Sterling Machine Tools Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. the appellants are in appeal against the order in appeal dated 31-12-2003 wherein the benefit of modvat is denied.2. the issue involved in this case is that the appellant took modvat credit on the basis of original copy of the invoice issued by the supplier, since the duplicate copy of the invoice meant for the transport carrier has been lost. the invoice was dated 31-7-1996. a show cause notice was issued to the appellants as to why the credit should not be denied to them. on adjudication, the adjudicating authority confirmed the demand and also imposed a penalty on an appeal from the order-in-original. the appellate authority in its order-in-appeal no. 19-ce/knp/2000, remanded the matter, back to the adjudicating authority for verifying the duty paying nature from the originating range. the adjudicating authority in the second round of adjudication has again confirmed the demand and appellate authority on an appeal upheld the order on the ground that the appellant was not able to satisfy the adjudicating authority. hence this appeal.2. the learned advocate for the appellants submits that, the order-in-original passed second time by the adjudicating authority is in itself speaks about the non-application of mind submits that the appellate authority has also not considered the facts of the case and passed the order in isolation of the facts. he submits that the order of the adjudicating authority was passed without following the order of the higher appellate authority.3. learned departmental representative submits that the appellate authority has correctly upheld the order. he submits that if the appellant wants to avail benefit of the credit on the original invoice, then he should follow the proper procedure as prescribed in the rules.the appellant should have filed an fir, affidavit of the driver about the loss of the duplicate copy of the invoice and then on being permitted by the assistant commissioner, should have availed the credit.4. considered the submissions made by both sides and perused the records. it is not in dispute that the inputs covered under the invoice is received and consumed in the factory of the appellant. the point of dispute is whether the appellant is precluded from availing the modvat credit on the basis of original invoice, in the absence of any fir, affidavit of the driver etc.5. i find from the records that the appellants vide his letter dated 8th october, 1996 and received by assistant commissioner office on 10-10-1996, has clearly informed the assistant commissioner that the duplicate copy of the invoice in question is lost in transit by the driver and sought permission to avail credit on the basis of original invoice. the revenue authorities instead of directing the appellant on the issue sought to keep quiet. on appellants taking credit in november, 1996, the revenue swings into action and seeks to deny the credit, on the original invoice. this action of the revenue is highly objectionable. the revenue instead of guiding the assessee to file fir, affidavit etc. chooses to keep quiet on the letter dated 10-10-96 and seeks to deny the credit on the basis of non-filing of fir, affidavit of the driver. if the revenue would have responded to the letter dated 10-10-96, the assessee would have tried to get the fir lodged etc.having not guided the appellant on the letter seeking the permission to avail credit on original invoice, now the revenue cannot cry foul and deny credit.6. further i also find that the jurisdictional assistant commissioner of the assessee had written to the originating range for the authenticity of the duty paying nature of the invoice in question.curiously enough the letter dated 20-9-2001 written by the assistant commissioner's office to the originating range, jagdishpur distt.sultanpur remained unanswered. the adjudicating authority has come to an adverse inference on this ground and has held that the appellant has failed to follow the procedure as per board circular no. 68/68-cx, dated 24-10-94. i find that this is not a correct appreciation of the fact and law. the adjudicating authority should have got a reply from his own counterpart or of the originating range. failure to do so inspire of such a huge government machinery at his disposal, cannot be held against the appellant. the appellant has in his limited capacity sought the permission of asstt. commissioner, to avail the modvat credit on original invoice. the board vide its circular dated 24-10-94 had directed that the details of duty paying character should be verified by the asstt. commissioner, which was not done in this case.the failure to elicit a information on the duty paying character from the originating range, cannot be the only reason for denial of modvat credit. in this case, it has been made the reason to deny the legitimate credit of duty.trishul alloys pvt ltd. v. cce, calcutta-i , it was held that: duplicate copy of invoice of appellant having been lost, modvat credit taken on original invoice - assistant collector to make enquiry from range superintendent about duty paying character of the consignment, and then allow or disallow modvat credit.8. i find that the above decision squarely covers the issue in this case. since the matter was remanded once to the adjudicating authority to do the verification has failed to elicit any information, it would serve no purpose to remand the matter again for the same reason.9. in view of the above facts and circumstances, the order in appeal deserves to be set aside. i set aside the impugned order and allow the appeal. appeal allowed.

Judgment:
1. The appellants are in appeal against the order in appeal dated 31-12-2003 wherein the benefit of Modvat is denied.

2. The issue involved in this case is that the appellant took Modvat credit on the basis of original copy of the invoice issued by the supplier, since the duplicate copy of the invoice meant for the transport carrier has been lost. The invoice was dated 31-7-1996. A show cause notice was issued to the appellants as to why the credit should not be denied to them. On Adjudication, the adjudicating authority confirmed the demand and also imposed a penalty on an appeal from the order-in-original. The appellate authority in its Order-in-appeal No. 19-CE/KNP/2000, remanded the matter, back to the adjudicating authority for verifying the duty paying nature from the originating range. The adjudicating authority in the second round of Adjudication has again confirmed the demand and appellate authority on an appeal upheld the order on the ground that the appellant was not able to satisfy the adjudicating authority. Hence this appeal.

2. The learned advocate for the appellants submits that, the order-in-original passed second time by the adjudicating authority is in itself speaks about the non-application of mind submits that the appellate authority has also not considered the facts of the case and passed the order in isolation of the facts. He submits that the order of the adjudicating authority was passed without following the order of the higher appellate authority.

3. Learned Departmental Representative submits that the appellate authority has correctly upheld the order. He submits that if the appellant wants to avail benefit of the credit on the original invoice, then he should follow the proper procedure as prescribed in the Rules.

The appellant should have filed an FIR, affidavit of the driver about the loss of the duplicate copy of the invoice and then on being permitted by the Assistant Commissioner, should have availed the credit.

4. Considered the submissions made by both sides and perused the records. It is not in dispute that the inputs covered under the invoice is received and consumed in the factory of the appellant. The point of dispute is whether the appellant is precluded from availing the Modvat credit on the basis of original invoice, in the absence of any FIR, affidavit of the driver etc.

5. I find from the records that the appellants vide his letter dated 8th October, 1996 and received by Assistant Commissioner office on 10-10-1996, has clearly informed the Assistant Commissioner that the duplicate copy of the invoice in question is lost in transit by the driver and sought permission to avail credit on the basis of original invoice. The Revenue authorities instead of directing the appellant on the issue sought to keep quiet. On appellants taking credit in November, 1996, the Revenue swings into action and seeks to deny the credit, on the original invoice. This action of the Revenue is highly objectionable. The revenue instead of guiding the assessee to file FIR, affidavit etc. chooses to keep quiet on the letter dated 10-10-96 and seeks to deny the credit on the basis of non-filing of FIR, affidavit of the driver. If the revenue would have responded to the letter dated 10-10-96, the assessee would have tried to get the FIR lodged etc.

Having not guided the appellant on the letter seeking the permission to avail credit on original invoice, now the Revenue cannot cry foul and deny credit.

6. Further I also find that the Jurisdictional Assistant Commissioner of the assessee had written to the originating Range for the authenticity of the duty paying nature of the invoice in question.

Curiously enough the letter dated 20-9-2001 written by the Assistant Commissioner's office to the originating range, Jagdishpur Distt.

Sultanpur remained unanswered. The adjudicating authority has come to an adverse inference on this ground and has held that the appellant has failed to follow the procedure as per Board Circular No. 68/68-CX, dated 24-10-94. I find that this is not a correct appreciation of the fact and law. The adjudicating authority should have got a reply from his own counterpart or of the originating Range. Failure to do so inspire of such a huge government machinery at his disposal, cannot be held against the appellant. The appellant has in his limited capacity sought the permission of Asstt. Commissioner, to avail the Modvat credit on original invoice. The Board vide its circular dated 24-10-94 had directed that the details of duty paying character should be verified by the Asstt. Commissioner, which was not done in this case.

The failure to elicit a information on the duty paying character from the originating range, cannot be the only reason for denial of Modvat credit. In this case, it has been made the reason to deny the legitimate credit of duty.Trishul Alloys Pvt Ltd. v. CCE, Calcutta-I , it was held that: Duplicate copy of invoice of appellant having been lost, Modvat credit taken on original invoice - Assistant Collector to make enquiry from Range Superintendent about duty paying character of the consignment, and then allow or disallow Modvat credit.

8. I find that the above decision squarely covers the issue in this case. Since the matter was remanded once to the adjudicating authority to do the verification has failed to elicit any information, it would serve no purpose to remand the matter again for the same reason.

9. In view of the above facts and circumstances, the order in appeal deserves to be set aside. I set aside the impugned order and allow the appeal. Appeal allowed.