Full Judgment
1. The facts of the case in brief are that the appellant manufactures metal labels falling under Chapter 83 of the schedule to the Central Excise Tariff Act, by using the input aluminium sheets falling under chapter 76 and availed Modvat benefit, for which they have filed declaration under Section 57G(1) of the Central Excise Rules. The appellant received the aluminium sheets through a sub-dealer, namely M/s. Gujarat Aluminium Stores, Mumbai, who in turn purchased the same from the dealer M/s. Jugraj Tejraj & Sons, Mumbai. The appellant is a small scale industry and cannot afford to purchase in large quantity directly from the manufacturer. Even to purchase from the direct dealer or the manufacturer an advance payment or payment against delivery is required. Due to the difficulty in cash flow the appellant purchased from the sub-dealer who normally gives them credit. The goods were originally received under the regular gate pass by the dealer from M/s.
Indian Aluminium Co. or M/s. Hindustan Aluminium Co. Ltd. M/s. Gujarat Aluminium Stores approached the dealer for the purchase of the quantity meant for the appellant. Since the goods were in possession of the dealer he obtained a subsidiary certificate to that quantity of goods from the Superintendent of Central Excise in the name of the appellant as consignee and the goods are directly consigned to the appellant factory. Since the purchase was from M/s. Gujarat Aluminium Stores the invoice was received from it, but the subsidiary certificate was received along with the goods from the dealer. The Collector of Central Excise, Mumbai-I issued a show cause notice on 19.1.1994 alleging that there is no co-relation between the gate pass and the resold goods. The copies of delivery challan and invoices were not furnished along with monthly RT 12 returns and were withheld from the department with the fraudulent intention, attracting five years period. The goods received by the appellant were of different thickness than shown in the subsidiary gate pass. The Modvat credit is wrongly taken by the appellant. Demand was made for the recovery of Rs. 5,44,142.46 which was taken during the period from January, 1989 to March, 1992 at a credit by the appellant. Show cause also called for, for the imposition of penalty. The appellant replied to the same on 15.2.1994, and also produced the relevant subsidiary gate passes issued by the Superintendent of Central Excise and the corresponding invoices issued by M/s. Gujarat Aluminium Stores. After hearing the appellant on 21.9.1994 the impugned order came to be passed. The statement showing the description and thickness of aluminium sheets indicated in subsidiary gate passes, invoices and delivery challans was also furnished. The demand was confirmed and a penalty of Rs. 50,000/- was imposed on the appellant under Rule 173Q(bb) and 173Q(2). Hence this appeal.
2. Shri D.D. Gwalani, learned Counsel appearing for the appellant, has submitted in the course of the argument that the impugned order is beyond the al legations in the show cause notice. The variation in the value and the scheme and the belated invoices are duly explained. The value of the goods are the same. The goods tally as observed in para 2 of the said order. The statement of the dealer is not given to the appellant to explain the case. As regards the question of time bar it is contended that the gate pass, duty paying document and subsidiary gate passes also of the invoice are introduced recently. It is not necessary to supply delivery challans or invoices along with RT 12 as there is no provision. The Superintendent has not asked for the same.
As observed in para 2 of the said order, no document is withheld from the department by the appellant. 1997 (96) ELT 191 is relied upon in support of the case. Small scale dealer has placed orders and the variation of date in the certificate and the invoice is normal as certificate is issued late. No one-to-one correlation principle will apply in Modvat cases. The quantity and the value tally as per the gate passes. RT 12 returns are finalised after enquiry. The demand is time barred as observed in the stay order. Shri K.L. Ramteke, the learned JDR, has submitted that the documents do not tally and Modvat credit is wrongly taken as held in the impugned order in pages 4 to 7 and the imposition of penalty and the confirmation of demand is proper and correct. In the course of the reply it is urged that as per Rule 57G the certificate issued is a duty paying document and credit is not taken on the delivery challan and even according to the annexure to the show cause notice the description of the goods tally and the subsidiary gate pass is a duty paying document.
3. Perused the show cause notice and reply, correspondence of the appellant to the department, certificates issued by M/s. Gujarat Aluminium Stores, the sub-dealer carrying the details shown in the subsidiary gate pass, invoices and the corresponding invoices issued by M/s. Gujarat Aluminium Stores, written submission made by the appellant in the adjudication proceedings and the minutes of RAC meeting held on 12.4.1993 under the Chairmanship of the Collector of Central Excise, Mumbai-II and also the Tribunal's decision in in the case of Gufic Pharma Pvt. Ltd. v. CCE, Vadodara in which in the case of Unique Resin Industries v. CCE, Baroda is relied upon, which deals with the question of extended period of limitation. According to this ruling it is not invokable by alleging suppression of fact which was not required by law to be disclosed. When there is no provision for the disclosure, failure to disclose the details does not attract the extended period 1997 (96) ELT 191 in the case of CCE, Ahmedabad v. Moti Laminates P. Ltd. also deals with the same aspect, regarding the suppression of fact. Details of clearances of the goods to the depots and discount claimed in the RT 12 returns submitted. Prices at which the assessee sold the goods from its depot, where the goods were taken after payment of duty, not required to be disclosed. Omission to furnish such information not amounts to suppression of facts and extended period of limitation cannot be invoked.
4. The appellant has explained that M/s. Gujarat Aluminium Stores has issued the invoice first and then directed M/s. Jugraj Tejraj & Sons to obtain subsidiary certificate. So there is a difference of date in invoices and the subsidiary certificate. As contended by the appellant the order No. 637/95-WRB dated 5.4.1995 supports the case of the appellant that the subsidiary gate passes under which the inputs are received tally in terms of the description and the details. The subsidiary gate passes were produced as duty paying documents as required under Section (sic) 57G of the Rules. It is for the department to call for further documents to clear the doubt, if any. So the question of withholding the documents does not arise, in the absence of it. This is the prima facie view at the stage of decision of the stay petition which helps the appellant in support of this contention.
5. The appellant has challenged since the beginning that the demand is time barred and there is no suppression or withholding of any material from the department. There is no statutory requirement for production of delivery challans and invoices along with RT 12 returns for taking Modvat credit based on subsidiary gate passes. Subsidiary gate pass is an authorised document under Rule 57G(2). The practice adopted by the dealers was not known to the department in view of the RAC meeting of the Mumbai-II Collectorate. The details in the subsidiary gate passes issued by the dealers and the invoices raised by the sub-dealers tally.
In the impugned order trade practice is accepted by the adjudicating authority, as contended by the appellant. The finding of the adjudicating authority that there is no scope for receiving the goods from one source and receiving it from another source in view of the wording in Rule 57G(2) and the format of the subsidiary gate pass, and the correlation of one-to-one must be there and the very goods which are left in the original manufacturer's factory must be received in the manufacturer's factory must be established before availing the benefit by the industrial user, but it is held that the goods are not the very same as were mentioned and enumerated in the documents for the clearances. The requirement of Rule 57G(2) is not clearly satisfied. He has examined the invoices, certificates and delivery challans. It is further observed that the delivery challan accompanies the physical goods like a gate pass or subsidiary gate pass/certificate in lieu of gate pass which is a mandatory document then the certificate should be dated prior to the date of delivery challan which is not so in this case. He has also examined the chart prepared by the appellant regarding the invoices, subsidiary gate passes and certificates. The certificates and gate passes are issued subsequently from the invoice to the extent of two week's delay and it is held that goods can be treated as comparable goods or similar goods which is not permissible.
Where duty paid nature of goods is not shown, credit cannot be taken.
The minutes of RAC meeting is also examined and held the privity between the dealer and sub-dealer and the sub-dealer and the actual user must be established in toto. It does not justify a scheme where the goods are put in a pool and from where they are removed piecemeal.
Regarding the question of time bar it is held that gate pass forms the basis of assessment of RT 12, and the invoices would be examined purely as corroborative evidence. During the relevant period the invoices covered these consignment and not this subsidiary gate pass. The appellant being aware of the same, still proceeded on claiming the Modvat credit on the subsidiary gate pass. It is a mis-representation of suppression of fact to deny the benefit of Modvat.
6. On the examination of the documents produced by the appellant it is seen that the annexure to the show cause notice at Exhibit 5 shows that the description of the goods in the subsidiary gate passes and invoices in column No. 7 & 8 tallies, as contended by the appellant. It is admitted fact that subsidiary gate pass is a duty paying document as prescribed by the Board, which is issued by the range Superintendent.
Rule 57G Sub-Rule (4) requires the manufacturer to submit the original documents evidencing payment of duty along with part I & II of RG 23A and there is no mention of invoices and challans. In the absence of it, the failure to produce the document does not amount to suppression. As contended by the appellant, if the department was not satisfied with the RT 12 returns it could have called upon the appellant to produce these documents to satisfy itself, as per the rule cited by the appellant referred in the above paragraphs. The clarification of the Collector of Central Excise, Mumbai-II in the meeting dated 12.4.1993 that it is permissible to take credit if the dealer has obtained the subsidiary gate pass in the name of actual user, though the goods are supplied to him by the actual dealer through sub-dealer, clearly supports the case of the appellant as the dealer has taken the subsidiary gate pass in the name of the appellant and the goods were supplied through sub-dealer. The certificate issued by the sub-dealer M/s. Gujarat Aluminium Stores and the subsidiary gate passes and corresponding invoices show that the goods mentioned in them tally regarding the quantity and description of the goods. Even the thickness of the sheet also tallies in the above documents. The sub-dealer has confirmed this under the certificate. The correlation is established between the goods supplied and the particulars mentioned in the duty paying documents and also invoices. Failure to mention the gauge and dimension in the description of the goods in the subsidiary gate pass does not affect the case of the appellant as it was for the concerned range Superintendent to do. The annexure enclosed to the written submission before the adjudicating authority also indicates the tallying of the description of the thickness of the aluminium sheets.
In the light of these documents, the statement of R.B. Singh and M/s.
Jugraj Tejraj & Sons, as pointed out by the learned JDR, does not help the case of the department in any way. So under these circumstances, the contention of the appellant that the extended period of limitation cannot be invoked in this case, has got some force. Availment of the Modvat benefit on the inputs by the appellant is proper and correct.
Hence the following order is passed: For the reasons discussed above, the show cause notice dated 19.1.1994 for the period January, 1989 to March, 1992 is barred by time. The extended period of limitation cannot be invoked in the case on hand. The description of the goods tallies in the documents produced, and also the actual physical goods. The appeal is allowed with consequential relief according to law and the impugned order is set aside.