Customs, Excise and Gold Tribunal - Tamil Nadu
Eltex Super Castings Ltd. vs Commissioner Of Central Excise on 30 July, 2004
Equivalent citations: 2005(99)ECC374
ORDER P.G. Chacko, Member (J)
1. In Appeal No. E/911/2003, the challenge is against the denial of Modvat credit of Rs. 48,948 to the appellants in respect of inputs for the period March to May 1995. A part (Rs. 29,448) of the credit was taken on the strength of the assessee's own invoices in respect of goods rejected and returned by the buyer and subsequently reprocessed in the assessee's factory. The remaining credit (Rs. 19,500) was taken on the basis of dealers invoice. In respect of the former, the authorities below held that the appellants were not entitled to take the credit on the basis of their own invoice and ought to have taken recourse to Rule 173 L. In the latter case, it was held that the dealer who issued the relevant invoice was not eligible to pass on Modvat credit under the invoice.
2. Heard both sides. It is submitted by the Consultant for the appellants that the credit of Rs. 29,448 was taken on rejected/returned final products which were 'inputs' for purposes of Rule 57 A on the ground of their having been subjected to reprocessing. Therefore, it is argued, the credit of duty originally paid on the goods was available to the appellants on the bass of Rule 52A invoice originally issued by them. Reliance has been placed on the Tribunal's decision in Calcom Electronics v. CCE, New Delhi, 2003 (159) ELT 492 (Tri. Del). In respect of the credit of Rs. 19,500 taken on the basis of dealer's invoice, Consultant submits that, as long as the duty-paid nature of the goods and the utilisation of the goods in the manufacture of final products are not in dispute, the credit is not liable to be denied on the ground of any mistake or irregularity on the dealer's part. In this connection, Consultant has relied on the Tribunal's decision in R.S. Industries v. CCE, New Delhi, 2003 (86) ECC 200 (Tri.Del) : 2003 (153) ELT 114 (Tri. Del).
3. Ld. DR reiterates the findings recorded in the impugned order.
4. After careful consideration of the submissions and case law, I find that the denial of credit of Rs. 29,448 on the ground of the credit having been taken on the basis of the invoice issued originally by the appellants themselves is not sustainable. The Credit was taken on the basis of invoice issued by the appellants under Rule 52A of the Central Excise Act, 1944 and such invoice was one of the documents prescribed under Rule 57G of the said Rules for availment of Modvat credit. That invoice was conclusive evidence of the duty-paid nature of the goods. Admittedly, the goods returned by the buyer and received back in the appellants' factory, were subjected to reprocessing amounting to manufacture. In the circumstances, the benefit of Modvat credit of the duty paid on the goods returned by the buyer was available to the appellants as held by the Tribunal in the case of Calcom Electronics (supra) as well as in the case of Lime Chemicals Ltd. v. CCE, Madurai, 2003 (59) RLT 1052 (CESTAT-Mumbai). Again, the credit taken on the basis of dealer's invoice is also admissible to the assessee inasmuch as the duty-paid nature of the goods and utilisation of the goods in the process of manufacture of final products are not in dispute. The Tribunal's decision in R.S. Industries (supra) supports the appellants' case. In the said case, it was held that the mere fact that Modvat credit had been fraudulently taken by the supplier of inputs was not a ground for denial of credit to the manufacturer of final product. The entire credit of Rs. 48,948 is, therefore, liable to be allowed to the appellants. It is ordered accordingly. The impugned order stands set aside and the appeal stands allowed.
5. In Appeal No. E/912/2003, the appellants are aggrieved by the denial of Modvat credit of Rs. 25,330 by the authorities below. A part of the credit was denied on the ground that certain details had not been furnished in the relevant invoice as required under Notification No. 23/95-CE(NT). Another part of the credit was disallowed on the ground that it was taken on the basis of invoices issued by the appellants themselves, The remaining credit was denied on the ground that the duty-paying documents were not strictly in the format prescribed under the aforesaid Notification.
6. Heard both sides. Insofar as the credit taken in respect of the goods rejected/returned by the buyer under cover of invoice originally issued by the appellants is concerned, the case stands covered by my decision in Appeal No. E/911/2003. As regards the remaining credits, the Tribunal's Larger Bench decision in Kamakhya Steels (P) Ltd. v. CCE, Meerut, 2004 (92) ECC 230 (LB): 2000 (121) ELT 247 (Tri-Del) is in support of the appellants. The Larger Bench held, after considering Notification No. 7/99-CE (NT) dated 9.2.99 and the Board's circular in clarification thereof, that the provisions of Rule 57G as amended under Notification No. 7/99 were applicable to pending cases relating to. periods prior to 9.2.99 and consequently Modvat credit on inputs could not be denied on the ground that the relevant documents (declaration, invoice etc.) did not contain the prescribed particulars. The Modvat credit in question was taken during the period September to November 1995. Applying the ratio of Kamakhya. Steels (supra) I find that the denial of credit on the aforesaid grounds is unjustifiable. In the result, the impugned order is set aside and this appeal is also allowed.