M/S. Shivagrico Implements Vs. Commissioner of Central Excise, - Court Judgment

Excerpt:
1. the applicants filed this application for waiver of pre-deposit of rs.56,233/- and penalty of rs.5,000/-. the benefit of modvat credit was denied to the appellants on the ground that the appellants availed the benefit of modvat credit before filing the declaration . the contention of the appellant is that the declaration was filed after taking the credit and the appellants were under belief that in the earlier declaration filed by them the input now in question is declared and when on verification they find that in respect of the present input, the declaration was not filed. they filed a fresh declaration alongwith the application of cod in filing the declaration . he relies upon the larger bench decision in the case of kamakhya steels (p) ltd. vs. cce, meerut, reported in 2000 (40) rlt 575 and submits that in this case the issue before the bench where an assessee can take credit in respect of the inputs regarding which no declaration was filed. he submits that the tribunal after taking into consideration the amendment made in rule 57g by notification no.77/99-ce (nt) remanded the matter to the adjudicating authority as the board circular no.441/7/99-cx dated 23.2.99 clarified that the amendment is applicable in the pending cases also.2. heard learned departmental representative who reiterated the finding of the lower authorities.3. in view of the larger bench decision of the tribunal in the case of kamakhya steels (p) ltd. vs. c.c.e., meerut (supra), prima facie balance of convenience is in favour of the appellants, hence the pre-deposit of duty and penalty is waived for hearing of the appeal.4. with the consent of both the parties, the appeals are taken up for disposal. the benefit of modvat credit was denied to the appellants only on the ground that the declaration was filed after taking the credit on the inputs. the appellants also filed an cod in filing the declaration. the contention of the appellants is that rule 57g of the central excise rules is amended by notification no.77/99-ce (nt) to the effect credit shall not be denied on the ground that the declaration filed under sub-rule (1) does not contain all the details or the manufacturer failes to comply with any other requirement under sub-rule (1). appellants relied upon the decision of the larger bench in the case of kamakhya steels (p) ltd. (supra) where the tribunal after taking into the consideration the board circular no.441/7/99 dated 23.2.99 remanded the matter to the adjudicating authority for deciding afresh. the tribunal held as under : shri a.r. madhav rao. ld. advocate as an intervener submitted that the question referred to the larger bench in the instant case need not be answered and matter be remanded to the adjudicating authority to examine the issue afresh in the light of amendment to rules 57g and 57t as per notification no. 7/99-ce (nt) dated 9.2.99. and the two circulars (m.f. dr. letter f.no. 267/6/92-cx dated 30.1.92 and circular no. 441/7/99-cx dt. 23.2.99) [reported in 1999 (31) rlt m61]. he referred to the relevant amendment (7/99-ce(nt) dt. 9.2.99) which is as under:- "7/99-ce(nt), dt. 9.2.1999. in exercise of the powers conferred by section 37 of the central excise act, 1944 (1 of 1944), the central government hereby makes the following rules further to amend the central excise rules, 1944, namely:- 1. (1) these rules may be called the central excise (3rd amendment) rules, 1944. (2) they shall come into force on the date of their publication in the official gazette. (a) in rule 57g, after sub-rule (10), the following sub-rule shall be inserted. namely,- "(11) credit under sub-rule (2) shall not be denied on the grounds that - (i) any of the documents, mentioned in sub-rule (3) does not contain all the particular required to be contained therein under these rules, if such document contains details of payment of duty, description of the goods,m assessable value, na,me and address of the factory or warehouse. (ii) the declaration filed under sub-rule (1) does not contain all the details required to be contained therein or the manufacturer fails to comply with any other requirements under sub-rule (1):" he submitted that circular are binding on the authorities functioning under the statute. referring to the circular no. 441/7/99 dated 23.2.99, he said that circular was issued to follow certain guidelines in respect of notification no. 7/99 dated 9.2.99 while considering the admissibility of modvat credit and further it was specified in the circular that guidelines are applicable to the pending cases and the pending cases are to be disposed of accordingly. in this context, he referred to the decision of the supreme court in the cases of mathew m. thomas vs commissioner of income tax reported in 1999 (33) rlt 227 (sc)=1999 (111) elt 4 (sc) wherein ti was held that proceedings shall include proceedings at the appellate stage. particularly, he drew our attention to the para 8 of the said judgement which reads as under:- "8 it is well settled that the word "proceedings" shall melude the proceedings at the appellate stage. it is sufficient to refer to the judgement of this court in garikapati veeraya v.n. subrah choudhary & ors. - air 1957 s.c. 540 wherein the court said at page 553:- (i) that the legal pursuit of a remedy, suit appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceedings". hence we are unable to persuade ourselves to agree with the view expressed by the full bench of the high court in the judgement under appeal that the circular would apply only to proceedings pending before the competent authority". we are not convinced with the arguments advanced on behalf of the revenue that amended provisions and circulars referred to above are not applicable to the point in issue. on going through the amendment to rule 57g particularly with reference to sub-clause ii of 2(a) of 7/99-ce(nt) dated 9.2.99 the circulars and the case law, we find that matter is required to be re-examined as it was rightly pointed out by the intervener. in the view we have taken, the matter is remanded to the jurisdictional assistant commissioner to examine the admissibility of modvat credit for the period covered under appeal no. e/1840/95 and to pass an order in accordance with law. in view of the above decision of the tribunal, the impugned order is set aside and the matter is remanded to the adjudicating authority for de novo consideration. in the light of the above decision of the tribunal, the appeals are disposed of as mentioned above.

Judgment:
1. The applicants filed this application for waiver of pre-deposit of Rs.56,233/- and penalty of Rs.5,000/-. The benefit of MODVAT credit was denied to the appellants on the ground that the appellants availed the benefit of MODVAT credit before filing the declaration . The contention of the appellant is that the declaration was filed after taking the credit and the appellants were under belief that in the earlier declaration filed by them the input now in question is declared and when on verification they find that in respect of the present input, the declaration was not filed. They filed a fresh declaration alongwith the application of COD in filing the declaration . He relies upon the Larger Bench decision in the case of Kamakhya Steels (P) Ltd. Vs. CCE, Meerut, reported in 2000 (40) RLT 575 and submits that in this case the issue before the Bench where an assessee can take credit in respect of the inputs regarding which no declaration was filed. He submits that the Tribunal after taking into consideration the amendment made in Rule 57G by Notification No.77/99-CE (NT) remanded the matter to the adjudicating authority as the Board Circular No.441/7/99-CX dated 23.2.99 clarified that the amendment is applicable in the pending cases also.

2. Heard learned Departmental Representative who reiterated the finding of the lower authorities.

3. In view of the Larger Bench decision of the Tribunal in the case of Kamakhya Steels (P) Ltd. Vs. C.C.E., Meerut (Supra), prima facie balance of convenience is in favour of the appellants, hence the pre-deposit of duty and penalty is waived for hearing of the appeal.

4. With the consent of both the parties, the appeals are taken up for disposal. The benefit of MODVAT credit was denied to the appellants only on the ground that the declaration was filed after taking the credit on the inputs. The appellants also filed an COD in filing the declaration. The contention of the appellants is that Rule 57G of the Central Excise Rules is amended by Notification No.77/99-CE (NT) to the effect credit shall not be denied on the ground that the declaration filed under Sub-rule (1) does not contain all the details or the manufacturer failes to comply with any other requirement under Sub-Rule (1). Appellants relied upon the decision of the Larger Bench in the case of Kamakhya Steels (P) Ltd. (Supra) where the Tribunal after taking into the consideration the Board Circular No.441/7/99 dated 23.2.99 remanded the matter to the adjudicating authority for deciding afresh. The Tribunal held as under : Shri A.R. Madhav Rao. ld. Advocate as an intervener submitted that the question referred to the larger bench in the instant case need not be answered and matter be remanded to the Adjudicating Authority to examine the issue afresh in the light of amendment to Rules 57G and 57T as per Notification No. 7/99-CE (NT) dated 9.2.99. and the two Circulars (M.F. DR. Letter F.No. 267/6/92-CX dated 30.1.92 and Circular No. 441/7/99-CX dt. 23.2.99) [reported in 1999 (31) RLT M61]. He referred to the relevant amendment (7/99-CE(NT) dt. 9.2.99) which is as under:- "7/99-CE(NT), dt. 9.2.1999. In exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to amend the Central Excise Rules, 1944, namely:- 1. (1) These rules may be called the Central Excise (3rd Amendment) Rules, 1944.

(2) They shall come into force on the date of their publication in the Official Gazette.

(a) in rule 57G, after sub-rule (10), the following sub-rule shall be inserted. namely,- "(11) Credit under sub-rule (2) shall not be denied on the grounds that - (i) any of the documents, mentioned in sub-rule (3) does not contain all the particular required to be contained therein under these rules, if such document contains details of payment of duty, description of the goods,m assessable value, na,me and address of the factory or warehouse.

(ii) the declaration filed under sub-rule (1) does not contain all the details required to be contained therein or the manufacturer fails to comply with any other requirements under sub-rule (1):" He submitted that circular are binding on the authorities functioning under the statute. Referring to the Circular No. 441/7/99 dated 23.2.99, he said that Circular was issued to follow certain guidelines in respect of Notification No. 7/99 dated 9.2.99 while considering the admissibility of modvat credit and further it was specified in the circular that guidelines are applicable to the pending cases and the pending cases are to be disposed of accordingly. In this context, he referred to the decision of the Supreme Court in the cases of Mathew M. Thomas Vs Commissioner of Income Tax reported in 1999 (33) RLT 227 (SC)=1999 (111) ELT 4 (SC) wherein ti was held that proceedings shall include proceedings at the appellate stage. Particularly, he drew our attention to the para 8 of the said judgement which reads as under:- "8 It is well settled that the word "Proceedings" shall melude the proceedings at the appellate stage. It is sufficient to refer to the judgement of this Court in Garikapati Veeraya V.N. Subrah Choudhary & Ors. - AIR 1957 S.C. 540 wherein the Court said at page 553:- (i) That the legal pursuit of a remedy, suit appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceedings".

Hence we are unable to persuade ourselves to agree with the view expressed by the Full Bench of the High Court in the Judgement under appeal that the Circular would apply only to proceedings pending before the Competent Authority".

We are not convinced with the arguments advanced on behalf of the Revenue that amended provisions and Circulars referred to above are not applicable to the point in issue. On going through the amendment to Rule 57G particularly with reference to sub-clause II of 2(a) of 7/99-CE(NT) dated 9.2.99 the Circulars and the case law, we find that matter is required to be re-examined as it was rightly pointed out by the intervener. In the view we have taken, the matter is remanded to the Jurisdictional Assistant Commissioner to examine the admissibility of modvat credit for the period covered under Appeal No. E/1840/95 and to pass an order in accordance with law. In view of the above decision of the Tribunal, the impugned order is set aside and the matter is remanded to the adjudicating authority for de novo consideration. In the light of the above decision of the Tribunal, the appeals are disposed of as mentioned above.