TMI Blog2006 (8) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 173Q(l)(bb) of the Rules and further imposing penalty of the like amount also on the (Noticee No. 2) Allied Steel under Rule 173Q(l)(bbb) read with Rule 209A of the said Rules and charging interest from the noticee No. 1 on the amount of Modvat credit. 2.Appeal No. 5215 has been filed by the appellant-Standard Electricals Limited against the order of the Commissioner (Appeals) made on 26-7-2004 confirming the demand for recovery of Rs. 19,689/- being the amount of Modvat credit wrongly availed by the appellant and imposing penalty of the like amount as well as charging interest thereon. It appears that no appeal is filed by the noticee No. 2 M/s. Sudarshan Steels. 3.In Central Appeal Nos. 5172 and 5216, according to the Revenue the inquiries revealed that the appellants-Standard Electricals Limited had purchased C.R. Coils from the other appellant M/s. Allied Steel under five different invoices (Nos. 40 and 41 both dated 31-7-98, No. 56 dated 11-9-98, No. 57 dated 12-9-98 and No. 60 dated 23-9-98) and taken Modvat credit in their RG23A part-II. During the enquiry, it transpired that the C.R. coils were taken from the premises of M/s. RSD Steels Cutters and not from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osable, as Modvat credit was correctly taken and the conduct of the appellant was bona fide. They also relied upon Trade Notice No. 62/99, dated 6-10-99 of the Mumbai Commissioner to show that the registered dealers of metal coils could sell the goods, after decoiling and cutting the coils into sheets, from the cutter's place. It was also their case that there was no controversy regarding the actual payment of duty indicated in the invoices by the suppliers. 6.The authorities below on the basis of the material placed on record found in all these matters that the "C.R. coils" were not unloaded at the registered premises and that the dealer did not have machinery for cutting such C.R. coils into required sizes and therefore, these were got unloaded in the premises of the cutter and were taken by the appellant-Standard Electricals Limited as "C.R. Sheets" from those premises on the basis of original invoices of "C.R. coils". Modvat credit was availed on the product "C.R. sheets". It was found that since the goods were lifted from the premises other than the premises of the registered dealer, these were goods other than those consigned by the registered dealer under the invoices. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered dealer, the goods were unloaded in the premises of the cutters, for the cutting job, and the delivery was to be taken by the purchaser i.e. Standard Electricals Limited from those premises. He submitted that mention in the invoice of the premises of registered dealer was only a bona fide procedure infringement on the part of the assessee and no penalty could have been levied on the registered dealer for such lapse. He submitted that all the goods were entered in the statutory record and there has been no allegation in the show cause notices that the goods were not duly entered. He then argued that there was no allegation of mens rea in the show cause notice. Mere procedure did not warrant Rule 173Q(i)(b) of the Rules. He also argued that the Standard Electricals Limited should not have been penalized for wrong descriptions in the invoices prepared by the registered dealer. 7.1.The learned Counsel placed reliance on the following decisions in support of his contentions :- (i) The decision of the Tribunal in Electro Steel Castings Ltd. v. CCE, Calcutta-III reported in 2001 (136) E.L.T. 929 (Tri. Kolkata) was cited to point out that where the assessee availed the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot duty paid or that goods were not entitled to modvat as being not notified as inputs. (vi) The decision of the Tribunal in Lupin Laboratories Ltd. v. CCE, Indore reported in 1994 (71) E.L.T. 914 (Tribunal), was cited for the proposition that it was well settled that what is relevant is substantial compliance with the provisions of law and as long as a manufacturer has substantially complied with the law, the benefit in accordance with law cannot be denied for non-observance of technical requirement (para 21). (vii) The decision of the High Court of Delhi in Faridabad Iron Steel Traders Association v. Union of India reported in 2004 (178) E.L.T. 1099 (Del.) was cited for the proposition that the mere process of cutting of C.R. coils into sheets to specific sizes did not amount to manufacture because the identity of the product remains unchanged. (viii) The decision of this Tribunal in Sudarshan Steels v. CCE, Jalandhar reported in 2006 (194) E.L.T. 52 (Tri.-Del.), was cited to point out that in similar in the circumstances where the dealers invoices were issued without bringing the goods in their registered premises and where duty was duly paid on those goods, it was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. sheets" in their factory, the movement of "C.R. coils" was shown under the invoice. It was, therefore, submitted that since the invoice of the registered dealer was invalid, no Modvat credit could have been availed by the manufacturer. The learned authorized representative for the department distinguished the cases cited on behalf of the appellant on the ground that in the present case the manufacturer i.e. Standard Electricals Limited had given instructions to cut the sheets and was, therefore, fully aware that the goods were lying in the premises of the "cutter" and not in the registered premises of the dealer and that the invoice showing the goods having been sent by the appellant M/s. Allied Steel to the manufacturer i.e. the appellant-Standard Electricals Limited as "C.R. Coils" was deliberately incorrect. He placed reliance on the Circular No. 69/69/94-CX dated 24-10-94 of the Government of India, Ministry of Finance in which it was stated that registration cannot be granted to a person who does not own proper premises for conducting his business, and further that the transport documents etc. relevant for Modvat credit should be shown in the records of such dealers, both w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods showed as if they were "C.R. Coils" removed from the premises of the registered dealer. There is absolutely no dispute about the fact that the same "C.R. coils" which were converted into "C.R. sheets" were the goods on which excise duty was paid, and that ordinarily Modvat credit could be availed in respect of such inputs. The only lapse on which the Revenue has acted was the incorrect description about the premises from which the goods were removed, in the invoice prepared by the registered dealer and their being described in their original form of "C.R. coils". 10.Under Rule 57G of the Central Excise Rules, 1944, procedure to be observed by the manufacturer is laid down and it is, inter alia, provided by sub-rule (3) thereof that, no credit under sub-rule (2) shall be taken by the manufacturer unless the inputs are received in the factory under the cover of the documents enumerated therein including at clause (e), being an invoice issued by a "first stage dealer" of excisable goods, registered under Rule 174. Rule 174, deals with registration of certain persons including dealers storing in private store-room or warehouse or otherwise, excisable goods. Separate registrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id were "C.R. coils" and the very goods were admittedly got cut into sheets by the consignee i.e. the appellant-Standard Electricals Limited at the premises of RSD Steel cutters, where they were unloaded for the purpose. Since the goods were supplied as C.R. coils, the invoice mentioned them as "C.R. coils". Even cutting of the coils into sheets, not being manufacture did not make any difference. It may also be noticed that as per the CBEC Circular No. 96/7/95-CX, dated 13-2-1995 if the whole consignment is dispatched to buyer from manufacturer of inputs, Cenvat will be permissible, if the name of the final buyer is shown as the consignee who can avail Cenvat credit on the basis of the duplicate copy of the manufacturer issued under Rule 11 (earlier Rule 52A). In such cases the goods need not be brought to the premises of the registered person (dealer). Invoice of registered person/dealer is not required for availing the Cenvat credit by the consignee. The Pune Commissionerate had issued a letter trade notice No. 76/95 dated 20-7-95 stating that registered dealer should not issue cenvatable invoice for transit sale. Such invoices can be issued only when goods are physically receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils who sold them after getting the coils cut into sheets from the cutter's place, and the registered dealers were required to mention the number of sheets along with the details of the original description as well as quality of goods on the body of the invoice issued under Rule 57G. In the present case also, the goods were unloaded at the cutter's place so that "C.R. coils" could be cut into "C.R. sheets". The goods were duly duty paid and on these very goods which were cut into "C.R. sheets", Modvat credit was availed. Merely because the sheets were unloaded at cutter's place and got cut by the consignee, the goods did not cease to be Modvatable under the invoice issued by the registered dealer. In the present case, there was no dispute about the identity of the goods "C.R. coils", on which duty was paid and which were cut into sheets on which the appellant-Standard Electricals Limted claimed the Modvat credit. It is, however made clear that the statutory requirement of governing the movement of the duty paid goods in the context of availment of Modvat credit when they are supplied by registered dealers cannot be undermined and the premises registered for storage of the goods hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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