Judgment:
1. M/s. Steel Authority of India Ltd. have filed this appeal being aggrieved by the impugned order passed by the Ld. Commissioner (Appeals) disallowing Modvat credit amounting to Rs. 15,58,960 and imposing the penalty of Rs. one lakh.
2. The facts of the case briefly stated are that M/s. Steel Authority of India Ltd. have a number of steel plants. While examining the records of Bhilai Steel which is one of the plants of M/s. Steel Authority of India Ltd. It was alleged that the assessee availed modvat credit during the period of the April' 94 and May' 97 on the strength of invalid/unapproved duty paying documents. They were, therefore, called upon to explain as to why duty amounting to Rs,15,58,960 should not demanded from them and why penalty should not be imposed. In reply to the SCN, the appellants submitted that they were getting raw-materials from subsidiary company or sister plant; that there was no dispute that the subject goods were duty paid and were received in the plant for manufacture of some other items; that the allegations are that either the payment particulars have not been mentioned or the movement of the goods have taken place under gate passes which were not submitted that in case, Modvat credit has been taken on the strength of extra copy of the invoice and in some cases, Modvat credit has been availed on the strength of original copy of the invoices.
It was submitted that it was the beginning of the new system, that during the earlier period, the appellants were permitted to issue their challans or advice notes indicating payment of duty as valid documents for purpose of taking Modvat credit. After considering the above submissions, the Ld. Commissioner held as indicated above.
3. Arguing the case for the appellants Shri M.P. Devnath, Ld. Counsel submits that it was the beginning of the introduction of the new scheme effective from 1.4.94. He submits that before that certain concessions were permitted to various plants of M/s. Steel Authority of India Ltd. as also other Public-Sector Undertakings. He submits that there are a number of decisions of the Tribunal dealing with various aspects and objections raised by the Department. He submits that in the case of Finecore Cables (P) Ltd. v. CCE, Bangalore 1997 (23) RLT. 842, this Tribunal held that invoice issued by depot of Hindustan Copper Ltd., credit on the basis of original copy of invoice could be allowed subject to verification. Ld. Counsel submitted that in the case of Britannia Engineering Ltd. v. CCE, Calcutta-III , this Tribunal held that customer's copy issued by M/s. SAIL is eligible document for taking Modvat credit since during relevant period M/s.
SAIL was issuing only the customer's copy and not duplicate invoice.
Ld. Counsel submitted that this Tribunal In the case of L & T Ltd. v.CCE, Bhubneswar 1994 (3) RLT 215 held that modvat credit could be taken on the strength of delivery challans issued by stock-yard of SAIL as proper documents for taking Modvat credit. Ld. Counsel also read copiously from Notification Nos. 15/94, 16/94, 21/94, 32/94 in support of his contentions. Further that during this period, the appellants herein were given the concession for a period of three months w.e.f.
1.4.94 as is evident from Central Board of Excise & Customs clarification.
4. Ld Counsel also referred to the Judgment of this Tribunal in the case of Britannia Engineering Ltd. (supra) wherein it was held that customer's copy issued by M/s. SAIL is eligible document for taking credit since during the relevant period, M/s. SAIL was issuing only the customer's copy and not duplicate invoice. Ld. Counsel also referred to the Judgment of this Tribunal in the case of Pratap Steel Rolling Mills 2000 (36) RLT 93 wherein this Tribunal held that Modvat credit was admissible on original copy of invoice issued by stock yard of steel plant before amendment of Rule 57G on 19.1.95. Ld. Counsel submits that the period of demand in this case is April' 94 and May' 94.
5. Ld. Counsel thus submitted that all the issues raised in this case are well settled by the decision of this Tribunal cited above. He submitted that there is no allegations that the goods were not duty paid nor was there any allegation that the goods were not received in the factory or were not used in the manufacture of final product. He submits that during the material period which was taken as transition period Modvat credit was being allowed on the strength of document which did not fully conform to prescribed documents. He, therefore, submits that having regard to the above submissions, the appeal may be allowed.
6. Shri Rajeev Tandon, Ld. DR submits that the entire demand of duty of account of disallowance of Modvat can be sub-divided into three parts.
The first part comprises the disallowance of Modvat credit on the strength of documents which were not prescribed documents and thus were considered as invalid document for taking Modvat credit.
The second part of the demand was on account of disallowance of Modvat credit arising on account of taking Modvat credit on the strength of original invoices.
The third demand of duty comes into existence on account of disallowance of Modvat credit on the strength of extra copy.CCE, Chandigarh v. Rine Engg. (P) Ltd. issued by second stage dealer is not valid for claiming Modvat credit.
Ld. DR refers to the Judgment of this Tribunal in the case of CCE v.Avis Electronics Pvt. Ltd. wherein the Tribunal held that a manufacturer could take credit only on the basis of duplicate copy of the invoice and where the duplicate copy has been lost in transit, he could take credit on the basis of the original copy of the invoice provided he satisfies the AC about the loss of duplicate copy.
Ld. DR submits that the Tribunal further observed: This was the mandatory requirement not a mere procedural technicality.
8. In regard to taking credit on extra copy of invoice, the Tribunal in the case of ACC Ltd. v. CCE, Chandigarh observed that no provision in Modvat rules for allowing credit on extra copy of the invoice exists and therefore, modvat credit on extra copy of invoice could not be taken. Ld. DR therefore, submitted that the demand raised and confirmed by the authorities below is legal and sustainable in law.
Reiterating the findings of the authorities below, he prays that the appeal may be allowed.
9. We have heard the submissions of both the sides. We have also perused the evidence on record. We have examined the case law cited and relied upon by the appellants. We agree with the contention of the Ld.
DR that the demand of Rs. 15,58,960 can be sub-divided into three parts: (1) Demand of Rs. 6,21,444 which has been confirmed by disallowance, Modvat credit on the ground that the Invoices did not bear payment particulars of duty. (2) Demand of Rs. 6640 has been confirmed on the ground that Modvat credit has been taken on extra copy of performa delivery invoice; and (3) demand of Rs. 9,30,876 has been confirmed on the ground that Modvat credit has been taken on original copy which was meant for buyer.
10. We note that Public-Sector Undertakings were given certain concessions in regard to the documents for purpose of payment of duty.
No doubt both sides have cited case law in support of their contentions. However, we note that the Central Excise Board of Excise & Customs in their Circular No. 34/34/94-CX dt. 26.4.94 had inter-alia clarified at point No. 4 4. SAIL has represented that in the case of Integrated Steel Plants despatches take place from several points which at times are situated several kilometres from the place where invoice is prepared. As such invoices are not prepared simultaneously with clearance but subsequent to clearance, It has requested that its Despatch Advices (which do not indicate the value) issued by the despatch points of the plant may be accepted as adequate documents for clearance of goods from the factory.
Decision: It is mandatory under the Rules to show the value in the invoice when the assessment depends on value of the goods. There can be no relaxation on this score. Necessary modifications to the existing procedure for issue of invoice may be effected. However, a time of three months to use the existing system maybe allowed. In the meantime, assessee should make necessary modification to extend terminals from the computer system to the despatch points.
11. Thus, we find that the Central Board of Excise & Customs clarified and extended the existing practice to three months. We note that the period of demand is April' 94 and May' 94 which was the period of relaxation extended to the appellants in the instant case. Thus, the two demands arising out of disallowance of Modvat credit on account of the documents not being strictly in conformity with the prescribed documents are not sustainable in law. It may be stated that the Central Board of Excise & Customs under Rule 57G(2) has power to prescribe any document as a duty paying document. Therefore, the concession extended to public-sector Undertakings to utilise the existing documents during the three months commencing from 1.4.94 is valid and legal.
12. In regard to Rs. 6640 taken as Modvat credit on extra copy of the performa delivery invoice, the document was neither prescribed not can be treated as a document used during the existing period under the relaxation provided under the Board circular and, therefore, the demand of Rs. 6640 is sustainable in law. We hold accordingly.
13. Having regard to the above observations and findings, imposition of penalty is not warranted, therefore, the order imposing is set aside, having regard to the fact that there was no dispute about the duty paid of the goods, their receipt in the factory and use in the manufacture of the final product.