Full Judgment
2. The appellant is engaged in manufacturing texturised yarn covered under Tariff Heading 5403.00 during the relevant time. They used to receive partially oriented yarn (POY) on the basis of invoices issued by depot of the manufacturer. Show cause notice issued to the appellant alleged that invoices were issued by unregistered dealers/ distributors/ traders and that such invoices did not contain the details as per proforma prescribed by the Central Board of Excise & Customs. Therefore, the department took the view that the appellant had wrongly taken the credit. The reply given by the assessee was not accepted and the demand was confirmed by the original authority.
3. The Commissioner (Appeals) took the view that the appellant could not produce any evidence to the adjudicating authority or to the appellate authority at the time of personal hearing that the goods in question were received by them in their factory and consumed by them.
He also observed that the appellant could not produce any lorry receipt/ consignment note/ delivery note to ascertain the delivery of the goods at their factory and that all invoices are addressed to the buyer other than appellant. It is contended on behalf of the appellant that the Commissioner (Appeals) has not correctly appreciated the facts in the case and law applicable. In the show cause notice, the only allegation was that the invoices were issued by unregistered dealers etc. By producing necessary documents before the authorities, the appellant had proved that such dealers were subsequently granted registration and therefore, the above ground is not available. The appellant would further contend that it had produced sufficient materials before the authorities below in order to show that the goods were received in its factory and were utilised therein. All the concerned invoices had been defaced by the Range Superintendent which certifies the receipt and utilization of the same in the manufacture of the final product. The appellant had also made available evidence of assessment of RT 12 along with the copy of RG 23A Part I and II of the relevant period. It is further submitted that lorry receipt/consignment note/delivery note were not available since depots are situated nearby and vehicles are managed by the consignee. In any view of the matter, the appellant would contend that this was not an application in the show cause notice.
4. It is further contended that the finding of the Commissioner (Appeals) that all invoices addressed to buyers other than the appellant and therefore, it has to be taken that there is no evidence to show that the goods have reached the appellant's factory, is unsustainable. All the invoices indicated that the goods are to be delivered at the factory of the appellant. Apart from the above, M/s.
Jindal Polyester and Sanghi Polyester Ltd. who are suppliers of POY to the appellant company certified that the goods covered by the relevant invoices had been delivered from their godown to the factory of the appellant and that all particulars incorporated in the invoices were written at the time of issue of the show cause notice. The appellant would submit that the above certificate would also clearly show that the finding of the Commissioner (Appeals) that it appeared that the appellant's name incorporated subsequently in the invoices as they have done job work, is totally without any basis.
5. It is the contention of the appellant that since it has been proved beyond doubt that the goods had reached the appellant's factory and they were used in the manufacture, any omission in procedural requirement should not be a reason to deny modvat credit. The learned DR submits that reliance placed by the appellant on the decision of this Tribunal, namely, Prakash Cotton Mills Ltd. v. CCE 1996(85) ELT 149(T) is of no consequence since the above decision had been overruled by a Larger Bench in Balmer Lawrie & Co. Ltd. v. CCE. Kanpur 2000(116) ELT 364.
6. After hearing both sides, we find that the appellant's case cannot be treated as one where a mandatory condition is violated which would justify denial of credit, as held by the Larger Bench. We are of the view that in the facts of the case ratio of the decision in CCE Ahmedabad v. Satyen Dyes 2001(134) ELT 655(Trib.-LB) could be applied.
In the present case, we find that the receipt of the inputs in the factory of production has been entered into the statutory records of Central Excise and the relevant invoices had also been defaced by the Jurisdictional Range Superintendent. The above would show that these invoices have been acted upon by the department after due verification.
The Revenue has no case that the goods covered by the invoices were received in any place other than the appellant's factory. Under these circumstances, we are of the view that the appellant cannot be denied modvat credit.
7. In the result, we set aside the impugned order and allow the appeals.
Operative part of the order already pronounced in the open Court on 28.10.2003.