M/S Nalwa Metals & Alloys Ltd vs Cce, Mumbai-Iii

IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV

APPEAL NO. E/619/11

(Arising out of Order-in-Appeal No. PKS/500/BEL/2010 dated 19.01.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai III.)

For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ========================================================

1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy : Seen of the order?

4. Whether order is to be circulated to the Departmental :Yes authorities? ========================================================

M/s Nalwa Metals & Alloys Ltd. : Appellant Versus

CCE, Mumbai-III

: Respondent

Appearance Shri Nikhil Kr. Rungta, Advocate : For Appellant Shri V.K. Shastri, Assistant Commissioner (A.R.) : For Respondent

CORAM: Honble Mr. Ramesh Nair, Member (Judicial) Date of Hearing : 10.03.2015 Date of Decision: .04.2015

ORDER No. .

Per: Ramesh Nair

The appeal is directed against Order-in-Appeal No. PKS/500/BEL/2010 dated 19.01.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai III, wherein the learned Commissioner (Appeals) upheld the impugned order and rejected the appeal filed by the appellant.

2. The issue involved in the present case is that the MODVAT credit of the appellant was disallowed by the lower authority on the following grounds:-

(A) Credit amount of Rs. 56,874.87 was denied on the ground that credit was taken before the issue of duty paying documents.

(B) Credit amount of Rs. 11,880/- was taken on the basis of certified photocopy of subsidiary GP-1s.

(C) Credit amount of Rs. 31,087.30 was availed as deemed credit on copper wire falling under chapter heading 74.08, whereas as per Boards vide MF(DR) letter F. No. 342/1/88-TRU dated 12.07.1990 it was allowed to take deemed credit on copper waste and scrap falling under chapter subheading No. 74.04 only.

(D) The credit amount of Rs. 2,54,805.77 on GP-1 which was neither in the name of the appellant nor endorsed in their favour.

(E) The credit amount of Rs. 36.396.03 taken in RG 23A part-II but no accounting of the material have been made in RG 23A Part-I. (F) The credit amount of Rs. 13,823/- taken in respect of the material entered in RG 23A part-I at a date prior to the date of issue of GP-1.

The adjudicating authority denied the credit vide Order-in-Original dated 23.09.1994. Aggrieved by the said order the appellant filed appeal before the Commissioner (Appeals) who vide the impugned order upheld the said Order-in-Original and rejected the appeal filed by the appellant, therefore the appellant is before me.

3. Shri Nikhil Kr. Rungta, learned Counsel for the appellant submits that:-

A. As regard Credit amount of Rs. 56,874.87 the same was availed on the certificate issued in lieu of GP-1 issued under Section 57 G of the Central Excise Rules, 1944. It is his submission that the certificate was issued on 23.02.1992, 03.03.1992, 03.04.1992 and the credit was taken on 14.03.1992, 18.03.1992, 18.04.1992 respectively. Therefore the lower adjudicating authority has wrongly contended that credit taken prior to issue of subsidiary GP-1. More over the certificate in lieu of GP-1 are always issued subsequent to the date of issue GP-1, therefore the appellant has correctly availed credit in view of the above fact appearing on record.

(B) As regard credit amount of Rs. 11,880/-, he submits that the same was availed on the strength of photocopy which was certified by Central Excise Officer. Therefore the same is admissible, in this support, he relied upon the judgment in the case of Bombay Goods Transport Association Vs. Union of India, 1995 (77) ELT 521 (Bom.), Eveready Industries India Ltd. Vs. CCE, Allahabad 1996 (87) ELT 137 (T).

(C) As regard credit amount of Rs. 31,087.30 taken as deemed credit on copper wire, he submits that they placed order to the supplier for copper waste and scrap which falls under chapter heading 74.04 only, however the supplier cleared the goods as copper wire. In fact the goods is copper waste and scrap meant for melting, therefore the appellant is entitled for taking credit as available to the copper waste and scrap falling irrespective the chapter sub-heading No. is 74.04 in invoice.

(D) Regarding the credit amount to Rs. 2,54,805.77 which was availed on the GP-1 which is neither in the name of the appellant nor endorsed in their favour, he submits that there is no dispute that the input covered under said GP-1 were purchased by the appellant, accounted for them in their books and payment of purchase was also made by the appellant to the supplier. He submits that endorsement on the gate pass not mandatory because no special condition was imposed in Rule 57G. In this support he relied upon the judgment in the case of Collector of Central Excise, Bombay Vs. Goodlass Nerolac Paints Ltd.  1986 (26) ELT 57 (Tribunal), S.B.S. Organics Pvt. Ltd. Vs. 1999 (45) ELT 701 (Tribunal) and Maschmeijer Aromatics (I) Ltd. Vs. Collector of Central Excise  1990 (46) ELT 395 (Tribunal).

(E) As regard credit amount of Rs. 36.396.03 the same was taken in RG 23A part-II, but no accounting of the material have been made in RG 23A Part-I. He submits that the entry was inadvertently not made in RG. 23 A Part-1, however the input was very much received by the appellant and the same was used in the manufacture of final product. The lapse of non-making in RG 23A is due to inadvertently. The objective of RG 23 A Part-I is only to show the receipt of input in the factory. There is no dispute in the fact that the input was received in the appellants factory and the same was used.

(F) As regard the credit amount of Rs. 13,823/- which was taken in respect of material entered in RG 23A part-I at a date prior to the date of issue of GP-1, he submits that the MODVAT credit was taken only after receipt of duty paying document. He relied on the Board letter No. B-21/4/87-TRU dated 15.04.1987 wherein it was clarified that the inputs received without duty paying documents and used immediately after they are received after making suitable entry in RG 23 A account but MODVAT credit can be allowed only after receipt of duty paying document. It is his submission that there action is in accordance with the said Board instruction, the refore credit can not be denied on this ground. He further submits that the CBEC vide Circular No. 441/7/1999-Cx dated 23.02.1999 retrospectively clarified that the Assistant Commissioner was empowered to allow the credit of duty paid on input/capital goods ignoring minor procedural lapses in filing the declaration or in the invoice/document based on which credit is to be taken. However the Assistant Commissioners should ensure that inputs/capital goods have suffered duty and are being used in the process of manufacture. It is his submission that in view of this Circular all the procedural infraction on the basis of which credit was denied in the present case should be relaxed/condoned and the appellant is entitled for the credit.

4. On the other hand Shri V.K. Shastri, learned Assistant Commissioner (A.R.) appearing for the Revenue reiterates the findings of the impugned order.

5. I have carefully considered the submissions made by both sides. I give my findings in chronological manner as under:-

(i) As regard credit amount of Rs. 56,874.87/- which was denied by the lower adjudicating authority on the ground that the appellant has availed credit in RG 23A Part-II on the basis of subsidiary GP-1 at a date prior to the issue of said subsidiary GP-1. I find that the subsidiary GP-1 were issued on 23.02.1992, 03.03.1992 and 03.04.1992 and the credit there against was taken in RG 23A Part-II on 14.03.1992, 18.03.1992 and 18.04.1992 respectively. Therefore the allegation of the Revenue is apparently wrong on the face of the record. Therefore the credit amount of Rs. 56,874.87/- is allowed.

(ii) As regard the credit amount of Rs. 11,880/- availed by the appellant on the basis of certified photocopy of subsidiary GP-1s. I find that in terms of the judgment relied upon by the appellant in the case of Bombay Goods Transport Association (supra) and Eveready Industries India Ltd. (supra) credit on certified photocopy of subsidiary GP-1s is admissible. Following the ratio of the said judgment I allow the credit of Rs. 11,880/- to the appellant.

(iii) As regard the credit amount of Rs. 31,087.30 availed as deemed credit on copper wire on going through the invoice it was observed that the supplier has sold the material to the appellant under description of cable (copper wire) GR-8647 and under chapter heading 74.08 From the said description it is clear that even though the appellant treated the said copper material as waste & scrap, but the supplier has sold the material as copper wire which is classifiable under chapter heading 74.08. As per the Board Notification No. 342/1/88-TRU MF(DR) dated 12.07.1990 the deemed credit was allowed in respect of copper waste and scrap falling under chapter heading No. 74.04 only. In view of this the deemed credit of MODVAT cannot be allowed on the goods namely copper wire falling under 74.08; therefore I uphold the denial of MODVAT credit of Rs. 31,087.30.

(iv) As regard the MODVAT credit amounting to Rs. 2,54,805.77 availed by the appellant as the strength of GP-1 which was neither in the name of the appellant nor endorsed in their favour. I am of the view that even if GP-1 was not endorsed in favour of the appellant but if input covered under the said GP-1 was received in the factory, account for the same in records, purchases were booked in the name of the appellant and payment their against was made by the appellant these are satisfactory evidences to established that the inputs covered under the said unendorsed GP-I were received by the appellant and used in the manufacture. However from the proceeding it is observed that such examination were not carried out, therefore I am of the opinion that for the purpose of this verification, the matter should be remanded to the original adjudicating authority to decide a fresh the eligibility of MODVAT credit of Rs. 2,54,805.77. After satisfying the criteria as mentioned above I therefore remand the matter to this extent.

(v) As regard the MODVAT credit amounting to Rs. 36.396.03 availed by the appellant in RG 23A part-II but no accounting of the material have been made in RG 23A Part-I, I am of the view that this is only technical lapse. The lower authorities have not disputed the receipt of the input and use thereafter in the manufacture of final product. The entry in RG 23 A Part-1 is only to show the receipt of input but if the receipt is otherwise not under dispute, merely because entry was not made in RG 23 A Part-1 MODVAT credit can not be denied. I therefore allow the MODVAT credit amounting to Rs. 36.396.03.

(vi) As regard the credit amount of Rs. 13,823/- MODVAT credit was availed in respect of the input entered in RG 23A part-I at a date prior to the date of issue of GP-1, I find that when the input was cleared admittedly no GP-I was issued, however the GP-I issued at a later date. This shows that the input was received by the appellant but no GP-I was received of that material at the relevant time. It was statutory provisions that goods cannot be cleared out of the factory without issue of GP-1 and debit of duty either in Profit & Loss Account or in MODVAT account. Therefore, I am of the view that GP-1 of a later date, cannot be considered as a duty paying document in respect of input cleared from the supplier and received by the appellant prior to the date of GP-1. I therefore upheld the denial of MODVAT credit of 13,823/-.

6. The appeal is disposed of in above terms.

(Pronounced in Court on 04.2015)

Ramesh Nair Member (Judicial) Sp/

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