Hybrid Electronic Systems P. Ltd. Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. since the arguments covering the stay petitions by both the sides were considered adequate for disposal of the appeals themselves, with the consent of both the sides, i find that the appeals themselves can be disposed of.2. all the three appeals arise out of the common order-in-appeal cited above, though they are covered by three different orders-in-original.3. in the case of appeal e/912/96-bom., modvat credit amounting to rs. 22,154/- was sought to be denied on the allegation that subsidiary gate pass that emanated from one party being the supplier, but payment for the inputs has been made on the basis of invoice raised by another party. it is not disputed that the subsidiary gate pass is issued for movement of the goods to the appellants. on this ground modvat credit to the extent of rs. 22,154/- has been denied and a penalty of rs. 2,000/- has been imposed. on appeal the commissioner (appeals) has confirmed the order of the assistant commissioner. on hearing this appeal, i find that subsidiary gate pass is a prescribed document during the material period and this subsidiary gate pass is in favour of the appellant. prima facie this document cannot be brushed aside for the purpose of availment of modvat credit. all the same when payment for purchase of goods was made to another party as against the name of the supplier furnished in the subsidiary gate pass, it is incumbent on the part of the appellants to produce necessary evidence to show that the same goods have come through the intermediary, who has raised the invoice. the ld. advocate undertakes to produce this evidence before the assistant commissioner and he would seek for remand of the matter.4. shri gurdeep singh, the ld. jdr does not have any objection to the matter being remanded setting out the aforesaid position.5. hence i set aside the order of the authorities below and remand the case (in regard to appeal e/912/96-bom.) back to the assistant commissioner, before whom all the requisite evidence establishing that the same inputs covered by subsidiary gate pass have been received through the intermediary, should be produced. the assistant commissioner on verifying this evidence should allow modvat credit, if nexus is established. thus appeal e/912/96-bom. is allowed by way of remand in the above terms.6. appeal e/913/96-bom. relates to denial of modvat credit on the ground that gate pass dated 31-3-1994, which was endorsed after 1-4-1994 and credit was also taken after 30-6-1994 and hence this document is not valid in respect of the credit taken after 30-6-1994 in terms of notification no. 16/94. shri m.h. patil, the ld. advocate does not have any objection to the contention that the case is not covered by notification 16/94, but he pleads that in respect of the same goods, apart from this gate pass endorsed after 1-4-1994, they have also produced commercial invoice issued by the dealer of the manufacturer, giving all the requisite particulars as annexed to the invoice. he refers to the notification no. 21 /94 in this regard to point out that such invoice in respect of the stock lying with the manufacturers as well as their distributors and dealers should be issued for the purpose of modvat credit. hence even if it is sought to be denied on the ground of non-availability of notification no. 16/94, benefit of modvat credit on the basis of manufacturers dealers invoice in terms of notification 21 /94 cannot be denied.7. shri gurdeep singh, the ld. jdr however, submits that the invoice as such does not contain particulars and it is not evident from the orders of the authorities below that the annexure to the invoice was placed before the authorities.8. shri m.h. patil, the ld. sdr does not have objection to the matter being subjected to verification by the authorities with regard to annexure giving all the particulars. the benefit under notification 21/94 cannot be denied, merely because that all the particulars are not furnished in the body of the invoice.9. i find that though notification no. 16/94 may not be available, when there is an invoice from the dealer of the manufacturer of the goods produced and this is an authorised document as per notification no.21/94, this cannot be brushed aside. however, since there is a grey area with regard to the annexure of invoice not being seen by the lower authorities, in fairness to both the sides, i consider it necessary to remand the case back to the assistant commissioner for considering the annexure to the invoice and make necessary verification and thereafter decide on the eligibility of modvat credit, on the basis of the invoice. it is needless for me to say that all the material particulars cannot be accommodated in one page of the invoice and there cannot be any objection in having annexure giving the particulars to the invoice.hence on this technicality, credit cannot be denied, if it is otherwise satisfying the other requirements.10. in appeal e/914/96-bom., there are two issues involved. one relates to denial of modvat credit in respect of gate pass endorsed after 1-4-1994 but issued before 31-3-1994. credit also has been taken before 30-6-1994. the objection from the department is that endorsed gate pass is also an authorised document and as per proviso to notification 16/94, such a document should have been issued prior to 31-3-1994. the very same issue has been considered by this bench in the case of patrawala - 1996 (13) rlt 350, wherein we have held that this objection is based on wrong interpretation of the notification and have construed that the benefit of notification 16/94 would be available, if the credit is taken before 30-6-1994 and the gate pass has been issued prior to 31-3-1994. it was held that endorsement made after 1-4-1994 cannot invalidate the document for the purpose of modvat credit. hence on the basis of this judgment, demand for an amount of rs. 34,599/- is not sustainable. appeal is allowed with regard to this demand.11. as regards balance of rs. 5,535 /-, the issue relates to taking of credit on gate pass stamped as invoice. this document has been issued in the month of april, 1994, when the requirement of issue of invoice was introduced and the board have also appreciated the difficulties in procuring the invoice books and given instructions. the ld. advocate refers to the trade notice no. 19/94 and 20/94 issued by the mumbai i commissionerate. in view of this, no serious objection can be taken in extending the modvat credit on the basis of these invoices. hence the entire appeal no. 914/96-bom., is allowed.12. in the result, appeal no. e/914/96-bom. is allowed unconditionally and appeals no. e/912/96-bom. and e/913/96-bom. are allowed by way of remand on the terms indicated in this order.

Judgment:
1. Since the arguments covering the stay petitions by both the sides were considered adequate for disposal of the appeals themselves, with the consent of both the sides, I find that the appeals themselves can be disposed of.

2. All the three appeals arise out of the common order-in-appeal cited above, though they are covered by three different Orders-in-Original.

3. In the case of Appeal E/912/96-Bom., Modvat credit amounting to Rs. 22,154/- was sought to be denied on the allegation that subsidiary gate pass that emanated from one party being the supplier, but payment for the inputs has been made on the basis of invoice raised by another party. It is not disputed that the subsidiary gate pass is issued for movement of the goods to the appellants. On this ground Modvat credit to the extent of Rs. 22,154/- has been denied and a penalty of Rs. 2,000/- has been imposed. On appeal the Commissioner (Appeals) has confirmed the order of the Assistant Commissioner. On hearing this appeal, I find that subsidiary gate pass is a prescribed document during the material period and this subsidiary gate pass is in favour of the appellant. Prima facie this document cannot be brushed aside for the purpose of availment of Modvat credit. All the same when payment for purchase of goods was made to another party as against the name of the supplier furnished in the subsidiary gate pass, it is incumbent on the part of the appellants to produce necessary evidence to show that the same goods have come through the intermediary, who has raised the invoice. The ld. advocate undertakes to produce this evidence before the Assistant Commissioner and he would seek for remand of the matter.

4. Shri Gurdeep Singh, the ld. JDR does not have any objection to the matter being remanded setting out the aforesaid position.

5. Hence I set aside the order of the authorities below and remand the case (in regard to Appeal E/912/96-Bom.) back to the Assistant Commissioner, before whom all the requisite evidence establishing that the same inputs covered by subsidiary gate pass have been received through the intermediary, should be produced. The Assistant Commissioner on verifying this evidence should allow Modvat credit, if nexus is established. Thus Appeal E/912/96-Bom. is allowed by way of remand in the above terms.

6. Appeal E/913/96-Bom. relates to denial of Modvat credit on the ground that gate pass dated 31-3-1994, which was endorsed after 1-4-1994 and credit was also taken after 30-6-1994 and hence this document is not valid in respect of the credit taken after 30-6-1994 in terms of Notification No. 16/94. Shri M.H. Patil, the ld. advocate does not have any objection to the contention that the case is not covered by Notification 16/94, but he pleads that in respect of the same goods, apart from this gate pass endorsed after 1-4-1994, they have also produced commercial invoice issued by the dealer of the manufacturer, giving all the requisite particulars as annexed to the Invoice. He refers to the Notification No. 21 /94 in this regard to point out that such invoice in respect of the stock lying with the manufacturers as well as their distributors and dealers should be issued for the purpose of Modvat credit. Hence even if it is sought to be denied on the ground of non-availability of Notification No. 16/94, benefit of Modvat credit on the basis of manufacturers dealers invoice in terms of Notification 21 /94 cannot be denied.

7. Shri Gurdeep Singh, the ld. JDR however, submits that the invoice as such does not contain particulars and it is not evident from the orders of the authorities below that the annexure to the invoice was placed before the authorities.

8. Shri M.H. Patil, the ld. SDR does not have objection to the matter being subjected to verification by the authorities with regard to annexure giving all the particulars. The benefit under Notification 21/94 cannot be denied, merely because that all the particulars are not furnished in the body of the invoice.

9. I find that though Notification No. 16/94 may not be available, when there is an invoice from the dealer of the manufacturer of the goods produced and this is an authorised document as per Notification No.21/94, this cannot be brushed aside. However, since there is a grey area with regard to the annexure of Invoice not being seen by the lower authorities, in fairness to both the sides, I consider it necessary to remand the case back to the Assistant Commissioner for considering the annexure to the invoice and make necessary verification and thereafter decide on the eligibility of Modvat credit, on the basis of the invoice. It is needless for me to say that all the material particulars cannot be accommodated in one page of the invoice and there cannot be any objection in having annexure giving the particulars to the invoice.

Hence on this technicality, credit cannot be denied, if it is otherwise satisfying the other requirements.

10. In Appeal E/914/96-Bom., there are two issues involved. One relates to denial of Modvat credit in respect of gate pass endorsed after 1-4-1994 but issued before 31-3-1994. Credit also has been taken before 30-6-1994. The objection from the department is that endorsed gate pass is also an authorised document and as per proviso to Notification 16/94, such a document should have been issued prior to 31-3-1994. The very same issue has been considered by this Bench in the case of Patrawala - 1996 (13) RLT 350, wherein we have held that this objection is based on wrong interpretation of the Notification and have construed that the benefit of Notification 16/94 would be available, if the credit is taken before 30-6-1994 and the gate pass has been issued prior to 31-3-1994. It was held that endorsement made after 1-4-1994 cannot invalidate the document for the purpose of Modvat credit. Hence on the basis of this judgment, demand for an amount of Rs. 34,599/- is not sustainable. Appeal is allowed with regard to this demand.

11. As regards balance of Rs. 5,535 /-, the issue relates to taking of credit on gate pass stamped as invoice. This document has been issued in the month of April, 1994, when the requirement of issue of invoice was introduced and the Board have also appreciated the difficulties in procuring the invoice books and given instructions. The ld. advocate refers to the Trade Notice No. 19/94 and 20/94 issued by the Mumbai I Commissionerate. In view of this, no serious objection can be taken in extending the Modvat credit on the basis of these invoices. Hence the entire appeal No. 914/96-Bom., is allowed.

12. In the result, Appeal No. E/914/96-Bom. is allowed unconditionally and Appeals No. E/912/96-Bom. and E/913/96-Bom. are allowed by way of remand on the terms indicated in this order.