M/S Mahalaxmi Extrusions vs Commissioner Of Central Excise-Rajkot

[ Arising out of OIA-220/2008/COMMR-A/RAJ dtd 11.8.2008, Passed by Commissioner (Appeals), Central Excise-RAJKOT]

M/s Mahalaxmi Extrusions - Appellant (s)

Vs.

Commissioner of Central Excise-RAJKOT - Respondent (s)

Represented by :

For Appellant : Shri P V Sheth (Adv) For Respondent(s) : Shri G P Thomas (AR)

For approval and signature :

Mr. P.K. Das, Hon.ble Member (Judicial)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial)

Date of Hearing : 29/12/2014 Date of Decision : 04/03/2015

ORDER No. A/10200 / 2015 dtd 4/3/2015

Per : Mr. P.K. Das;

The relevant facts of the case, in brief, are that the appellants are engaged in the manufacture of Brass Rods classifiable under Chapter 74 of the Schedule to the Central Excise Tariff Act 1985. They placed order to M/s MIR Metals Trading L.L.C Dubai and M/s A.R.A. Trading (L.L.C) Dubai for supply of Re-melted Brass Ingots/Brass Ingots. The said companies entered into contract with M/s Mitesh Impex, Jamnagar, for purchase of the Brass Ingots and the goods would be delivered to the appellant. Accordingly, M/s Mitesh Impex supplied the goods to the appellant under cover of Central Excise invoice in the name of said Companies and deliver to Mahalaxmi Extrusions, Jamnagar (i.e., appellant), who availed Cenvat Credit on the basis of said Central Excise invoices.

2. A show cause notice dtd 14.2.2006 was issued by the Joint Commissioner, Customs and Central Excise proposing to deny Cenvat Credit amounting to Rs 14,34,980/- alongwith interest and to impose penalty for the period Feb. 2005 to July 2005. It has been alleged that the appellant availed Cenvat Credit on the basis of the invoices, which are not valid documents in terms of Rule 9 of Cenvat Credit Rule 2004. It has further been alleged that as per Rule 3 read with Rule 9 of the said Rule 2004, Cenvat Credit is available only to the person, to whom the goods have been sold by the manufacturer and not to any other person. It is mandatory that the person in whose name the invoice has been issued, can take credit. The Adjudicating Authority disallowed the cenvat credit of Rs 14,34,980/- alongwith interest and also imposed penalty of equal amount of Cenvat Credit under Rule 15 of the Cenvat Credit Rules 2004. By the impugned order, the Commissioner (Appeals) modified the adjudication order in so far as penalty imposed on the appellants was reduced to Rs 50,000/- under Rule 15 of the Cenvat Credit of the said Rules.

3. The Ld Advocate on behalf of the appellant submits that there is no provision in the Cenvat Credit Rules that the credit would be eligible only purchaser of the goods from the manufacturer of inputs. He submits that Rule 9 of the said Rules provides the documents. In the present case, the appellants name is mentioned in the invoices and the goods were delivered to the appellant. In support of their contention, the appellant filed Miscellaneous application for additional documents to substantiate that the appellant received the goods in their factory and utilised in the manufacture of the final products, which were cleared on payment of duty. It is submitted that the Central Board of Excise and Customs by circular no 146/57/95-CX dtd 12.9.1995 clarified the procedural relaxation regarding the Cenvat Credit on inputs supplied for job worker. It is also relied upon the Board circular No 218/52/96-CX dtd 4.6.1996 regarding the Modvat Credit on transit sale. He relied upon the decisions of the Tribunal as under :

a) Aristo Exports vs CCE, Daman  2013(296)ELT.542 (Tri. Ahmd)

b) Neptune Stampings vas CCE, Daman  2009(246)ELT.254 (Tri.Ahmd)

c) CCE Pondicherry vs Emerald Packaging  2005(191)ELT.169 (Tri.Chennai)

d) Mahadev Industries vs CCE, Belgaum  2000(115)ELT.452 (Tribunal)

4. On the other hand, the Ld Authorised Representative on behalf of the Revenue reiterated the findings of the Commissioner (Appeals). He submits that the appellant purchased the goods from the Dubai companies and the invoices were issued in their name. Rule 9 of the Rules 2004 clearly stipulates that credit would be eligible on the basis of invoices issued by the manufacture of inputs, who had purchased the goods. It is submitted that in some cases payment of duty has made by the appellant himself to the supplier of the ingots.

5. After hearing both the sides and on perusal of the records, I find that the appellant purchased the Brass Ingots from the Dubai Company, who placed the orders to M/s Mitesh Impex, a 100% EOU, supplied the goods to the appellant in DTA as per the agreement with the Dubai company. It is seen from the invoices that M/s Mitesh Impex has mentioned the appellants name as Delivery to. There is no dispute that the goods were delivered to the appellant accompanied with Central Excise invoices. The Commissioner (Appeals) observed that the appellants purchased goods from overseas trader but availed the input credit on the invoices issued by the manufacturer to the overseas trader, which is not in conformity with any of the provisions of Cenvat Credit Rules. I agree with the submission of the Learned Advocate that in the Cenvat Scheme, ownership of input is not relevant factor and the assessee would entitle to avail cenvat credit on the basis duty paying documents prescribed under Rule 9 of Rules 2004. This view is supported by the decision of the Tribunal in the case of M/s Mahavir Industries (supra).

6. Rule 9 of Rules 2004 provides that cenvat credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of an invoice issued by a manufacturer of inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer. Rule 3 of the said Rules 2004 provides a manufacturer shall be allowed to take credit the specified duty as mentioned therein, on any input received in the factory of manufacturer. In the present case, the appellant availed credit on the basis of invoice issued under Rule 9 of the said Rules. There is no dispute that the input received in the factory of the appellant. In any event, the manufacturer of input supplied the goods in DTA. Thus, there is no scope to use the documents by the overseas company. So, the denial of cenvat Credit is not justified.

7. The Tribunal, in the case of M/s Mahadev Industries (supra) held that double set of names and addresses on the invoices not bar availing modvat credit when the basic character of the invoices as a central excise duty paying document by describing the product recording the amount of duty paid and indicating the consignment to whom goods dispatched satisfied. The relevant portion of the said decision is reproduced below :

?The next issue required to be considered by us is whether the invoices were improper documents vis-a-vis availability of Modvat credit on the inputs which were cleared and transported under their cover. In this respect, we are of the view that since it is not disputed that the name and address of the appellants were clearly written on each of these invoices, merely because the name and address of the purchaser of these Inserts was also written thereon, it does not necessarily follow that this double sets of name and address on such invoices would render the invoices ineligible for Modvat credit. The basic nature of the invoice as a Central Excise duty paying document is (a) to describe the product cleared; (b) to record the amount of duty paid thereon at the time of clearance by the manufacturers & (c) to record to whom these goods have been despatched. We find that whether these invoices were to the appellants on account of Railways or vice-versa is not in any way clouding the aforesaid three facts. When it is read in conjunction with the agreement between the appellants and the Railways, it is crystal clear that the Railways ordered for the purchase of the Inserts and directed the manufacturer thereof to supply to the appellants for further use in the manufacture of the Sleepers.

That it was so received and used in the appellants factory is also not under dispute. Therefore, we find that the principle involved in the decisions cited by the ld. Advocate on this issue as noted above would also apply in this case. In the case of M/s. S.S.P.E. Cotton Mills (P) Ltd. supra, there was similarly no dispute that duty paid goods actually received in the factory and were used therein and that the invoices contained the dealers name as well as the recipient assessees name as the goods were purchased through the dealer but directly supplied to the assessees factory. The only difference between this fact and the fact in the present case is that here the goods were received not through a dealer, but through a buyer, namely the Railways, but that the goods in both the cases were directly despatched by the manufacturing factory to the end user. As long as this linkage is clearly established by the documents, mere technical considerations, in our considered view, should not be held as a ground to deny Modvat credit. Because such a situation does not involve any clear and distinct violation of a substantive nature which seriously affects the substantive right of the recipient thereof to avail Modvat credit under law.

The law on this issue is well settled that mere procedural minor infractions should not be allowed to come in the way of eligibility of Modvat credit. Similar views have been taken in the case of C.C.E. v. Carborandum Universal Ltd. [1997 (93) E.L.T. 357 (Tri.)] where it was the assessees headquarters which placed the order for inputs and the invoices showed only that name and address and not of the recipient factory. Yet, the Tribunal had held that since it was verified that the inputs had been received and used by the factory, Modvat credit had not been denied. In the present set of facts, the linkage is even more clearly established because the invoice did contain the name and address of the appellants as well. In the case of Inder Poly Fabs (P) Ltd. supra, it has been held that since the name of the appellants were shown in the documents, it would establish the link between the goods and the ultimate consignee, i.e. appellants. This exactly is the situation in this case as in each document, the appellants factory address has been specified. Therefore, on this count also, we are of the clearly considered view that Modvat credit cannot be denied to the appellants. 

8. In view of the above discussion, I find that the appellants name was mentioned in the invoices and the goods were delivered at the appellants factory and the cenvat credit was availed on the basis of invoices as mentioned under Rule 9 of Rules 2004 and the input utilized in the manufacture of final product. There is no dispute that the entire consignment was received by the appellant. So, there is no reason to deny the cenvat credit to the appellant. Accordingly, the impugned order is set aside. The appeal filed by the appellant is allowed with consequential relief. The appellant filed Miscellaneous Application for additional evidence is disposed of.

(Pronounced in the open court on 4.3.2015)

(P.K. Das) Member (Judicial)

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