Custom, Excise & Service Tax Tribunal
M/S. Hindustan Colas Pvt. Ltd vs Cce,C&St, Visakhapatnam on 27 September, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Bench SMB
Court I
Appeal No. E/21328/2015
(Arising out of Order-in-Appeal No.61/2014-15(V-I)CE dt. 09/03/2015
passed by CCE,C&ST(Appeals), Visakhapatnam)
For approval and signature:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial)
1.
Whether Press Reporters may be allowed to see 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 Lordship wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental authorities?
M/s. Hindustan Colas Pvt. Ltd.
..Appellant(s)
Vs.
CCE,C&ST, Visakhapatnam
..Respondent(s)
Appearance Shri M. Karan Talwar, Advocate for the appellant.
Shri Arun Kumar, Deputy Commissioner (AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Date of Hearing: 27/09/2016 Date of decision: 27/09/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] Brief facts of the case as put forward by appellant are as follows:
1.1. M/s Hindustan Colas Private Limited (hereinafter referred to as the Appellant) is engaged in the manufacture and clearance of excisable goods Bitumen Emulsion, Polymer Modified Bitumen, Crumb Rubber Modified Bitumen (CRMB) and Modifier falling under Tariff item 27150090 and 40040000 respectively of the CETA.
1.2. During the period from June, 2011 to July, 2011 the Appellants manufactured CRMB on job work basis for HPCL. HPCL is having refinery at Visakhapatnam (HPCL refinery) and also a terminal in Visakhapatnam (HPCL Terminal) which is used for marketing and distribution of goods manufactured in HPCL refinery. HPCL terminal is registered with the Central Excise Department as a Depot.
1.3. HPCL terminal supplied raw materials namely Asphalt Bulk (VG-10) and Asphalt Bulk (VG-30) to the appellants for manufacture of CRMB on job work basis as well as for the appellants own case. HPCL terminal, in the capacity of depot, issued invoices through their online JDE system to the appellants. The appellants took CENVAT credit of excise duty paid on the raw material received from HPCL terminal which were further used for manufacture of CRMB on job work basis. Due to the escalation of the price of the raw material supplied to the appellants, HPCL was required to collect the enhanced price as well as central excise duty thereon from the appellants. HPCL refinery paid the excise duty of Rs.48,75,312/- on the enhanced price, which was collected from the appellants.
1.4. HPCL Terminal on behalf of HPCL refinery had to pass on the excise duty so collected from the Appellant by issuing supplementary invoices. However, in the online system of generating invoices, it is not possible to generate supplementary invoices. Therefore, HPCL terminal had issued manual supplementary invoices from the old stationery available with them. Inadvertently, the old invoices mentioned as First Stage dealer instead of depot. The appellants took CENVAT Credit of excise duty paid on the enhanced price, on the basis of these supplementary invoices. The details of the said four supplementary invoices are as under:
Invoice No. Invoice date Product Quantity mentioned in the invoice Amount of credit availed (incl. Edn. Cess & SHE cess) 10005561 RI 30.11.2010 Asphalt Bulk VG 10 5525 MTs 45,99,603/-
10000740A1 31.03.2011 Asphalt Bulk VG 10 154.69 MTs 91,498/-
10000882R1 31.03.2011 Asphalt Bulk VG 10 264.41 MTs 1,39,304/-
100011125RI 31.03.2011 Asphalt Bulk VG 30 202 MTs 54,907/-
1.5. An audit was conducted and it was noticed that appellants have taken credit on the above said four supplementary invoices issued by First Stage dealer i.e., HPCL Terminal (H/T). According to department as per provision contained in Rule 9 of CENVAT Credit Rules, 2004 the CENVAT Credit on supplementary invoices issued by First Stage Dealer is not admissible.
1.6. The appellants vide their letter dated 28.5.2012 addressed to the Additional Commissioner (Audit), Visakhapatnam-I Commissionerate and replied to the above audit objection. The appellants submitted a true copy of the PLA register containing details of differential duty of Rs. 48,75,312/- paid by HPCL refinery who is the manufacturer of the goods on which differential duty has been collected from the appellants. A show cause notice dated 9.11.2012 was issued proposing to recover the irregularly availed credit of Rs. 48,75,312/- along with interest and also for imposition of penalty. After due process of law, the original authority confirmed the demand, interest and imposed equal amount of penalty. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.
2.1. The Ld Counsel, Shri Karan Talwar appearing on behalf of the appellant, reiterated the grounds of appeal and submitted that though supplementary CENVAT invoices were issued by HPCL/T containing the description as First Stage Dealer, the HPCL/T can never be considered as a First Stage Dealer. The supplementary invoices were issued by HPCL/T under the capacity of depot. That the mentioning of First Stage Dealer in the invoices is only a technical defect / due to inadvertent mistake, the invoices being old stationery. The documents would establish that the defect was only technical mistake and that there was no positive act with intent to evade payment of duty and that the notice issued invoking extended period is unsustainable.
2.2. The Learned Counsel led the Bench to each piece of evidence to substantiate the contention that the mention of First Stage Dealer in the supplementary invoice was only an inadvertent mistake. He submitted that HPCL/T is nothing but a depot of HPCL/R and therefore can be said to be an extended arm of the manufacturer. Rule 9(1) provides for issue of supplementary invoice by manufacturer and not by First Stage Dealer. As soon as the error was pointed out, the appellant explained the same to be only an inadvertent mistake to department and also offered the accounts for verification. The appellant had written to HPCL/T seeking clarification and reply was received from them stating that they had forgotten to delete words First Stage dealer while issuing the supplementary invoices using old stationery and that the said defect can be rectified. Thereafter, appellant submitted rectified invoices. But these rectified invoices were not considered or accepted by the department. The Ld Counsel relied upon the judgments laid in the cases of Rupa and Co V/s. CCE, Coimbatore 2008 (225) ELT 552 (Tri Chennai.), Expo International Vs. CCE, Kanpur 2009 (247) ELT 705 (Tri Del), General Instruments Company Vs. UOI 2008 (229) ELT 642 (S.C), Bajaj Temp Ltd Vs. CCE & Cu, Pune 1999 (106) ELT 145 (Tri) CCE, Surat Vs. Kalpana Industries 2004 (175) ELT 309 (Tri Mumbai) to canvass the argument that credit cannot be denied due to technical defects on the document and that substantive rights should not be denied for procedural lapses.
3. On behalf of the department, the Ld, AR, Shri Arun kumar reiterated the findings of the authorities below. He submitted that as per Rule 9 (1) (b), a supplementary invoice can be issued by the manufacturer and not by First Stage Dealer. The supplementary invoices on which appellants availed credit though issued by HPCL/T are mentioned to be issued by First Stage Dealer. Therefore appellants have availed credit on improper documents, and the same has to be reversed.
4. I have heard both sides.
5. I may proceed to analyse the issue before me by first explaining the defect in the supplementary invoice issued by HPCL. The printed invoice shows the name and address of HPCL/T as First Stage Dealer. By scoring First Stage Dealer and incorporating Reg. No. of HPCL (manufacturer), the defect has been rectified.
a. The case of appellant is that the use of invoice with the head First Stage Dealer was only an inadvertent mistake. When the defect was pointed out appellants vide letter dated 28.05.2012 replied to the department stating that it was only an inadvertent mistake and that credit was correctly availed and utilized by them and also furnished copy of PLA register.
b. The appellants were manufacturing Crumb Rubber Modified Bitumen (CRMB) on job work basis for HPCL. Till 31/03/2012, HPCL was supplying raw materials (Bitumen VG10 / VG30) to appellants plant at Visakhapatnam on stock transfer basis for utilizing the same in production of CRMB 55 / CRMB 60. HPCL terminal is only a depot where HPCL refinery transferred the goods on stock transfer basis to HPCL terminal and there is no element of sale involved between HPCL refinery and HPCL terminal. In the absence of any sale between the parties, HPCL terminal cannot be termed as first stage dealer. It is also not the case of the Department that HPCL terminal purchases goods from HPCL refinery. In fact, the Department has not attempted to prove as to how HPCL terminal is a first stage dealer.
c. Appellants availed credit on the basis of the supplementary invoices. Though these invoices contain the words First Stage Dealer, the invoices were received from HPCL/T which is a Depot of manufacturer. The invoices happened to contain the words First Stage Dealer because pre-printed manual stationary was used inadvertently.
d. The show-cause notice dated 9.11.2012 was issued to appellants proposing to recover the credit along with interest and for imposition of penalty. The appellants vide letter dated 23.11.2012 sought clarification from HPCL/T with regard to the defect in the supplementary invoices. On 25.01.2013, HPCL/T replied as below:
During the period January 10 December 10 the bitumen (VG 10 & VG 30) tanks at Visakha Terminal were attached to HPCL, VR & these tanks were under Registration No. AAACH1118B023 of VR. The differential duty on VG 10 & VG 30 stock transfers to locations were paid by VR and hence the issuance of supplementary CENVAT invoices has happened. In fact, we have issued these supplementary CENVAT invoices on behalf of VR only with their Central Excise Registration number as Depot of Manufacturer but, the CENVAT invoice stationery of Visakha Terminal was used for this purpose wherein we have forgotten to delete FORST STAGE DEALER which is technical defect and the same can be rectified / corrected.
The above technical defect can easily be corrected / rectified in the invoices for which you may kindly arrange to take permission from your Central Excise Authorities accordingly.
d. Again vide letter dated 05.02.2013 appellants requested the Assistant Commissioner, Visakhapatnam to issue certificate as to the satisfaction of availment of credit and enclosed the rectified supplementary invoices along with the letter. The relevant portion of the said letter reads as under:
Accordingly we have consulted our Range-IIE superintendent and he has advised us to get the rectification of the technical defects in the Invoices by taking up with HPCL authorities and there after make a request in writing to Assistant Commissioner, Central Excise, for issue of certificate as to satisfaction of the availment of CENVAT Credit in accordance with provisions of Rule 9(2) of the CENVAT Credit Rules, 2004.
We have now got the technical defects in the invoices rectified by the HPCL, authorities who are duly authorized in this behalf. Copies of the rectified supplementary invoices are here with enclosed for your reference.
6. The department has issued letter dated 26.02.2013 stating that the supplementary invoices cannot be accepted as proper documents and that certificate as to availment of credit cannot be issued. In this letter there is no mention as to the fate of the rectified supplementary invoices. After adjudication, the demand was confirmed along with interest and also imposing equal amount of penalty under 15(2) of CCR, 2004 read with Section 11AC of Central Excise Act, 1944.
7. The facts and evidence narrated above makes it crystal clear that there was no intention on the part of appellant to evade payment of duty by any positive act of fraud, suppression or willful mis-representation of facts. There is no dispute that duty was paid and also that goods were received. Again there is no dispute with regard to the main invoices issued by HPCL/T. The dispute is with regard to the supplementary invoices for differential duty for the reason that it is not issued by manufacturer and therefore not in order as per Rule 9(1)(b). Rule 9(1) gives the list/type of documents on the basis of which credit can be taken. Sub-section 2 of Rule 9 lays down that no credit shall be taken unless all the particulars as prescribed under Central Excise Rules, 2002 or the Service Tax Rules, 1994 as the case may be, are contained in the document. The proviso to this sub-section states that if the document does not contain all particulars and contains necessary details as to payment of duty/tax registration number etc., then the Deputy Commissioner of Central Excise or the Assistant Commissioner as the case may be, if satisfied that goods covered by the said document are properly accounted may allow the credit. The proviso thus gives a discretion to the concerned Commissioner to allow the credit in case of doubt with regard to any document/invoice. The Commissioner can require the assessee to get the documents rectified and then allow the credit after satisfying himself that there is no evasion of duty. The appellants have put forward a consistent and believable case supported by documentary evidence that the defect in the invoice happened only due to error at the end of HPCL/T while issuing the invoice.
8. The Tribunal in the case of Rupa & Co Vs. CCE, Coimbatore had occasion to analyse an issue where there was defect in documents. The discussion of the Tribunal in the said case is note worthy and reproduced below:
2. One of these documents is an invoice issued by a manufacturer for clearance of inputs or capital goods from a factory or from a depot. Form where the goods are sold by or on behalf of the said manufacturer. In the present case, the inputs in question were procured by the appellants from depots of manufacturers thereof. The manufacturers of inputs had cleared the goods on payment of duty at the factory gate and marketed the same from their depots. There is no sale of goods between the manufacturer and his depot. It was only stock transfer of goods from the factory to the depot. It was open to the manufacturer of cotton yarn to clear the goods from his depot under invoice referred to under Rule 7(1) (a)(i). All the so-called invoices produced by the appellants to the adjudicating authority were, in fact, invoices within the category mentioned under Rule 7(1)(a)(i) of the CENVAT Credit Rules, 2002. In other words, the so-called depot invoices in this case were manufacturers invoices and the same required to be accepted for purposes of Rule 9A of the said rules. Of course, if such invoices did not contain any essential particulars, it was open to the adjudicating authority to point it out to the appellants for rectification. We find that such an exercise has not been done in the present case. On the other hand, Learned Commissioner chose to treat the depots as independent dealers requiring to be registered with the department for the purpose of issue of CENVATABLE invoices. Indeed, the depots in this case were only extended arms of the respective manufacturers and the invoices issued by such depots were to be treated as manufacturers invoices. Copies of all these invoices have been produced by the appellants and we have perused specimens thereof. It is seen that particulars like description, quantity and value of cotton yarn as also obtained the relevant factory invoices (containing the very same particulars) also to the adjudicating authority in their endeavourer to buttress the evidence of payment of duty on the goods by the suppliers. It seems, the adjudicating authority was not satisfied. Further, the appellants also obtained certificates from the input-manufacturers and produced the same to the adjudicating authority. We have seen specimens of these documents also on record. These certificates certified that the entire quantity of cotton yarn covered by the relevant factory invoices (referred to as gate passes in the depot invoices) were transferred to the depots and were sold therefrom under the depot invoices to the appellants. The adjudicating authority, nevertheless, was yet to be satisfied. .
9. In the case of Expo International Vs. CCE, Kanpur 2009 (247) ELT 705 (Tri-Del) the Tribunal held that non mention of the words duplicate for transport on the invoice is only a procedural lapse and therefore credit cannot be denied. The relevant portion reads as below:
3. I have carefully considered the submissions from both the sides and perused the records. In this case the Appellant had purchased the goods from M/s. Sarin Sales Corporation, who are first stage dealer and who in turn had purchased the goods form manufacturer M/s. ATV Projects, Raigarh. The only ground on which the Modvat credit is denied by the Department is that the invoices neither mentioned the word duplicate for transportation the invoices nor they mentioned the mode of transport and beside this, the duty debit at the manufacturers end is also not mentioned. In this case, there is no dispute about the fact that the inputs have been received by the Appellant. I find that the Assistant Commissioner has given a clear finding that the invoices on the basis of which the basis Modvat credit has been taken, are duplicate invoices and just because the vehicle number and debit entry at the manufacturers end are not mentioned, the Modvat credit cannot be denied. I also find that subsequently M/s. Sarin Sales Corporation had given a certificate mentioning the vehicle number in which the goods had been transported and also the invoices issued by the manufacturers under which the duty had been paid on the goods. In view of these circumstances, mere absence of words duplicate for transport on the invoices and non mention of debit of the duty at the manufacturers end are only procedural lapses because of which the Modvat credit cannot be denied. The Impugned Order, therefore, is not sustainable. The same is set aside. The appeal is allowed.
10. From the totality of facts and evidence placed before me there is nothing to show that the supplementary invoices were obtained in a surreptitious manner with intend to avail credit wrongly, which the appellants were otherwise not eligible for. Apart from the technical defects, the department does not allege any discrepancy in these documents. This Bench raised a question to Department whether the rectified supplementary invoices are in order. The Ld, AR was fair enough to concede this aspect. In such circumstances, as the defects are proved to be procedural lapses, the denial of credit is unjustifiable especially when after rectification, the invoices are in order.
11. The Ld. Counsel has argued on the ground of limitation also. As discussed above there is nothing to establish that there is any positive act of fraud, suppression or willful misrepresentation on the part of appellants with intent to evade payment of duty. There being no evidence to establish fraud, suppression of facts, the demand raised invoking the extended period of limitation is unsustainable.
12. From the foregoing discussions, the appellant succeeds both on merits as well as on the ground of limitation. The Impugned Order is set aside. The appeal is allowed with consequential reliefs, if any.
(Operative part of this order pronounced in the court on conclusion of the hearing) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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