Customs, Excise and Gold Tribunal - Delhi
Crop Health Products Ltd. vs Collector Of Central Excise on 16 January, 1998
Equivalent citations: 1998(102)ELT376(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. The appellants in this case are seeking the quashing of the order of Commissioner (Appeals), Ghaziabad dated 26-8-1996 confirming duty demand of Rs. 8,16,815/- against the appellants. The question relates to the alleged wrongful availment of Modvat credit by the appellants on the strength of invoices which were not in the name of the appellants. The allegation against the appellants was that they had availed Modvat credit on the strength of original and triplicate copies of invoices and not duplicate copy as per Rule 52A(3) of the Central Excise Rules, 1944.
2. According to the appellants, they had entered into an agreement dated 6-4-1994 with M/s. Bayer India Limited for the use of the appellants' premises by M/s. Bayer India Limited for manufacturing and taking certain agro chemical formulations. These formulations, namely, insecticides, weedicides and fungicides, fall under Heading No. 3808.10 of the Central Excise Tariff Act. M/s. Bayer India Limited filed an application for exemption from licensing under Notification No. 27/92 on the ground that the goods were being manufactured on its account by the present appellants. Necessary permission was granted by the Supdt., Central Excise, Ghaziabad to M/s. Bayer India Limited on 12-7-1994. The appellants' case is that they had duly filed a declaration on 1-4-1994 under Rule 57A and they were receiving duty paid inputs from various suppliers of M/s. Bayer India Limited and used the same in the manufacture of the finished goods after availing credit of duty on the said inputs with effect from 12-7-1994. All the inputs were received under invoices evidencing payment of duty as prescribed by Rule 57G. By SCN dated 2-3-1995, the Department alleged that the appellants had wrongly availed Modvat credit on the strength of documents which were not proper documents under Rule 57A and 57G and that the invoices were in the name of M/s. Bayer India Limited. The Assistant Collector by his order upheld the allegation contained in the SCN and found that the invoices were not in the name of the appellants, though, he agreed with the factual position that the goods had been received by the appellants. The Commissioner (Appeals) by the impugned order held that the Assistant Commissioner was right in denying Modvat credit to the appellants in cases where the invoices were issued in the name of M/s. Bayer India Limited.
3. Appearing for the appellants Ms. Malini Sood, ld. Counsel contended that the lower authorities have failed to appreciate the fact that Rule 57G did not require that the invoices should be in the name of the manufacturer where it is proved that the inputs were received under cover of invoices evidencing payment of duty. She submitted that the lapse, if any, was only procedural or technical which should not be made the basis for denying the appellants the substantive benefit of Modvat credit. She relied on the following decisions in support of her contention that where substantive requirement of the law have been satisfied, mere procedural lapses cannot be made the basis for defeating the basic purposes of the Modvat scheme or merely because a wrong address of name has been mentioned.
1. Mangalore Chemicals & Fertilisers Ltd. v. Deputy Commissioner, 1991 (55) E.L.T. 437 (S.C.);
2. Thermal Coatings (P) Ltd. v. CCE, New Delhi, 1993 (49) E.L.T. 363 (T);
3. CCE, Bangalore v. Triton Valves Ltd., 1993 (65) E.L.T. 289 (T);
4. CCE, Coimbatore v. Carborundum Universal Ltd., 1997 (93) E.L.T. 357 (T);
5. Usha Associates v. CCE & C, Vadodara, 1995 (78) E.L.T. 512 (T);
6. Eicher Tractors Ltd. v. CCE, Chandigarh, 1996 (87) E.L.T. 252 (T);
7. Bansal Containers (P) Ltd. v. CCE, Allahabad, 1996 (83) E.L.T. 425 (T)and
8. Beepee Coatings Ltd. v. CCE & C, Vadodara, 1997 (92) E.L.T. 223 (T).
Further, she also relied on the Tribunal decision in Collector of Central Excise v. Amal Rasayan Limited, 1993 (68) E.L.T. 446 in which it was held that the vital question is the receipt of the inputs and their use for the manufacture of the final product. Where these two conditions are satisfied the manufacturer's right to claim Modvat credit is fully satisfied and cannot be denied for any lapse in relation to any procedural matter like production of documents.
4. Appearing for the Respondent Commissioner Shri P.K. Jain, ld. SDR submitted that under the scheme of Modvat credit it was essential that the manufacturer complies with all the procedural requirements of the rules. A primary requirement of the Rules is that the manufacturer should have received the inputs and it is the prescribed documents which would show that it had in fact been received in his name. In the instant case the admitted position was that the invoices were not in the name of the appellants but were in the name of M/s. Bayer India Limited. He submitted that though it may not be in dispute that the appellants were manufacturing the goods on behalf of M/s. Bayer India Limited, nevertheless it was the appellants who were the manufacturers who were eligible to avail Modvat credit. Since the invoices were neither in their name nor endorsed in their name, ld. SDR submitted that the Commissioner (Appeals) had rightly held that Modvat credit was not admissible in the case of the appellants. He, therefore, pleaded for rejection of the appeal.
5. We have carefully considered the submissions and have perused the record. In Bansal Containers (P) Limited, supra, the Tribunal had taken the view that the mere fact that the endorsement of the gate pass was made in favour of the Head office and not in favour of the factory should not stand in the way of availment of Modvat credit. In the case of Eicher Tractors v. Collector of Central Excise, supra, it was held that a mistake in writing the correct name of the appellants in the gate passes, being an error of a technical nature, should not be made a ground for denying Modvat credit. In Beepee Coatings Limited, supra, the Tribunal had held that Modvat credit cannot be denied where inputs are received along with manufacturers' invoices showing sale to some traders and subsequently when invoices from such Traders are produced credit cannot be denied since co-relation to goods is fully established. Further, in CCE, Coim-batore v. Carborundum Universal Ltd., supra, the Tribunal had held that the omission of the name of the consignee and his address, though not a minor omission, such omission should not disentitle a manufacturer from the benefit of Modvat credit so long as the goods in question had been ordered by the manufacturer had been received by him. We find from the aforesaid decisions not the Tribunal has been consistently taking view that wrong mention of the address of the consignee or other similar mistakes in the duty paying documents would not stand in the way of allowing Modvat credit to a manufacturer so long as it is not in dispute that the goods have been received and utilised for the manufacture of the final product. Following the above views we are inclined to allow the present appeal.
6. Accordingly, we allow the instant appeal and set aside the impugned order with consequential benefits, if any, to the appellants in accordance with law.