Commissioner of Central Excise Vs. KevIn Enterprises - Court Judgment

Excerpt:
1. first two appeals have been filed against order-in-appeal no. 114 & 115/91 (48 & 49 bed) ce/ahd/collr(a) dated 18-2-1991, whereas appeal e/67/91bom is against order-in-appeal no.474/90/61-brd/cex/ahd/collr(a) dated 25-10-1990 both passed by the collector of central excise (appeals), ahmedabad. as the issue involved in all the three appeals is same, all the appeals are taken up for hearing together.2. the respondents received consignments of coils initially supplied by sail under invoice issued in favour of one m/s. kanoi steel corporation, who sold part thereof in all the three cases, to the present respondents by making endorsement on the gate passes to the effect that they had no objection to m/s. kevin enterprises taking credit on the said material. the coils were received in original packing bearing due identification marks. respondents availed of modvat credit thereon which was objected to and therefore the demands were raised which were confirmed by the adjudicating authority but were set aside by the collector (appeals) by the impugned orders.3. shri v.k. puri, the ld sdr for the appellant, submits that the department is not challenging any of the factual positions but their contention is that when part of the consignment is received by the respondents, the same ought to have been received under subsidiary gate passes and act of the suppliers namely m/s. kanoi steel corporation of having endorsed the gate passes for the part of the consignments was not recognised as a valid document for availment of modvat credit as per the board's direction given by letter no. 233/26/86/cex, dated 23-1-1989. in his submission therefore the part consignment received under such endorsed invoices being not recognised documents for availment of modvat credit, the approach of the collector (appeals) in holding the respondents eligible for availment of modvat credit is not proper. he also submits that going by the documents, the invoices issued by sail bear a particular date and the endorsement made by m/s.kanoi steel corporation are also of the same day or a day or two thereafter. therefore, it cannot be even said that what was sold to the respondents by kanoi steel corpn. were only remnants so as to attract the concessions given under trade notice no. 87/89, dated 5-5-1989 issued by the calcutta collectorate and no. 80/48/89, dated 12-5-1989 issued by the bombay-ii collectorate. he submits that what appears to have been transferred is a major portion of the goods received by kanoi steel corporation and as per the requirements as laid down by the board, which they are authorised to do the endorsement on gate pass could not be accepted as valid documents.4. shri m.h. patil, the advocate for the respondents, however, submits that the collector (appeals) has considered the aspect of factual position as well and has come to the conclusion that in some cases only part consignments were received. the said authority while admitting that they were all in original packing bearing serial no. assigned by the sail, he also refers to the order of the collector (appeals) where, the said authority had observed that the suppliers had also given an undertaking on the reverse of invoices to the effect that they had no objection for the respondents taking modvat credit and that they would not be taking modvat credit from any authority. in his submission, since the entitlement of the respondents to avail of the modvat credit being not under challenge and when endorsement on the invoices and gate passes on transfer of part of the consignments has been approved in the trade notices issued by the collectorates, there shall be no cause for denial of modvat credit.5. considering the submissions and going through the records, there is no denial on the factual position including the one of the endorsement made by m/s. kanoi steel corporation on the gate passes where they have also declared that they had not availed of any modvat credit and that they had no objection for availing of modvat credit by the respondents.the original invoices have come to the respondents with these endorsements. going by what has been provided for in the board's letter dated 23-1-1989, such endorsement for the part consignment would not be treated as adequate and considering that letter by itself, would make respondents disentitled to avail modvat credit. in ordinary circumstances therefore the objection raised by the department would have been sustained. here however subsequent to the issuance of such letter by the board, two trade notices have been issued by two different collectorates, where on the representations made by the trade and the difficulties ex perienced by them by giving some more concessions, it has been approved that gate passes could be endorsed for part of the consignment. the issue that requires to be considered is whether what has been received by the respondents could be branded as remnants. the ld dr has by referring to the gate passes and other documents submitted that it could not be the remnance and that removal of one of two articles would not make the balance quantity as remnants.the collector (appeals) has however in his orders held these as remnants and seems to have satisfied by considering various aspects. in the appeal against the orders of the said authority, basically what is required to be considered is whether on factual aspects he has misdirected himself. the said authority seems to have taken the view that with entitlement of the respondents to avail modvat credit having not been challenged, they appear to have received the balance of the entire quantity. he has felt that the same would be falling under the category of remnants. when entitlement of respondents is not challenged, the factual appreciation made by him in relation to these consignments cannot be ignored so as to deny the modvat credit to the respondents. though agreeing with the legal proposition that when endorsement on the duty paying documents by itself is not enough, when part consignment is transferred, with the specific case brought under appeal, there appears to have been a satisfaction of the collector (appeals) about the transfer of only part of remnants which are permissible under trade notices referred to above, there does not appear to be any justifiable reason to interfere the finding of fact as given by the collector (appeals) and on that ground, the appeals are rejected.

Judgment:
1. First two appeals have been filed against Order-in-Appeal No. 114 & 115/91 (48 & 49 BED) CE/Ahd/Collr(A) dated 18-2-1991, whereas Appeal E/67/91Bom is against Order-in-Appeal No.474/90/61-BRD/CEX/AHD/Collr(A) dated 25-10-1990 both passed by the Collector of Central Excise (Appeals), Ahmedabad. As the issue involved in all the three appeals is same, all the appeals are taken up for hearing together.

2. The Respondents received consignments of coils initially supplied by SAIL under invoice issued in favour of one M/s. Kanoi Steel Corporation, who sold part thereof in all the three cases, to the present Respondents by making endorsement on the gate passes to the effect that they had no objection to M/s. Kevin Enterprises taking credit on the said material. The coils were received in original packing bearing due identification marks. Respondents availed of MODVAT credit thereon which was objected to and therefore the demands were raised which were confirmed by the Adjudicating Authority but were set aside by the Collector (Appeals) by the impugned orders.

3. Shri V.K. Puri, the ld SDR for the appellant, submits that the Department is not challenging any of the factual positions but their contention is that when part of the consignment is received by the Respondents, the same ought to have been received under subsidiary gate passes and act of the suppliers namely M/s. Kanoi Steel Corporation of having endorsed the gate passes for the part of the consignments was not recognised as a valid document for availment of Modvat Credit as per the Board's direction given by letter No. 233/26/86/CEX, dated 23-1-1989. In his submission therefore the part consignment received under such endorsed invoices being not recognised documents for availment of Modvat Credit, the approach of the Collector (Appeals) in holding the Respondents eligible for availment of Modvat Credit is not proper. He also submits that going by the documents, the invoices issued by SAIL bear a particular date and the endorsement made by M/s.

Kanoi Steel Corporation are also of the same day or a day or two thereafter. Therefore, it cannot be even said that what was sold to the Respondents by Kanoi Steel Corpn. were only remnants so as to attract the concessions given under Trade Notice No. 87/89, dated 5-5-1989 issued by the Calcutta Collectorate and No. 80/48/89, dated 12-5-1989 issued by the Bombay-II Collectorate. He submits that what appears to have been transferred is a major portion of the goods received by Kanoi Steel Corporation and as per the requirements as laid down by the Board, which they are authorised to do the endorsement on gate pass could not be accepted as valid documents.

4. Shri M.H. Patil, the advocate for the Respondents, however, submits that the Collector (Appeals) has considered the aspect of factual position as well and has come to the conclusion that in some cases only part consignments were received. The said Authority while admitting that they were all in original packing bearing serial No. assigned by the SAIL, he also refers to the order of the Collector (Appeals) where, the said authority had observed that the suppliers had also given an undertaking on the reverse of invoices to the effect that they had no objection for the Respondents taking Modvat credit and that they would not be taking Modvat credit from any authority. In his submission, since the entitlement of the Respondents to avail of the Modvat credit being not under challenge and when endorsement on the invoices and gate passes on transfer of part of the consignments has been approved in the Trade Notices issued by the Collectorates, there shall be no cause for denial of Modvat Credit.

5. Considering the submissions and going through the records, there is no denial on the factual position including the one of the endorsement made by M/s. Kanoi Steel Corporation on the gate passes where they have also declared that they had not availed of any Modvat Credit and that they had no objection for availing of Modvat Credit by the Respondents.

The original invoices have come to the Respondents with these endorsements. Going by what has been provided for in the Board's letter dated 23-1-1989, such endorsement for the part consignment would not be treated as adequate and considering that letter by itself, would make Respondents disentitled to avail Modvat Credit. In ordinary circumstances therefore the objection raised by the department would have been sustained. Here however subsequent to the issuance of such letter by the Board, two Trade Notices have been issued by two different Collectorates, where on the representations made by the Trade and the difficulties ex perienced by them by giving some more concessions, it has been approved that gate passes could be endorsed for part of the consignment. The issue that requires to be considered is whether what has been received by the Respondents could be branded as Remnants. The ld DR has by referring to the gate passes and other documents submitted that it could not be the remnance and that removal of one of two articles would not make the balance quantity as remnants.

The Collector (Appeals) has however in his orders held these as remnants and seems to have satisfied by considering various aspects. In the appeal against the orders of the said authority, basically what is required to be considered is whether on factual aspects he has misdirected himself. The said authority seems to have taken the view that with entitlement of the Respondents to avail Modvat Credit having not been challenged, they appear to have received the balance of the entire quantity. He has felt that the same would be falling under the category of remnants. When entitlement of Respondents is not challenged, the factual appreciation made by him in relation to these consignments cannot be ignored so as to deny the Modvat Credit to the Respondents. Though agreeing with the legal proposition that when endorsement on the duty paying documents by itself is not enough, when part consignment is transferred, with the specific case brought under appeal, there appears to have been a satisfaction of the Collector (Appeals) about the transfer of only part of remnants which are permissible under Trade Notices referred to above, there does not appear to be any justifiable reason to interfere the finding of fact as given by the Collector (Appeals) and on that ground, the appeals are rejected.