Full Judgment
2. The Assessees have two manufacturing units one situated at Chandrapura, Taluka-Halol, Dist. Panchmahals and the other is situated at Vishwamitri Road, Vadodara. Both units hold Central Excise registrations and operate under the Modvat credit scheme. Certain inputs were received in the Halol unit under cover of the invoices indicating payment of duty which invoices were not in the name of the Halol unit but were in the name of the Vadodara unit. Identically worded, Show Cause Notices were issued seeking reversal of the credit taken by the Halol unit, on the ground that the duty paying documents which were not in their name could not be deemed to be documents prescribed under Rule 57G. Allegations as to penalty were also made.
The Assistant Commissioner in identical orders reversed the Modvat credit totally amounting to Rs. 1,39,831/- and also imposed penalty totally amounting to Rs. 6,500/-. The Commissioner (Appeals) in the two impugned orders identically worded upheld the lower orders. Hence the present appeals and applications.
3. Shri J.C. Patel relied upon the Trade Notice issued by the Commissioner of Central Excise, Chandigarh bearing No. 61-C.E./95 dated 24-11-1995. Vide this Trade Notice the assessees were informed that where the bill of entry was in the name of the Registered Office, Head Office, Branch Office or Regional Office, there were no objection to the goods being used in the factory of the assessees where an endorsement was made on the bill of entry to that effect. The Trade Notice permitted similar procedure to be adopted in the case of invoices issued in the name of the head office by a manufacturer also.
Shri K.L. Ramteke pointed out that in the present case this trade notice would not cover the situation, since the invoice was in the name of another manufacturing unit. Shri J.C. Patel relied upon the Tribunal Judgement in the case of Larsen & Toubro Limited v. Collector of Central Excise -1994 (72) E.L.T. 948, in which it was held that where the company owned a number of units, Modvat credit could not be denied to one unit where the duty paying documents were in another unit's name. Shri K.L. Ramteke submits that after 31-3-1994 invoices replaced gate passes and that endorsed invoices were held not to be modvatable documents in the following Judgments : (1) Poddar Udyog Ltd. v.Commissioner of Central Excise -1997 (95) E.L.T. 438, (2) Jenny Plywood Industries Ltd. v. Commissioner of Central Excise -1997 (96) E.L.T.4. I have considered the rival submissions. It is correct that subsequent to 1-4-1994 invoices could not be endorsed. The subject judgements however speak of situations where the goods were despatched by dealers. In such a situation the dealer was required to issue a separate invoice citing the earlier invoice bearing details as required under the procedure prescribed under Rule 57GG. These Judgements would not apply to situations where a sister unit was sending goods to another unit. The cited Judgement in the case of Larsen & Toubro Ltd. would continue to apply in such situations, even where the identity of the duty paying documents has changed from gate passes to invoices. In this judgement the Tribunal has held that there was not even need for an endorsement in the case of such transfer. This judgement was later followed by the single Member Bench in the case of Commissioner of Central Excise v. Snow Cem India Ltd. 1997 (96) E.L.T. 627. I also find that the cited notice was issued in 1995 when in a specific situation like the one involved in this case, the trade notice itself permitted an endorsement.
5. The Commissioner is correct in observing that after 1-4-1994 the rules were amended there by eliminating the facility of endorsement.
However, as observed by him earlier, the amendment would relate to the invoices issued by dealers and exchanges made between two units by a multi-unit manufacture would stand, unaffected.
6. I find from the show cause notice that the goods were actually received and consumed in the assessees' factory and that the dispute was only on legal ground.
7. In view of my discussion I allow the appeals, set aside the impugned orders and direct consequential relief.