Eveready Industries India Ltd Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. the appellants in this case manufacture flash lights. one of their inputs is miniature bulbs which they were buying from silvania laxman and were availing of modvat credit facility of the duty paid on the bulbs. gate pass no. 467, dated 31-7-1992 was lost in transit. the goods were duly received and entered in the rg 23a part i register on 28-8-1992. therefore they approached the suppliers to obtain and sent to them a copy of the gate pass duly attested by the jurisdictional range officer. on receipt of this copy the appellants took credit in rg 23a part ii register on 31-12-1992. the jurisdictional officer of the appellants factory noticed these cases when scrutinising the rt 12 returns for the month of december, 1992. after issue of a show cause notice the credit was denied by the original authority vide his order dated 20-5-1993 on the observation that in terms of the board's instructions dated 15-12-1992 attested gate passes were not the valid documents for taking modvat credit. this view was upheld by the collector vide his order dated 23-9-1993. against this order the appellants filed an appeal before the cegat which was decided vide final order no. a-104/94-nrb, dated 24-1-1994 in a. no. e/3087/93-nrb.in the order the tribunal had held that the various trade notices based on the board's letter f. no. 202/96/81-cx. 6, dated 30-11-1982 (circular no. 40/82) were in force until they were set aside by the later instructions dated 15-12-1992. it was held that the procedure in vogue when the credit was taken permitted endorsed gate pass be valid documents. the case was remanded to the original authority for examination of the certified copy in terms of the board's circular no.160/86 reported in 1986 (26) e.l.t. 36.2. in de novo proceedings the assistant collector in his order dated 29-5-1995 again relied upon the later circular of the board and again held that the impugned gate passes could not qualify for taking a credit. he did refer in an oblique manner to the circular cited by the cegat and on which he was directed to decide the merits of the case and he condemned the circular of the board as being ultra vires to provisions of rule 57g(4). he also hinted that perhaps the board after realising its error had thought it fit to withdraw it. this interesting observation is worth reproducing below :- "since the original copy of gp1 in this case is admitted lost in transit it is not permissible to the party to have availed modvat credit on the basis of a certified copy of the original documents. an administrative instruction may not override the provisions of the rule (even this instruction in question have been withdrawn now.)" 3. he again rejected the admissibility of the attested gate passes. the collector in his order dated 20-2-1996 referred to the boards circular no. 40/82, dated 30-11-1982.which dealt with the issue of taking proforma credit on the strength of attested copy of the gate pass and which was made applicable to availment of modvat credit in 1986 as communicated in coimbatore collector's trade notice no. 60/86, dated 25-9-1986. he observed that the appellants had not followed the procedure given in the trade notice and had not furnished any indemnity bond. he observed that before taking credit on 31-12-1992 the provisions of board's circular no. 25/82, dated 15-12-1982 had come into force and, therefore, the credit taken was irregular. he upheld the rejection of the credit giving rise to the present appeal.3a. shri m.p dev nath, ld. advocate stated that the circular of the board prescribed an indemnity bond where a manufacturer desires to take credit immediately i.e. even before the receipt of the attested copy.here the credit was taken only subsequent to receipt of the attested copy. the observation that the procedure had not been followed by the appellants was wrong.4. as regards the observations of both the authorities that this facility was withdrawn on 15-12-1992, and that the credit was taken on 31-12-1992 the ld. advocate relied upon the judgment of the tribunal in the case of hindustan motors ltd. v. collector of central excise, calcutta - 1994 (73) e.l.t. 597 (tribunal) in which it was held that the crucial event determining the admissibility of the credit was the receipt of the inputs and not the act of taking the credit. ld.advocate stated that during the material time credit taken on attested copies was permissible as per the executive instructions. the tribunal in several cases had given relief on the strength of this procedure. in this respect he cited the judgment of the tribunal in the case of ind-ital chemicals ltd. v. collector of central excise, madras, a third member judgment reported in 1995 (11) rlt 403 and also in an earlier judgment, namely, order no. 871/94-nrb, dated 28-10-1994 in the case of geep industrial syndicate. ld. advocate further submitted in this case that both the lower authorities had gone beyond the scope of the directions given by the tribunal.in such cases an adverse view has been taken of such authorities by the court as in the case of kamlakshi finance corporation ltd. v. union of india, 1990 (47) e.l.t. 231 (bombay) and in the case of geep industrial syndicate ltd. v. union of india, 5. shri kilania, ld. jdr arguing on behalf of revenue reiterated the arguments of the lower authorities.7. the tribunal had remanded the case to the assistant collector for examination of the acceptability of the certified copy of the impugned gate pass after holding that the board's circular permitting credit to be taken on the basis of the attested copy was applicable to the facts of the case. the assistant collector's job was merely to examine the facts as they were apparent on perusal of the gate pass, namely, the date of attestation, the date of taking credit and the date of receipt of the inputs in the factory. when the directions were so specific there was no cause for him to hold that the facility had been withdrawn vide board's later circular dated 15-12-1992. he had also no reason to comment upon the board's capacity and authority to issue executive instructions which according to him went against the provisions of rule 57g(4). the ld. collector also did not apply his mind to the submissions of the appellants before him that the assistant collector had transgressed the limit set by the tribunal's order. he also made the erroneous observations about non-furnishing of the indemnity bond without realising that the impugned instructions made it necessary to file such a bond only when the assessee desired to take credit before receipt of the attested copy of the invoice. his belief that the credit taken after receipt of the board's amending circular could not qualifiy is also wrong in view of the tribunal's findings that the relevant date is that of receipt of input and not of taking credit. the collector made a grave error in upholding the perverse order passed by the assistant collector.8. i allow this appeal and set aside both the lower orders and remand the case back to the original adjudicating authority who will examine the certified copy of the gate pass and allow the modvat credit to be taken on such examination of the gate pass as is done in the ordinary course.9. a copy of this order shall be marked to the jurisdictional collector for his information.

Judgment:
1. The appellants in this case manufacture Flash Lights. One of their inputs is miniature bulbs which they were buying from Silvania Laxman and were availing of Modvat Credit facility of the duty paid on the bulbs. Gate pass No. 467, dated 31-7-1992 was lost in transit. The goods were duly received and entered in the RG 23A Part I Register on 28-8-1992. Therefore they approached the suppliers to obtain and sent to them a copy of the gate pass duly attested by the jurisdictional Range Officer. On receipt of this copy the appellants took credit in RG 23A Part II Register on 31-12-1992. The jurisdictional officer of the appellants factory noticed these cases when scrutinising the RT 12 Returns for the month of December, 1992. After issue of a show cause notice the credit was denied by the original authority vide his order dated 20-5-1993 on the observation that in terms of the Board's instructions dated 15-12-1992 attested gate passes were not the valid documents for taking Modvat Credit. This view was upheld by the Collector vide his order dated 23-9-1993. Against this order the appellants filed an appeal before the CEGAT which was decided vide Final Order No. A-104/94-NRB, dated 24-1-1994 in A. No. E/3087/93-NRB.In the order the Tribunal had held that the various Trade Notices based on the Board's letter F. No. 202/96/81-CX. 6, dated 30-11-1982 (Circular No. 40/82) were in force until they were set aside by the later instructions dated 15-12-1992. It was held that the procedure in vogue when the credit was taken permitted endorsed gate pass be valid documents. The case was remanded to the original authority for examination of the certified copy in terms of the Board's Circular No.160/86 reported in 1986 (26) E.L.T. 36.

2. In de novo proceedings the Assistant Collector in his order dated 29-5-1995 again relied upon the later Circular of the Board and again held that the impugned gate passes could not qualify for taking a credit. He did refer in an oblique manner to the Circular cited by the CEGAT and on which he was directed to decide the merits of the case and he condemned the Circular of the Board as being ultra vires to provisions of Rule 57G(4). He also hinted that perhaps the Board after realising its error had thought it fit to withdraw it. This interesting observation is worth reproducing below :- "Since the original copy of GP1 in this case is admitted lost in transit it is not permissible to the party to have availed Modvat credit on the basis of a certified copy of the original documents.

An administrative instruction may not override the provisions of the Rule (Even this instruction in question have been withdrawn now.)" 3. He again rejected the admissibility of the attested gate passes. The Collector in his order dated 20-2-1996 referred to the Boards Circular No. 40/82, dated 30-11-1982.which dealt with the issue of taking proforma credit on the strength of attested copy of the gate pass and which was made applicable to availment of Modvat credit in 1986 as communicated in Coimbatore Collector's Trade Notice No. 60/86, dated 25-9-1986. He observed that the appellants had not followed the procedure given in the Trade Notice and had not furnished any indemnity bond. He observed that before taking credit on 31-12-1992 the Provisions of Board's Circular No. 25/82, dated 15-12-1982 had come into force and, therefore, the Credit taken was irregular. He upheld the rejection of the credit giving rise to the present appeal.

3A. Shri M.P Dev Nath, Ld. Advocate stated that the Circular of the Board prescribed an indemnity bond where a manufacturer desires to take credit immediately i.e. even before the receipt of the attested copy.

Here the credit was taken only subsequent to receipt of the attested copy. The observation that the procedure had not been followed by the appellants was wrong.

4. As regards the observations of both the authorities that this facility was withdrawn on 15-12-1992, and that the credit was taken on 31-12-1992 the Ld. Advocate relied upon the judgment of the Tribunal in the case of Hindustan Motors Ltd. v. Collector of Central Excise, Calcutta - 1994 (73) E.L.T. 597 (Tribunal) in which it was held that the crucial event determining the admissibility of the Credit was the receipt of the inputs and not the act of taking the Credit. Ld.

Advocate stated that during the material time credit taken on attested copies was permissible as per the executive instructions. The Tribunal in several cases had given relief on the strength of this procedure. In this respect he cited the judgment of the Tribunal in the case of Ind-Ital Chemicals Ltd. v. Collector of Central Excise, Madras, a Third Member judgment reported in 1995 (11) RLT 403 and also in an earlier judgment, namely, Order No. 871/94-NRB, dated 28-10-1994 in the case of Geep Industrial Syndicate. Ld. Advocate further submitted in this case that both the lower authorities had gone beyond the scope of the directions given by the Tribunal.

In such cases an adverse view has been taken of such authorities by the Court as in the case of Kamlakshi Finance Corporation Ltd. v. Union of India, 1990 (47) E.L.T. 231 (Bombay) and in the case of Geep Industrial Syndicate Ltd. v. Union of India, 5. Shri Kilania, Ld. JDR arguing on behalf of Revenue reiterated the arguments of the lower authorities.

7. The Tribunal had remanded the case to the Assistant Collector for examination of the acceptability of the certified copy of the impugned gate pass after holding that the Board's Circular permitting credit to be taken on the basis of the attested copy was applicable to the facts of the case. The Assistant Collector's job was merely to examine the facts as they were apparent on perusal of the gate pass, namely, the date of attestation, the date of taking credit and the date of receipt of the inputs in the factory. When the directions were so specific there was no cause for him to hold that the facility had been withdrawn vide Board's later Circular dated 15-12-1992. He had also no reason to comment upon the Board's capacity and authority to issue executive instructions which according to him went against the Provisions of Rule 57G(4). The Ld. Collector also did not apply his mind to the submissions of the appellants before him that the Assistant Collector had transgressed the limit set by the Tribunal's order. He also made the erroneous observations about non-furnishing of the indemnity bond without realising that the impugned instructions made it necessary to file such a bond only when the assessee desired to take credit before receipt of the attested copy of the invoice. His belief that the credit taken after receipt of the Board's amending Circular could not qualifiy is also wrong in view of the Tribunal's findings that the relevant date is that of receipt of input and not of taking credit. The Collector made a grave error in upholding the perverse order passed by the Assistant Collector.

8. I allow this appeal and set aside both the lower orders and remand the case back to the original adjudicating authority who will examine the certified copy of the gate pass and allow the Modvat Credit to be taken on such examination of the gate pass as is done in the ordinary course.

9. A copy of this order shall be marked to the jurisdictional Collector for his information.