TMI Blog2010 (10) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... se Act, 1944 (for short the Act ) against the order dated 11-8-2006 of the Northern Bench of the Customs, Excise Service Tax Appellate Tribunal, New Delhi (for short the Tribunal ) has been admitted on following substantial questions of law :- (1) Whether the learned Appellate Tribunal has acted according to law in allowing the appeal of the respondent? (2) Whether the learned Appellate Tribunal has, in regard to availment of Modvat credit on the basis of invalid documents, erred in misinterpreting and misapplying the contents of the Notification No. 7/99-C.E. (N.T.) dated 9-2-1999 and Board s Circular No. 441/7/99-CX dated 23-2-1999, without appreciating the facts of the case enumerated above? (3) Whether the learned Appellate Tribunal has correctly allowed the Modvat Credit to the respondent on the basis of documents, which were not merely invalid in certain terms, but were also not legal and genuine as the consignor had knowing fully well that the provisions of Cenvat Credit Rules had entrusted upon them the responsibility of passing on the genuine credit of duty, had passed on the irregular credit to the Respondent? 2. Briefly stated, facts of the case as projecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise Officer. For the aforesaid reasons, it was held that the documents furnished by the respondent-assessee were improper and not valid documents for availing duty of credit under the Modvat Scheme. Reliance is placed on the decision of the Supreme Court in the matter of Mangalore Chemicals Fertilizers Ltd. v. Dy. Commissioner reported in 1991 (55) E.L.T. 437 (S.C.) and decision of Delhi Tribunal in the case of Tide Water Oil Co. (India) v. Commissioner of Central Excise, Ghaziabad reported in 2003 (156) E.L.T. 861 (Tri.-Del). 4. On the other hand, Shri Manish Panda, learned counsel for the respondent/assessee, would argue that Modvat credit was held to be inadmissible only on the ground of procedural lapses on the part of input supplier. There was no dispute regarding payment of duty on the inputs and its utilization in the manufacture of final product by the respondent. From perusal of the three show-cause notices issued in March and May, 1996 for disallowing Modvat credit, it would be evident that the department s contention was that the invoices were not proper documents as prescribed under Rule 57G of the Central Excise Rules (in short Rules ). However, show-caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been disputed by the Revenue that the inputs received by the respondent were not duty paid at the hands of supplier and that the inputs have not been used by the respondent for manufacture of their dutiable final product. It is also not the case of the Revenue that the invoices, on which Modvat credit has been availed, do not contain details of payment of duty, description of goods, assessable value, name and address of the factory or the warehouse, as would be evident from the Order-in-Original or the Order-in-Appeal. The Joint Commissioner as well as the Commissioner (Appeals) did not follow the Circular dated 23rd February, 1999 issued by the Board after amendment in Rule 57G by the Central Government and insertion of sub-rule (11). 7. The objection raised by the Superintendent, Central Excise Range-1, Vishakhapatnam, is confined to the limited technical lapses on the part of the supplier in maintaining its RG 23D Register and in not submitting duplicate copy of the invoices raised by the respondent in the Range Office. The department has not disputed that the supplier has paid duty on the HSD Oil supplied to the respondent or that the invoices raised by the supplier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. reported in 2008 (232) E.L.T. 7 (S.C.), the short question before the Hon ble Supreme Court for determination was - whether the Lean gas was a by-product or a final product? Without examining the above issue, it was observed thus : 7. As repeatedly held by this Court, show cause notice is the foundation of the Demand under Central Excise Act and if the show cause notice in the present case itself proceeds on the basis that the product in question is a by-product and not a final product, then, in that event, we need not answer the larger question of law framed hereinabove. On this short point, we are in agreement with the view expressed by the Tribunal that nowhere in the show cause notice it has been alleged by the Department that Lean Gas is a final product. Ultimately, an assessee is required to reply to the show cause notice and if the allegation proceeds on the basis that Lean Gas is a by-product, then there is no question of the assessee disputing that statement made in the show cause notice. 11. In the instant case also, the respondent was served with show-cause notices with the only allegation that the invoices furnished by the assessee were found to be tamp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is incorrect, adjudication proceedings in the normal course should be initiated. Efforts, however, should be directed towards reduction of litigation. 13. Modvat credit was denied to the assessee by the Joint Commissioner and confirmed by the Commissioner (Appeals) only on the basis of information furnished by the Superintendent, Central Office, Vishakhapatnam, on 9-8-1999 to the effect that the supplier did not submit the subject invoices along with their monthly return and details of the goods received and sold were not entered in RG 23D Register. The above procedural lapse, if any, is attributable to the supplier. The ratio of law laid down by the Hon ble Supreme Court in Mangalore Chemicals Fertilizers Ltd. (supra) is not applicable to the facts of the present case as in the cited judgment, while considering the entitlement for exemption and refund, it was held that there is a distinction between non-observance of a procedural condition of a technical nature and non-observance of a substantive condition. Non-observance of procedural condition of technical nature is condonable, whereas non-observance of substantive condition would disentitle the assessee any exemption and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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