Custom, Excise & Service Tax Tribunal
In The High Court Of Judicature Of Uttar ... vs M/S Bhushan Steel & Strips Ltd on 15 February, 2010
IN THE HIGH COURT OF JUDICATURE OF UTTAR PRADESH ALLAHABAD BENCH, ALLAHABAD
D.B. CIVIL EXCISE REFERENCE APPLICATION NO. 07 OF 2004
In the matter of
Commissioner of Central Excise ---- Applicant
Meerut
Versus
M/s Bhushan Steel & Strips Ltd., Respondent
23, SITE-IV, Industrial Area, Sahibabad STATEMENT OF CASE Honble High Court of Allahabad vide order dated 25/8/2009, passed in Central Excise Reference Application No. 07/2004 filed by the appellant, directed the Tribunal to submit statement of case arising out of order No. A/381-82/2003-NBC dated 17/07/2003 passed by the CESTAT, New Delhi in respect of appeal No. E/2197-98/2002 filed by the appellant against Order-in-Appeal No. 139-41/CE/MRT/2002 dated 09.5.2002, passed by the Commissioner (Appeals), Central Excise, Ghaziabad and refer the following questions for the opinion of the Court: -
(1) Whether Modvat credit can be availed/taken on original invoice without taking permission from jurisdictional Assistant Commissioner/ Deputy Commissioner, as required under Rule 57-G (6) of Central Excise Rules 1944.
(2) Whether credit can be availed on the challans which were not proper document for availing Modvat credit under Rule 57-G (3) of Central Excise Rules, 1944 and same were not submitted for defacement as required under Rule 57-G (8) and also not produced before adjudication authority at the time of hearing, as required.
2. In compliance of the Honble High Courts order, the Statement of Case is prepared after hearing both the sides.
2.1. M/s Bhushan Steel & Strips Ltd., Plot No. 23, Site-IV, Industrial Area, Sahibabad, Distt. Ghaziabad (herein referred to as the party) are engaged in the manufacturing of C.R. Coils/Sheets and G.P. Coils/Sheets falling under Chapter 72 and Oxygen Gas falling under Chapter 28 of the 1st Schedule to the Central Excise Tariff Act, 1985. Under mentioned Show Cause Notices were issued to the party for wrong availment of MODVAT Credit :-
(1) SCN No. 84/98 dated 16/07/98 for recovery of credit amounting to Rs. 1,02,67,016/- on the grounds that :-
(i) The party had wrongly availed Modvat credit amounting to Rs. 99,51,741.00 in the month of January 1998, on the Capital Goods which did not qualify as Capital Goods in terms of Rule 57-Q of erstwhile Central Excise Rules, 1944 ;
(ii) The party had taken inadmissible Modvat Credit amounting to Rs. 3000.00 on the strength of sixtuplicate copies of invoices which were not a valid document prescribed for Modvat purpose; and
(iii) The party had also taken excess inadmissible credit amounting to Rs. 2,08,800.00 and Rs. 1,03,475.00.
(2) SCN No. 153-GZB-II/99 dated 25.10.99 for recovery of credit amounting to Rs. 2,19,540.00 on the grounds that:-
(i) The party had availed inadmissible MODVAT credit amounting to Rs. 49,629.00 on Rails falling under Sub-heading No. 7302.00 as Capital goods which did not appear to be covered under the table to Rule 57-Q of the Central Excise Rules, 1944 ;
(ii) The party availed inadmissible MODVAT credit amounting to Rs. 1,66,050.00 on an item namely Quakerol-35L falling under Sub-Heading No. 3403.10 which did not qualify as Capital goods under Rule 57Q and further, the above credit was availed of by them on strength of original copy of invoice No. 41 dated 4.5.98 without obtaining the permissions of jurisdictional Asstt/Deputy Commissioner, and the same was contrary to the provisions of Rule 57T (8) readwith Rule 52A (3) of Central Excise Rules, 1944 ; and
(iii) The party availed irregular MODVAT credit amounting to Rs. 3,861.00 on the basis of original copy of invoices without obtaining the permission of the jurisdictional Asstt/Deputy Commissioner, and the same was contrary to the provisions of Rule 57T (8) readwith Rule 52A (3) of the Central Excise Rules, 1944.
(3) SCN No. 38-GZB-II/99 dated 25.02.1999 for recovery of credit amounting to Rs. 71,339.00 on the ground that The party had wrongly availed MODVAT credit on the basis of Original for buyers copy of Invoice No. 15304 dated 12.08.98 without the permission of Assistant Commissioner of Central Excise, as required under Rule 57G (6) readwith Rule 57A of Central Excise Rules, 1944.
2.2 On Adjudication of above of above Show Cause Notices, the Deputy Commissioner of Central Excise Division-II, Ghaziabad passed the following orders :-
(i) Vide Order-in-Original No. 335/99 dated 10.03.2000, SCN No. 84/98 dated 16/07/98 was adjudicated. The Deputy Commissioner confirmed the demand of Rs. 74,46,713.00 out of total demand of Rs. 1,02,67,016.00 and allowed credit of Rs. 28,20,303.00 being admissible to the party.
(ii) Vide Order-in-Original No. 37/2000 dated 08.05.2000, SCN No. 153-GZB.II/99 dated 25/10/99 was adjudicated. The Deputy Commissioner confirmed the demand of Rs. 1,69,911.00 out of total demand of Rs. 2,19,540.00 and allowed credit of Rs. 49,629.00 being admissible to the party.
(iii) Vide Order-in-Original No. 49/2000 dated 01/06/2000, SCN No. 38-GZB/99 dated 25/02/99 was adjudicated. The Deputy Commissioner confirmed the entire demand of Rs. 71,339.00 as raised vide aforesaid SCN and also imposed a penalty of Rs. 1,000.00 on the party under Rule 210 of the Central Excise Rules, 1944 for contravention of Central Excise Rule 57G (6) ibid.
2.3 Aggrieved with the above orders of Deputy Commissioner, Central Excise Division II Ghaziabad, the party filed appeal against the aforesaid orders before the Commissioner (Appeals), Central Excise Ghaziabad. The Commissioner (appeals) vide Order-in-Appeal No. 139-41/CE/GZB/2002 dated 09/05/2002 allowed the appeals of the party filed against Deputy Commissioners Orders-in-Original No. 335/99 dated 10/03/2000 and 37/2000 dated 08/05/2000 but rejected their appeal filed against Order-in-Original No. 49/2000 dated 01/06/2000.
2.4 The Department, being aggrieved with the aforesaid two orders-in-appeal passed by the Commissioner (Appeals), allowing the partys appeal, filed two appeals bearing Appeals No. E/2197/02 and E/2198/02 before Honble CEGAT. The Honble CEGAT vide order No. A/381-82/03-NBC dated 17/07/2003 held the demands as time barred, allowed Modvat Credit on original copy and the appeals filed by the revenue were dismissed.
2.5 The department being aggrieved with the aforesaid order of Honble CEGAT took the matter before Honble Allahabad High Court, on the following grounds by filing a reference application under Section 35 H (1) of the Central Excise Act, 1946.
(1) That under rule 57-Q of erstwhile Central Excise Rules, 1944, the capital goods were clearly defined and made specific. It clearly shows that the goods specified under the said rule were only to be treated as capital goods Except those, other goods did not qualify the definition of capital goods. In this case, subject goods on which credit was availed claiming them to be capital goods were item of general use such as Angles, Shapes & Sections, light bulbs, Automatic Data Processing Machines, Gas Detection Systems, Gantry Steel Structures, Air conditioners and Score Board Display. It would be seen that Air-Conditioners and Data Processing Machines were to be used in Office Premises and had nothing to do with the working of plant and machinery. Other items i.e. Angles/Shapes etc. are not part or accessory of any machinery specified under Rule 57-Q, but items of general use which are not intended to be capital goods within the scope of rule 57-Q. Therefore, any goods not specified under Rule 57-Q cannot qualify as capital goods and credit is not to be allowed on such goods treating them as capital goods.
(2) That Honble Tribunal erred in holding that the demand was time barred whereas the demand was raised well within limitation period of six months as provided under the Rule 57-U (1). In this case the party received the said goods during the period 1995 to 1998 but they took credit in the month of January 1998. The Show Cause Notices were issued on 16/7/98, hence the demand was not time barred.
(3) That the document prescribed under Rule 57-G for availing credit was duplicate copy of an invoice issued under Rule 52-A. In the present case the party availed credit of Rs. 3,000/- on the basis of sixtuplicate copy of invoice, which is not a valid document for availing credit. Since the party failed to produce duplicate copy of the invoice and also did not obtain necessary permission from competent authority for availing credit, the said credit is not allowable to them.
(4) That the party availed credit of Rs. 1,69,911/- against original copy of purchase invoices instead of duplicate copies of invoices. In case of non availability of duplicate copy, they were required to obtain the permission from the Dy/Assistant Commissioner under Rule 57-T (8) readwith Rule 52-A (3) of said Rules. The party initially did not apply for necessary permission but filed an application on 15/4/1999 and thereafter availed credit on the same day without waiting for permission from the competent authority. Hence, credit was not admissible to the party.
2.5.1 The Commissioner accordingly prayed Honble High Court for directing the Tribunal to refer the following questions of law arising out of the Tribunals order to the Honble Court for its decision :-
(1) The goods which have been kept out of definition of capital goods and specifically disallowed under Rule 57-Q of the Erstwhile Central Excise Rules, 1944, whether Modvat credit can be allowed on the items contradicting/over ruling the provisions (2) The Capital goods received between January 1995 to January 1998 and Modvat credit taken during the month of January 1998, show cause notice issued within six months from taking credit in consonance with provisions, whether show cause notice can be held time barred (3) Credit taken on original copy of invoice without obtaining permission of the Jurisdictional AC/DC, Central Excise contrary to the provisions of Central Excise Rules, 1944, whether credit can be allowed on original copy of invoice without prior permission of the concerned AC/DC of Central Excise.
3. Honble Allahabad High Court vide order dated 25/8/99 in respect of Departments reference application, directed this Tribunal to draw statement of the case and to refer the following question of law arising of the Tribunals order for its opinion :
(1) Whether Modvat credit can be availed/taken on original invoice without taking permission from Jurisdictional AC/DC, as required under Rule 57G (6) of Central Excise Rules, 1944.
(2) Whether credit can be availed on challans which were not proper documents for availing Modvat credit under Rule 57G (3) of Central Excise Rules 1944 and the same were not submitted for defacement as required under Rule 57G (8) and also not produced before Adjudicating Authority at the time of hearing, as required.
4. Accordingly, under the provisions of Section 35H (4) of the Central Excise Act, 1944 and in pursuance of Allahabad High Courts order dated 25/8/09, the following questions of law arising out of the Tribunals order No. A/381-82/03-NBC dated 17/7/03 are referred to the Honble High Court for its decision :-
(1) Whether Modvat credit can be availed/taken on original invoice without taking permission from Jurisdictional AC/DC, as required under Rule 57G (6) of Central Excise Rules, 1944.
(2) Whether credit can be availed on challans which were not proper documents for availing Modvat credit under Rule 57G (3) of Central Excise Rules 1944 and the same were not submitted for defacement as required under Rule 57G (8) and also not produced before Adjudicating Authority at the time of hearing, as required.
5. The Registry of the Tribunal is directed to send the statement of the case to the Registrar Allahabad High Court, Allahabad Bench for consideration of the Honble High Court.
6. The relevant documents are enclosed.
(Justice R.M.S. Khandeparkar) President (Rakesh Kumar) Member (Technical) PK LIST OF RELIED UPON DOCUMENTS 1 (a). Show Cause Notice No. 84/98 dated 16/7/98 for recovery of Modvat credit amounting to Rs. 1,02,67,016.00 1(b). Order-in-Original No. 335/99 dated 10/3/2000 issued by the Deputy Commissioner, Adjudicating the above-mentioned show cause notice dated 16/7/98 2 (a). Show Cause Notice No. 153/GZB-II/99 dated 25/10/99 for recovery of Modvat credit amounting to Rs. 2,19,540.00 2 (b). Order-in-Original No. 37/2000 dated 08/5/2000 issued by the Deputy Commissioner adjudicating the above-mentioned show cause notice dated 25/10/99
3. Order-in-Appeal No. 139-141/CE/GZB/02 dated 09/5/02 passed by Commissioner, Central Excise (Appeals), Ghaziabad.
4. Tribunals order No. A/381-82/03 dated 17/7/03 in respect of appeals filed by the Department against the Commissioner (Appeals)s order
5. Order dated 14/9/09 passed by Honble Allahabad High Court directing the Tribunal to draw the statement of the case and to refer the questions of law, as mentioned in the order, for its opinion.