1. The Revenue has filed this appeal against the order-in-appeal No.18/05(V-II) CE dated 26.5.2005 passed by the Commissioner of Customs and Central Excise (Appeals).
2. We have heard the learned SDR, None appeared for the Respondents.
The issue involves Notification No. 58/97-CE dated 30.8.1007 by which the Government has notified certain inputs for the purpose of credit of duty under modvat scheme. The said notification is reproduced below: Notification No. 58/97-CE dated 30.8.1997 is extracted thereunder for ready reference: Iron and steel-Goods notified for purposes of credit of duty under Modvat In exercise of the powers conferred by Sub-rule (6) of Rule 57A of the Central Excise Rules, 1944, the Central Government hereby declares the following inputs and the final products falling within the Schedule to the Central Excise Tariff Act, 1985 (5) of 1986) namely: Inputs: Hot re-rolled products of non-alloy steel falling under sub-headings Nos. 7211.11.7211.19, 7211.30, 7211.52, 7211.59, 7211.60, 7211.92, 7211.99, 7213.90, 7214.90, 7215.90, 7216.10 and 7216.90 of the said Schedule and on which duty of excise has been paid under Final Products : All goods falling within the said Schedule.
2. The Central Government further declares that the duty of excise under the Central Excise Act, 1944 (1 of 1944) (hereinafter referred to as the said Act), shall be deemed to have been paid (hereinafter referred to as deemed duty), on the inputs declared herein and the same shall be equivalent to the amount calculated at the rate of twelve per cent of the price, as declared by the manufacturer, in the invoice accompanying the said inputs (hereinafter referred to as invoice price) and credit of the deemed duty so determined shall be allowed to the manufacturer of the final products.
3. The credit of deemed duty allowed in respect of the said inputs shall be utilized only towards payment of duty of excise leviable under the said Central Excise Act on the said final products.
Provided that the credit of deemed duty in respect of inputs cleared for export under bond shall be allowed to be utilized towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible by refund to the manufacturer subject to such safeguards, conditions and limitations as may be specified by the Central Government in the Official Gazette.
Provided further that no such refund of credit of deemed duty shall be allowed if the manufacturer avails of drawback allowed under the Customs and Central Excise Duties (Drawback) Rules, 1971, or claims rebate of duty under Rule 12 in respect of such duty.
4. The provisions of this notification shall apply to only those inputs which have been received directly by the manufacturer of the final products from the factory of the manufacturer of the said inputs under the cover of an invoice declaring that the appropriate duty of excise has been paid on such inputs under the provisions of Section 3A of the said Act.
5. The provisions of this notification shall not apply to inputs where the manufacturer of the said inputs has not declared the invoice price of the said inputs correctly in the documents issued at the time of their clearance from his factory.
6. The notification shall come into effect on and from the Ist day of September, 1997.
Explanation (as amended by Notification No. 2/98-CE dated 10.3.1998)- For the purpose of this notification 'invoice price' means the price charged by the manufacturer of inputs and indicated in the invoice accompanying the said inputs, the payment for which is made directly by the manufacturer of the final products to the manufacturer of the said inputs by cheque drawn on his own bank account or by draft or by bankers' cheque.
The Revenue has proceeded against the respondent because they had not followed the conditions of the said notification in availing the modvat credit. The learned authorized representative invited our attention to the provisions of notification and in particular urged the following requirement which is mentioned in the "explanation" to the notification. As per the explanation, "for the purpose of this notification, the invoice price' means the price charged by the manufacturer of inputs and indicated in the invoice accompanying the said goods the payment for which is made directly by the manufacturer of the final products to the manufacturer of the said inputs by cheque drawn on his own bank account or by any bank draft or by bankers' cheque." It was brought to our notice that, the requirements given in the explanation have not been met with. In the present case, the payment has not directly been made by the manufacturer of the final product (respondent) to the manufacture of the inputs. Further, the cheque has to be drawn on the bank account of the manufacturer or by bank draft or by bankers' cheque. This condition has also not been complied with. When these conditions are not complied with, the credit cannot be claimed. Therefore, it was urged that the original authority was right in disallowing the credit. Further, it was argued that the Commissioner (Appeals) has erred in holding that procedural instructions cannot be bar for denial of substantial benefit of credit under the modvat scheme. In this connection, Revenue relied upon the decision of the Tribunal in the case of CCE, Ludhiana v. Punnia Engg.
Co. reported in 2004 (175) ELT 582 (T), wherein similar issue was dealt with and the Tribunal held that the Notification has to be strictly interpreted. It was stated that there was a wide gap between the expression "duty has been discharged" as used in notification No.58/97-CE and the expression "duty to be discharged", as stated in the invoices issued by the supplier of the inputs. The decision of the Commissioner (Appeals) in ignoring the specific condition given in the said Notification is not legal and proper. We do not agree with the Commissioner (Appeals) that there is only a minor procedural lapse in the present case. It has been clearly brought out by the Revenue that conditions mentioned in the explanation to the notification have been violated. In these circumstances, the respondent is not entitled for the benefit of the modvat credit, hence we allow the Revenue's appeal and restore the order-in-original.