since the Hon'ble High Court's order was received by the importer on 14.5.1996, applying mis well settled law, the period of 6 months to run from 16.5.1996. Learned Advocate submits that since the last credit covering the entire quantity involved was taken on 27.9.1996, the same was taken well within 6 months of the relevant date as discussed above. Therefore, the charge in the show cause notice does not survive.
v) With respect to the issue of eligibility of endorsed triplicate copy of Bill of Entry as a valid document under the Modvat scheme, learned Advocate submits that the issue is now a well settled one and cites the following decisions:
i) Kay Polyplast Ltd. v. CCE
ii) Siliguri Silicate v. CCE 1997 (21) RLT 440 (CEGAT)
iii) Superpax India Pvt. Ltd. v. CCE
iv) CCE v. Bharat Wire Products
v) Maharaja International Ltd. v. CCE
vi) CCE v. Amartara Ltd. 1996 (64) ECR 57 (Tri.)
3. Learned Advocate submits that the gist of all these case laws is that an endorsed Bill of Entry still remains a Bill of Entry and, therefore, remains a valid document for taking credit under Rule 57G. He submits that it is now clearly established that such a Bill of Entry need not pertain to high sea sales but to sale even after import of the goods. Therefore, learned Advocate submits that on this count too the denial of Modvat credit is erroneous under law and needs to be set aside.
4 Heard Shri R. Victor Thyagaraj, learned SDR, who submits that the issue has been regulated by the circular of the Central Board of Excise and Customs in their Circular No. 96/7/95-CX dated 13.2.1995, wherein, it has been prescribed that:
a) only the triplicate copy of the Bill of Entry will be used for availing Modvat.
b) Where the entire consignment is sold out from the Docks/bonded warehouse, the Preventive Officer of Customs giving out of charge of the order shall attest the duplicate and triplicate copy of the Bill of Entry giving therein the details of the new consignee and that the goods shall travel in the cover of the triplicate copy of the Bill of Entry and thereon the Modvat credit can then be taken.
5. Learned SDR submits that because there is no such endorsement by the Preventive Officer of Customs on the triplicate copy of the Bill of Entry on which this credit has been taken, therefore, the credit has been taken in violation of the Board's circular. He submits that the law is now well laid down that the Board's circular has a binding effect as in the case of Ranadey Micronutrients v. CCE . Learned SDR also submits that the 6 months time limit is statutorily provided for from the date of issue of the document and in this respect he cites the case of Miles India v. CCE reported in 1987 (30) ELT 641 (S.C.) : 1985 ECR 289 (SC) : ECR C 750 SC : ECR C Cus 1094 SC.
6. We have carefully considered the rival submissions as well as the records of the case. We find that though the learned Advocate's submission regarding the Order-in-Original having traversed beyond the scope of the show cause notice appears to be factually correct, after perusal of the show cause notice, however, we find that at this stage no purpose will be served in remanding the matter to the original authority on this count alone. Therefore, instead we proceed to consider both the issues involved as below:
a) The question of 6 months limitation for taking the credit and
b) The question of whether an endorsed Bill of Entry is a valid document for availing Modvat credit.
7. With respect to the limitation issue, we find that the general principle in law which is well laid down is that wherever there is a stay granted by a competent judicial authority, any limitation provided in any statute shall exclude that period of stay from the limitation prescribed in the statute. This principle has been clearly laid down by the Hon'ble Supreme Court in the case of Gandhi Grah Nirntan Sahkari Satniti Ltd. . We find that when the Hon'ble High Court of Madras had stayed the removal of the goods from customs custody until their further orders, it would be illogical as well as unjust to compute into the 6 months time limit this period of stay by the Hon'ble High Court. Therefore, we have to exclude the said period of stay from the 6 months time limit. We find in this connection that the relevant date appears to be 15.5.1996, as the importers of the goods have claimed to have received the Hon'ble High Court's order permitting the sale on 14.5.1996. There is nothing on record to dispute or question this date. We also find that though the show cause notice has mentioned the period of credit from 25.7.1996 to 30.11.1996, however, the Order-in-Original has clearly mentioned in page 2 of the order that the entire consignment was received on or before 27.9.1996 as could be seen from the entries made on the reverse of the Bill of Entry. Since the time period between the relevant date noted above and the date on which the last Modvat credit instalment was entered in the appellants RC 23A Part II is much less than 6 months, therefore, we find that the entire credit was taken luithin time and this allegation in the show cause notice does not survive on facts.
8. With respect to the issue of endorsed Bill of Entry, being a valid document for Modvat credit or not, we find that while learned SDR cites the circular of the Central Board of Excise and Customs noted above as well as a case law of 1987, however, much water has flowed since then. It is now an established legal position that an endorsed Bill of Entry even for non-high sea sales, would be a valid document for taking Modvat credit. We come to this conclusion in view of the decision contained in the case of Kay Polyplast Ltd. supra, wherein, it has been held that a Bill of Entry endorsed in favour of a third party, wherein the importer has also declared that no Modvat credit has been availed by him, would be a valid evidence for duty payment and that such an endorsement would, therefore, qualify the document for Modvat credit. However, it was for the authorities to satisfy the genuineness of these facts. The said judgement relied upon the decision in the case of Krishna Insulations reported in 1995 (7) RLT 59 and the Final Order of the Tribunal dated 7.9.1995 in Krishna Strips Ltd. In the case of Superpax India Private Ltd. supra, it has been held by the Hon'ble Tribunal that the duty paid character of the Bill of Entry is not changed by the endorsement thereon and, therefore, an endorsed Bill of Entry remains a valid duty paid document under Rule 57G. A similar view has been taken by the Hon'ble Tribunal in the case of CCE v. Bharat Wire Products . In the case of CCE v. Amartara Ltd. supra, the Tribunal has held that since the identity of imported goods and their linkage till receipt by the manufacturer is established by an endorsed Bill of Entry, therefore, Modvat credit under this cannot be denied under Rules 57A and 57G. Again, we find that in the case of Maharaja International Ltd. supra, it has been held that a reference to High Court has been denied on this issue.
9. In view of the plethora of decisions examined above, we are clearly of the considered view that the matter is a partly covered one and applying the ratio of these decisions, we find that the Order-in-Appeal impugned as well as the Order-in-original is required to be set aside in view of the discussions noted above. Ordered accordingly.
10. The appeal succeeds with consequential relief as per law.
(Pronounced and Dictated in Open Court).