Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of C. Ex., Mumbai-I vs Indoco Remedies Pvt. Ltd. on 1 February, 2002
Equivalent citations: 2002(143)ELT590(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The question for consideration in this appeal is the eligibility to Modvat credit which was taken by Indoco Remedies Pvt. Ltd., the respondent to this appeal. The notice issued to it proposed denial on two grounds. The first was that it could not take Modvat credit of the duty paid on invoices which were issued in the name of a "loan licensee" i.e. person who utilised machinery and other facilities in the respondent's factory for manufacture of medicaments out of their own raw material and employing their skill. The second was that the respondent had taken Modvat credit on the basis of invoices of the manufacturer of the inputs which had been endorsed. Credit was proposed to be denied on the ground that there was no provision in law for such endorsement. The Asstt. Commissioner, who adjudicated on the show cause notice confirmed the proposal in the notice and denied the credit, and also imposed a penalty. The assessee appealed the order. The Commissioner (Appeals) was persuaded by the points made in the appeal and permitted credit and set aside the penalty. Hence this appeal by the department.
2. I have heard both sides.
3. As far as the first issue is concerned, the matter is clearly in the department's favour. The Commissioner has been swayed by the fact that the actual place where the goods were manufactured was respondent's factory. That is however not relevant. The credit is to be taken by the manufacturer, that manufacturer was the "loan licensee", the person who utilised the respondent's factory for manufacture by it of the medicaments. It is that person who paid the duty on these goods and it is in his name the invoice has been issued. Therefore, while that manufacturer, the loan licensee may be entitled to the credit, the respondent would not be. The order of the Asstt. Commissioner in this regard will have to be restored.
4. As to the second point, Counsel for the respondent says that the invoices which were endorsed to it were issued by the manufacturers for clearance of their goods either to their own depots or to the dealer. He says that the respondent was in fact in possession of the invoices for the same goods which were issued by the depot or by the dealer and credit could val-idly be taken on this invoice. If that is the case, the respondent would be entitled to credit notwithstanding that it would not be entitled to credit on the basis of endorsed invoice. This point however has been raised for the first time before me and I think it appropriate to remand the matter to the Asstt. Commissioner for considering these document and reviewing on the eligibility to credit.
5. The appeal is therefore allowed and the impugned order set aside. So far as the credit taken on invoice issued to a "loan licensee" is concerned, the Asstt. Commissioner's order is restored. The remaining matter is remanded to the Asstt. Commissioner. He shall consider the documents that the respondent may produce within a month from the order and pass orders on the eligibility to credit in accordance with law. I however set aside the penalty imposed on the appellant. The credit was taken in April, 1994 shortly after the invoice system was introduced and there was considerable lack of clarity both in the department and outside as to various aspects of the system. I therefore think that the respondent deserves the benefit of doubt in this case.