Sardar Aluminium Factory Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. when the matter was called, shri j.s. agarwal the learned advocate appearing for m/s. sardar aluminium factory, submitted that rule 57g(2) speaks of the bill of entry. there is no further procedure laid down about the endorsement in the rule. he submitted that the goods were imported by m/s. metal trading company and were sold to appellant in original packings. this aspect has been verified by the superintendent and this is evidenced from the supdt. central excise's endorsement on the face of the bill of entry. he submitted that even there is a letter of the asstt. collector (audit) clarifying that when the importer endorsed the bill of entry in favour of actual user, one endorsement may be accepted as a duty paying document for modvat. subsequent endorsements should not be accepted and no modvat credit is to be allowed on them. the learned advocate also cited the judgment of the tribunal in the case of s.b.s. organics pvt. ltd. v. collector of central excise & customs, reported in 1990 (45) e.l.t. 701 and also stay order no. s/532/93-nrb in the case of noble plastic mould v.collector of. central excise, delhi. in these judgments, the tribunal held :- "modvat credit - endorsement upto any number permissible - endorsement on gate passes - inputs received under gate passes endorsed three times before reaching the final user of inputs - modvat credit permissible when goods in factory packed condition are received by parties intending to avail such credit - department, however, allowed to make inquiry about the genuine nature of gate passes and about non-utilisation of gate passes of earlier stages of endorsements for availment of credit - rule 57g of central excise rules, 1944 - trade notice no. 86/89, dated 12-5-1989 issued by baroda collectorate." 2. in the case of noble plastic mould, it has been held that the bench has been consistently taking the view that the non-observance of procedural formalities will not disentitle the assessees from the availing of modvat credit if otherwise found eligible.3. shri k.n. gupta, the learned sdr submitted that there is a basic difference between gate pass and bill of entry. he submitted that whereas original of the gate pass accompanies the goods, triplicate copy of the bill of entry accompanies the goods. therefore, if any claim of refund etc. arises subsequently, there is no mention in the original copy of the bill of entry which is accepted for such refunds etc. to show that modvat credit or any other benefit has been granted to the importers of the goods. he therefore, submitted that there is a detailed procedure laid down for the purpose of availing modvat credit on bill of entry to be followed in the instant case and therefore, submitted that non-observance of the instructions should disentitle the appellant from availing modvat credit. he submitted that the trade notice is being followed by all the customs houses. he also referred to the order of the asstt. collector and submitted that this order is dated 18th sept., 1992 whereas the case before us pertains to the period of may and june, 1992.4. heard both sides and considered the submissions made by them.without going into the merits of the case, i find that the tribunal has been strictly holding that procedural requirement not complied with, shall not disentitle availment of modvat credit if otherwise eligible.i agree with the findings of the tribunal in the two cases cited by the learned advocate. the pre-deposit of duty amounting to rs. 83,928 and penalty of rs. 10,000 is waived and recovery proceedings shall remain stayed pending disposal of the appeal.

Judgment:
1. When the matter was called, Shri J.S. Agarwal the learned advocate appearing for M/s. Sardar Aluminium Factory, submitted that Rule 57G(2) speaks of the bill of entry. There is no further procedure laid down about the endorsement in the rule. He submitted that the goods were imported by M/s. Metal Trading Company and were sold to appellant in original packings. This aspect has been verified by the Superintendent and this is evidenced from the Supdt. Central Excise's endorsement on the face of the bill of entry. He submitted that even there is a letter of the Asstt. Collector (Audit) clarifying that when the importer endorsed the bill of entry in favour of actual user, one endorsement may be accepted as a duty paying document for modvat. Subsequent endorsements should not be accepted and no modvat credit is to be allowed on them. The learned advocate also cited the judgment of the Tribunal in the case of S.B.S. Organics Pvt. Ltd. v. Collector of Central Excise & Customs, reported in 1990 (45) E.L.T. 701 and also stay order No. S/532/93-NRB in the case of Noble Plastic Mould v.Collector of. Central Excise, Delhi. In these judgments, the Tribunal held :- "MODVAT Credit - Endorsement upto any number permissible - Endorsement on gate passes - Inputs received under gate passes endorsed three times before reaching the final user of inputs - MODVAT Credit permissible when goods in factory packed condition are received by parties intending to avail such credit - Department, however, allowed to make inquiry about the genuine nature of gate passes and about non-utilisation of gate passes of earlier stages of endorsements for availment of credit - Rule 57G of Central Excise Rules, 1944 - Trade Notice No. 86/89, dated 12-5-1989 issued by Baroda Collectorate." 2. In the case of Noble Plastic Mould, it has been held that the Bench has been consistently taking the view that the non-observance of procedural formalities will not disentitle the assessees from the availing of modvat credit if otherwise found eligible.

3. Shri K.N. Gupta, the learned SDR submitted that there is a basic difference between gate pass and Bill of Entry. He submitted that whereas original of the gate pass accompanies the goods, triplicate copy of the Bill of Entry accompanies the goods. Therefore, if any claim of refund etc. arises subsequently, there is no mention in the original copy of the Bill of Entry which is accepted for such refunds etc. to show that modvat credit or any other benefit has been granted to the importers of the goods. He therefore, submitted that there is a detailed procedure laid down for the purpose of availing modvat credit on bill of entry to be followed in the instant case and therefore, submitted that non-observance of the instructions should disentitle the appellant from availing modvat credit. He submitted that the Trade Notice is being followed by all the Customs Houses. He also referred to the order of the Asstt. Collector and submitted that this order is dated 18th Sept., 1992 whereas the case before us pertains to the period of May and June, 1992.

4. Heard both sides and considered the submissions made by them.

Without going into the merits of the case, I find that the Tribunal has been strictly holding that procedural requirement not complied with, shall not disentitle availment of modvat credit if otherwise eligible.

I agree with the findings of the Tribunal in the two cases cited by the learned advocate. The pre-deposit of duty amounting to Rs. 83,928 and penalty of Rs. 10,000 is waived and recovery proceedings shall remain stayed pending disposal of the appeal.