Gabs Poly Pvt. Ltd. Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. the captioned appeal assails the decision of the collector (appeals) holding that modvat credit taken on the gate pass endorsed after 31-3-1994 was not admissible and that proviso to rule 57g(2) mentions about duty-paying documents to be either an invoice issued under rule 52a or the one prescribed by the central government and that invoice on the stength of which modvat credit has been taken by the appellants was neither.2. the facts of the case are that the appellants are engaged in the manufacture of resin poly buttons blanks. they purchased inputs from the market and were availing modvat credit facility under rule 57a of the central excise rules, 1944 after complying with the provisions of rule 57g. the dispute arose in respect of 3 items. the items are at serial nos. 1, 5 and 7 of annexure a to the show cause notice. the dispute was that gp is was endorsed in the two cases on or after 1st april, 1994 and that modvat credit was taken on the basis of these endorsed gp. 1. the allegation was that since the gp. 1 were endorsed after 1-4-1994 no modvat credit can be taken on the strength of these gp 1 and that they were not valid documents after the date of endorsement. the second allegation was that inputs were not purchased from authorised dealer distributor. the department issued a show cause notice to the appellants asking them to explain as to why the duty amounting to rs. 83,900/ should not be demanded from them under rule 57-1 read with section 11a of the central excises & salt act, 1944. the lower authorities after hearing the appellants confirmed the demand.3. sh. naveen mullick, ld. counsel for the appellants submits that the issue can broadly be divided into two categories. the first category of the dispute is in respect of two gp is. he submits that the relevant gp is are the gp 1 no. 019506, dated 26-3-1994 and gp 1 no. 019507, dated 26-3-1994. the ld. counsel submits that this clearly shows that gp is were issued before 30-3-1994. he submits that modvat credit of duty in respect of gp. 1 019506, dated 26-3-1994 was taken on 2-4-1994 and in respect of gp. 1019507 the credit was taken on 15-4-1994. he submits that admitted position on the basis of above facts was that gp. 1 were issued before 30-3-1994 and that credits on the strength of gp. is were taken before 30-6-1994. he submits that this position is fully covered by notification no. 16/94. he submits that against serial no. 10 endorsed gate passes have been accepted as valid duty-paying documents; and that proviso to the notification clearly states that modvat credit of duty on the endorsed gate pass can be taken provided that the gate passes were issued before 1-4-1994 and that credit of duty on the strength of these endorsed gate pass was taken before 30-6-1994. the ld. counsel submits that in their case both the conditions are satisfied and, therefore, the gate pass nos. 019506 and 019507 are valid duty-paying documents and, therefore, credit was correctly taken by the appellants.4. on the second issue i.e. invoice issued by authorised dealer/distributor is concerned he submits that notification no. 15/94 nowhere uses the term 'authorised'. he submits that notification no.15/94 clearly says that the invoice issued by distributor/dealer are valid documents for the purpose of taking modvat credit. he submits that invoice no. 40, dated 23-4-1994 was issued by m/s. m.g. associates that m/s. m.g. associates had purchased these goods from m/s. indian dye stuff industries limited who are manufacturers. he refers to the definition of the term wholesale dealer in section 2(k) of the central excises & salt act, 1944 and submits that wholesale dealer is a person who purchases goods for further sale in substantial quantity. he submits that in the instant case the quantity purchased was 5000 kgs.and, therefore, this was quantity which indicates a wholesale purchase.he submits that therefore, invoice of m/s. m.g. associates become documents acceptable under notification no. 15/94 dated 30-3-1994. in support of his contentions the ld. counsel cited and relied upon the decision of the tribunal in the case moosa haji patrawala private limited reported in 1996 (13) rlt 350. the ld. counsel submits that their case was fully covered factually and legally and therefore, prays that the appeal may be allowed.5. shri y.r. kilaniya, ld. jdr submitted that both the additional collector as well as commissioner (appeals) has very lucidly dealt with each aspect and that he reiterated the findings of these authorities.6. heard the submissions of both sides. in so far as taking of credit on the strength of endorsed gp. 1 is concerned i find that gp. is were issued before 1-4-1994 and the credit on the strength of these endorsed gate passes was taken before 30-6-1994.1 also observe that under notification no. 16/94 under serial no. 10 endorsed gp 1 is valid document. i also find that similar issue was for decision before west regional bench of this tribunal in the case of moosa haji patrawala cited (supra) and this tribunal held that if gate passes were issued before 30-3-1994 and endorsement of such gate passes made from 1-4-1994 to 30-6-1994; if credit on the basis of such gate passes was taken before 30-6-1994 no objection can be raised to such credit as such gate passes are valid documents for the purpose of rule 57g of the central excise rules, 1944. having regard to the stipulations of notification no. 16/94 as also the ratio of the decision of this tribunal in the case of moosa haji patrawala i hold that endorsed gate passes are valid duty-paying documents for the purpose of rule 57g and that modvat credit taken on the strength of these documents was valid and is sustainable in law.7. on the second issue i find that m/s. m.g. associates can be termed as dealer for the purpose of notification no. 15/94 inasmuch as m/s.m.g. associates purchased substantial quantity of the products from sale depot of the manufacturer. having regard to the stipulations in notification no. 15/94 i hold that invoice issued by m/s. m.g.associates is valid document for the purpose of rule 57g and, therefore, modvat credit taken on the strength of these invoices was admissible and is sustainable in law. in view of the above findings the appeal is allowed. consequential relief, if any, shall be admissible to the appellants in accordance with law.

Judgment:
1. The captioned appeal assails the decision of the Collector (Appeals) holding that Modvat credit taken on the gate pass endorsed after 31-3-1994 was not admissible and that proviso to Rule 57G(2) mentions about duty-paying documents to be either an invoice issued under Rule 52A or the one prescribed by the Central Government and that invoice on the stength of which Modvat credit has been taken by the appellants was neither.

2. The facts of the case are that the appellants are engaged in the manufacture of resin poly buttons blanks. They purchased inputs from the market and were availing Modvat credit facility under Rule 57A of the Central Excise Rules, 1944 after complying with the provisions of Rule 57G. The dispute arose in respect of 3 items. The items are at serial Nos. 1, 5 and 7 of Annexure A to the show cause notice. The dispute was that GP Is was endorsed in the two cases on or after 1st April, 1994 and that Modvat credit was taken on the basis of these endorsed GP. 1. The allegation was that since the GP. 1 were endorsed after 1-4-1994 no Modvat credit can be taken on the strength of these GP 1 and that they were not valid documents after the date of endorsement. The second allegation was that inputs were not purchased from authorised dealer distributor. The department issued a show cause notice to the appellants asking them to explain as to why the duty amounting to Rs. 83,900/ should not be demanded from them under Rule 57-1 read with Section 11A of the Central Excises & Salt Act, 1944. The lower authorities after hearing the appellants confirmed the demand.

3. Sh. Naveen Mullick, ld. Counsel for the appellants submits that the issue can broadly be divided into two categories. The first category of the dispute is in respect of two GP Is. He submits that the relevant GP Is are the GP 1 No. 019506, dated 26-3-1994 and GP 1 No. 019507, dated 26-3-1994. The ld. Counsel submits that this clearly shows that GP Is were issued before 30-3-1994. He submits that Modvat credit of duty in respect of GP. 1 019506, dated 26-3-1994 was taken on 2-4-1994 and in respect of GP. 1019507 the credit was taken on 15-4-1994. He submits that admitted position on the basis of above facts was that GP. 1 were issued before 30-3-1994 and that credits on the strength of GP. Is were taken before 30-6-1994. He submits that this position is fully covered by Notification No. 16/94. He submits that against serial No. 10 endorsed gate passes have been accepted as valid duty-paying documents; and that proviso to the Notification clearly states that Modvat credit of duty on the endorsed gate pass can be taken provided that the gate passes were issued before 1-4-1994 and that credit of duty on the strength of these endorsed gate pass was taken before 30-6-1994. The ld. counsel submits that in their case both the conditions are satisfied and, therefore, the gate pass Nos. 019506 and 019507 are valid duty-paying documents and, therefore, credit was correctly taken by the appellants.

4. On the second issue i.e. invoice issued by authorised dealer/distributor is concerned he submits that Notification No. 15/94 nowhere uses the term 'authorised'. He submits that Notification No.15/94 clearly says that the invoice issued by distributor/dealer are valid documents for the purpose of taking Modvat credit. He submits that invoice No. 40, dated 23-4-1994 was issued by M/s. M.G. Associates that M/s. M.G. Associates had purchased these goods from M/s. Indian Dye Stuff Industries Limited who are manufacturers. He refers to the definition of the term wholesale dealer in Section 2(k) of the Central Excises & Salt Act, 1944 and submits that wholesale dealer is a person who purchases goods for further sale in substantial quantity. He submits that in the instant case the quantity purchased was 5000 kgs.

and, therefore, this was quantity which indicates a wholesale purchase.

He submits that therefore, invoice of M/s. M.G. Associates become documents acceptable under Notification No. 15/94 dated 30-3-1994. In support of his contentions the ld. Counsel cited and relied upon the decision of the Tribunal in the case Moosa Haji Patrawala Private Limited reported in 1996 (13) RLT 350. The ld. Counsel submits that their case was fully covered factually and legally and therefore, prays that the appeal may be allowed.

5. Shri Y.R. Kilaniya, ld. JDR submitted that both the Additional Collector as well as Commissioner (Appeals) has very lucidly dealt with each aspect and that he reiterated the findings of these authorities.

6. Heard the submissions of both sides. In so far as taking of credit on the strength of endorsed GP. 1 is concerned I find that GP. Is were issued before 1-4-1994 and the credit on the strength of these endorsed gate passes was taken before 30-6-1994.1 also observe that under Notification No. 16/94 under serial No. 10 endorsed GP 1 is valid document. I also find that similar issue was for decision before West Regional Bench of this Tribunal in the case of Moosa Haji Patrawala cited (supra) and this Tribunal held that if gate passes were issued before 30-3-1994 and endorsement of such gate passes made from 1-4-1994 to 30-6-1994; if credit on the basis of such gate passes was taken before 30-6-1994 no objection can be raised to such credit as such gate passes are valid documents for the purpose of Rule 57G of the Central Excise Rules, 1944. Having regard to the stipulations of Notification No. 16/94 as also the ratio of the decision of this Tribunal in the case of Moosa Haji Patrawala I hold that endorsed gate passes are valid duty-paying documents for the purpose of Rule 57G and that Modvat credit taken on the strength of these documents was valid and is sustainable in law.

7. On the second issue I find that M/s. M.G. Associates can be termed as dealer for the purpose of Notification No. 15/94 inasmuch as M/s.

M.G. Associates purchased substantial quantity of the products from sale depot of the manufacturer. Having regard to the stipulations in Notification No. 15/94 I hold that invoice issued by M/s. M.G.Associates is valid document for the purpose of Rule 57G and, therefore, Modvat credit taken on the strength of these invoices was admissible and is sustainable in law. In view of the above findings the appeal is allowed. Consequential relief, if any, shall be admissible to the appellants in accordance with law.