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M/s. Shasun Chemicals and Drugs Ltd. Versus The Customs, Excise and Gold (Control) Appellate Tribunal, Commissioner of Customs & Central Excise (Appeals) , Assistant Commissioner of Central Excise

2017 (11) TMI 831 - MADRAS HIGH COURT

CENVAT/MODVAT credit - imported raw material - duty paying documents - the case of the assessee was that, they did produce the original triplicate copy of the Bill of Entry, at the time of paying the duty and only thereafter, it was lost during transit as the assessee company is having its factory at Cuddalore and head office at Chennai - whether the production of attested / certified photocopy of the triplicate Bill of Entry can be treated as a valid document for the purpose of allowing the MOD .....

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rsus M/s. Matsushita Television And Audio India Ltd. [2015 (8) TMI 1057 - ALLAHABAD HIGH COURT] would be squarely applicable to the present case, where it was held that it is undisputed that the inputs were received in the factory under the cover of a triplicate copy of the bill of entry which was subsequently misplaced, and the credit was allowed. - Even after the amendment made to Rule 57G by insertion of Rule 11 by N/N. 7/99 dated 09.2.1999, the filing of documents is only procedure for .....

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s set aside and the questions of law framed in this appeal are answered in favour of the assessee and against the Revenue. - C.M.A. No. 2545 of 2011 - Dated:- 15-11-2017 - Rajiv Shakdher And R. Suresh Kumar, JJ. For the Appellant : Ms. Ragini for M/s.S.Murugappan For the Respondents : Mr.A.P.Srinivas JUDGEMENT ( Judgment of the Court was delivered by R. Suresh Kumar, J. ) This Civil miscellaneous appeal has been filed against the final order Nos. 535 and 536 of 2001 dated 15.3.2001 passed by the .....

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se of accounting the manufacture of various products and for paying appropriate excise duty as applicable in terms of Central Excise Act, 1944 (in short, 'the Act'). One of the products manufactured by the assessee company is Analgin . For the manufacture of the said product, among other inputs, three raw materials namely, Methyl Aceto Acetate, Cysteamine and Isoprophyl Alcohol are required, which, the assessee company regularly imported from abroad. (ii) During the relevant period, unde .....

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they were availing credit of excise duty paid on the locally procured materials, and credit of additional duty paid on imported materials. (iv) In such exercise, for the import of Methyl Aceto Acetate, the assessee company paid excise duty as well as additional duty under Bill of Entry No.40821 dated 22.11.1993. The quantity imported was 15,336 Kgs of Methyl Aceto Acetate and additional duty paid was ₹ 1,75,928.17. After payment of duty and once the goods cleared from the customs and when .....

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as 6000 Kgs for which the additional duty paid was ₹ 1,78,526.57. The quantity of Isoprophyl Alcohol imported was 25,600 Kgs and the additional duty paid for this material was ₹ 1,27,096.94. In respect of these consignments also, after the goods were cleared from the customs and reached the factory located at Cuddalore, the assessee company availed the MODVAT credit and entered the details in the MODVAT register, namely, RG23, Part I and Part II. (vi) It is one of the condition that, .....

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s of the original copy of the triplicate Bill of Entry as provided for in the Rules. (vii) Thereafter, the original copies of the triplicate Bill of Entry, had been sent for budgetary preparation for the year 1993-94 to the Head Office at Chennai. While the same was sent back to the Cuddalore factory, during transit, it was lost. Thereafter, when the assessee company filed returns with the Excise Authorities, since the original of the triplicate bills were lost, those documents were not able to .....

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the original of the triplicate copy of the Bill of Entry, was lost during transit, from Head Office to factory, the assessee company had approached the Assistant Commissioner of Customs, Madras, who after scrutiny of documents, had issued attested triplicate copy of Bills of Entry No. 41662 dated 08.11.1993, in respect of import of Cysteamine HCL and for remaining Bill of Entry, the Assistant Commissioner of Customs had assured to issue after verification of original Bill of Entry with the cust .....

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ent along with the said letter dated 17.8.1994 to the Revenue, who gave the show cause notice to the assesse. However, the third respondent by letter dated 23.9.1994, after having rejected the plea of the assessee on the strength of production of certified photocopy of the original Bill of Entry, had confirmed the demand of ₹ 3,05,623.41 being the wrongly availed MODVAT credit, under 57A of the Rules, raised in the show cause notice, and also imposed a penalty of ₹ 200/-. (xi) Subseq .....

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ssessee company to accept the photostat copies duly certified by the Customs Department, confirmed the demand of ₹ 1,75,928.17 as a wrongly availed MODVAT credit under Rule 57A of the Central Excise Rules, 1944 as raised in the show cause notice and also imposed a penalty of ₹ 200/-. (xiv) Aggrieved over the said orders of assessment / Demand passed by the Revenue, the Assessee company preferred an appeal before the Commissioner of Customs and Central Excise (Appeals), the second res .....

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n appeal E / 1344 & 1345/96/MAS has allowed the appeals by setting aside the order of Commissioner (Appeals) dated 26.6.1996. Aggrieved by the said order of CEGAT, dated 15.3.2001, the assessee, in fact filed writ petition in W.P.No.21602 of 2001 which was admitted on 09.11.2001 and was pending before this Court. However, by order dated 21.7.2011, a learned Judge, who heard the said writ petition, had passed an order in W.P.M.P.No.418 of 2011, whereby, the learned Judge permitted the assesse .....

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can be accepted as a specified document under Rule 57G of Central Excise Rules, 1944 for the purpose of availment of MODVAT credit? 2. Whether the first respondent was justified in law while denying the availment of MODVAT credit by the appellants on mere technical grounds when actually there is no dispute regarding the duty payment and the usage of the inputs in the manufacture of final products ? And 3. Whether the first respondent was by law justified in setting aside the order of the second .....

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of the Rule, has already been decided in a number of cases, in favour of the assessee, especially, in the context, where, if the importer / manufacturer actually brought the inputs to the factory and having utilized the same for manufacturing of finished goods and also had availed the MODVAT credit, based on anyone of the documents mentioned under 57 G (3) of the Rules. In support of her contention, the learned counsel for the assessee would rely upon the Judgment of the Division Bench of the A .....

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during transit of the same from the Head Quarter of the assessee company at Chennai to the assessee's factory located in Cuddalore. 6. She would also submit that, however, in response to the show cause notice of the Revenue, the assessee, since lost the triplicate copy of the Bill of Entry, had approached the Customs authorities and obtained duly certified photo copy of the Bill of Entry and produced the same before the officers concerned of the Revenue. Therefore, the learned counsel would .....

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en of proof that the duty for the subject imported goods had already been paid, and the same had been used as an input at the factory of the assessee / manufacturer, it produced the certified photocopy of Bill of Entry duly certified by the customs authorities. Therefore, the learned counsel would state that the non-filing of original triplicate copy of Bill of Entry, either at the time of filing of returns or pursuant to the show cause notice issued by the Revenue, should not be a reason to den .....

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.), CPRM STEELS LTD. VS. CESTAT, CHENNAI. (iii) 2015 (322) ELT 124 (A.P.), S.S. ORGANICS LIMITED VS. COMMISSIONER OF CENTRAL EXCISE, HYDERABAD 9. By citing and relying upon the aforesaid decisions, Mr.A.P.Srinivas, learned standing counsel would argue that, in view of the consistent decisions taken by the Courts of law, the assessee is not entitled to take MODVAT credit without the availability or production of original triplicate copy of the Bill of Entry. The learned standing counsel would als .....

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h document as contemplated under the Rule, it cannot be claimed by the assessee that, they would be entitled to claim the MODVAT credit, by merely filing photostat or attested / certified copy of the documents. 10. The learned standing counsel in this regard would heavily rely upon the aforesaid three Judgments, including the Division Bench Judgment of this Court, which is a jurisdictional High Court and submit that, therefore, the said Judgment would bind the Tribunal, which passed the Order im .....

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manufacturer of pharmaceutical drugs. For the said purpose, constantly, the assessee company had been engaging in importing raw materials. It is also not in dispute that three such raw materials had been imported by the assessee for which duty had been paid against the Bill of Entry dated 22.11.1993, 11.11.1993 and 17.11.1993. It is also not in dispute that pursuant to the said Bill of Entry, after having paid the duty, the goods were cleared from the customs and sent to the factory of the asse .....

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er documents, during transit it was lost, and therefore, the assessee's factory at Cuddalore was not able to produce the said original triplicate copy of Bills of Entry at the time of filing the returns. 14. Though the aforesaid claim on the side of the assessee had not been specifically disputed by the Revenue, it had issued show cause notice to the assessee asking to show cause as to why, the taking MODVAT credit on the basis of alleged Bill of Entry, without having produced the original t .....

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rted and against the Bill of Entry, duty had been paid and only thereafter, the inputs reached the factory. And it is also not in dispute that those inputs alone were utilized for manufacturing the finished products, which were subjected to payment of excise duty, as against which only, as per the MODVAT rule, the assessee claimed MODVAT credit on the basis of the entry registered in the MODVAT register. 16. Therefore, the only issue to be decided, according to the assessee, in this case is that .....

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the relevant rule, namely, 57G(3) which reads thus: Rule 57G(3):- No credit under sub-rule(2), shall be taken by the manufacturer unless the inputs are received in the factory under the cover of any of the following documents, namely:- (a) an invoice issued by a manufacturer of inputs under Rule 52A or 100E of the said rules; (b) an invoice issued by the manufacturer of inputs from his depot or from the premises of the consignment agent of the said manufacturer or from any other premises from wh .....

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r; (g) an invoice issued by a dealer on or before the 31st day of August, 1996; (h) an invoice issued by an importer registered under Rule 174 and duly authenticated by the proper officer; (i) an invoice issued by an importer from his depot or from the premises of the consignment agent of the said importer provided the said depot or the premises, as the case may be, is registered under Rule 174, and duly authenticated by the proper officer; (j) an invoice issued by a first stage or second stage .....

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For the purposes of this section - (1) first stage dealer means a dealer who purchases the goods directly from - (a) the manufacturer under the cover of an invoice issued under Rule 52A or Rule 100 E or from the depot of the said manufacturer, or from 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, under cover of an invoice issued under Rule 57G; or (b) an importer or from the depot of .....

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only based on which duty was paid for clearing the goods from customs, and those goods imported are nothing but three named items of raw materials which are necessary inputs for manufacturing the final product at the factory. 20. In this regard, the claim of the assessee is that, those imported items, since have been subjected to duty, had been cleared by the customs only on the basis of Bill of Entry, and those items had reached the factory, whereupon the assessee had claimed MODVAT credit, by .....

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ok into the Judgment of Allahabad High Court, where the following question of law had been framed by the said Court. "Whether on the facts and circumstances, the MODVAT credit can be taken on the basis of the photostat copy of BOE " 22. The aforesaid question of law framed in the said case is exactly similar to that of the 1st question of law framed in this case also. 23. The factual matrix of the said case has been narrated at paragraph 4 of the said Judgment, where also, there was no .....

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was prevailing where, the goods imported were received in the factory of production and the same were covered by the requisite documents including the triplicate Bill of Entry which was lost subsequently and in lieu thereof, the assessee had produced duly attested / certified photocopy of the triplicate Bill of Entry. 25. The only difference between the said case and the case in hand is, there, the alternative document produced was exchange control copy obtained from bank, here, the alternative .....

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Excise Division-III, NOIDA has also not disputed the duty paid character of the goods and the fact that these were received in the factory for intended purpose under the cover of relevant documents. The case of the department is that the triplicate copy of bill of entry as required under Clause (c) of sub-rule(3) of Rule 57G could not be subsequently produced by the assessee for defacement. The stand taken by the assessee that the triplicate copy of the relevant bill of entry was misplaced, was .....

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ained by the assessee from the bank could have been easily verified by the authorities. It is not the case of the appellant that the said document was not verifiable 27. Here also, if the same analogy is adopted, the certified photostat copy of the triplicate Bill of Entry, since was issued by the Customs Authorities, can very well be verified by the Excise Authority, therefore, it cannot be said that the MODVAT Credit claimed by the assessee is without any document within the meaning of Rule 57 .....

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it was disallowed by the original authority, the assessee preferred an appeal before the CEGAT against the disallowance of MODVAT credit on the ground that the reconstructed triplicate copy of the Bill of Entry, cannot be considered as a valid document for availment of MODVAT credit. 30. Considering the said case, the CEGAT found the issue infavour of the assessee as against which Revenue carried the matter to the High Court of Madhya Pradesh, where the Division Bench of the said High Court has .....

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nd produced the same. Thus, the Tribunal has rightly held that for such a matter, no substantial question of law arises and rejected the application of the applicant. We find no ground for interference in the said matter. The M.C.C is accordingly dismissed. Parties to bear their own costs. 31. In the second case cited above, (i.e., Union of India Vs.Kataria Wires Ltd.), the assessee therein, by producing the certified copy of the invoice, issued by the jurisdictional superintendent, to fulfill t .....

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y the jurisdictional Superintendent of Central Excise. Aggrieved by the same, the Revenue prepared the appeal before the CESTAT, where also the view of the Commissioner (Appeals) was confirmed, against such decision, the matter was carried by the Revenue before Madhya Pradesh High Court. 33. In that case, the High Court of Madhya Pradesh has held as follows: 4. We have perused the impugned order, heard the learned counsel and carefully considered the requirement of Rule 57G of the Rules. Though .....

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erely because original and duplicate copy as required by Rule 52A, C, (i),(ii) were lost, the claim could not have been defeated especially when certified copy duly issued by the jurisdictional Superintendent was produced. Under these circumstances, we do not perceive any error in the order passed by the CESTAT. Accordingly, we do not find that the case involves any substantial question of law, much less the question formulated by the appellant. The appeal is dismissed summarily. 34. Now, let us .....

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257/94,UCD dated 8.8.94. And, the assessees responded by submitting the photostat copy of the original certified copy of Bill of Entry in question, duly certified by the Customs, as the original one was lost during transit vide their letter dated 17.8.94 and, in as much as they have produced the copy of the document in question, they contended that the availment of Modvat Credit on the impugned goods covered by the said document is right and, therefore, requested for dropping of further proceedi .....

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credit, more so, when certified copies of triplicate copy of the Bill of Entry evidencing payment of duty have been submitted. In this view of the matter, the impugned orders cannot be sustained and are therefore, set aside. 37. However, the CEGAT (Tribunal) in its impugned order, having not accepted the findings given by the Commissioner (Appeals) observed that, the facts which were not in dispute are that, at the time of submission of RT 12 returns, the respondents did not submit the original .....

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for the first time these are submitted along with RT 12 returns. 39. Only based on these findings, the Tribunal ultimately, came to the conclusion that, the assessee is not eligible to claim MODVAT credit on the basis of the documents submitted by them i.e., certified photostat triplicate copy of Bill of Entry. However, the aforementioned Judgments point in the direction that, if there is no specific denial or a definite case of the Revenue that the original / triplicate copy of the Bill of Ent .....

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on hand. 41. The aforesaid two Judgments of the Madhya Pradesh High Court also would support the legal position articulated by the Allahabad High Court, in MATSUSHITA TELEVISION & AUDIO INDIA LTD case. 42. At the same time, the learned counsel appearing for the Revenue, has relied upon three Judgments of different High Courts, which have been referred to above. Therefore, let us take up those Judgments also and examine. 43. The first Judgment is 2013 (293) E.L.T. 208 (All.)(cited supra) of .....

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and not otherwise. 44. The following Judgments given by the Allahabad High Court in the aforesaid decision can usefully be referred to hereunder: 38. Applying the principles laid down by the Apex Court in the aforesaid cases to the facts of the present case, we are of the considered opinion that the amendment made in Rules 57G of the Rules by insertion of sub-rule (11) vide Notification No.7/99, dated 9th February, 1999 relates to procedure for availing Modvat credit and does not affect any sub .....

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documents for availing Modvat credit is only a procedural matter and the amendment made vide Notification No.7/99, dated 9th February, 1999 which inserted sub-rule (11) in Rule 57G the position was made clear that Modvat credit should not be denied only on the ground that the documents referred to in sub-rule (2) does not strictly comply with the said Rule but contains the details of payment dues, description of goods, assessable value, name and address of the factory or warehouse etc. This posi .....

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ee would in no way get affected. It is the further finding of the said High Court, in the aforesaid Judgment is that, the filing of documents for availing MODVAT credit is only a procedural matter and by virtue of notification No. 7/ 99, dated 09.2.199 which inserted sub-rule 11 in Rule 57G, made it clear that, MODVAT credit should not be denied only on the ground that the documents referred to in sub-rule (2) does not strictly comply with the said rule but contains the details of payment of due .....

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relevant portion of the clarificatory notification issued by the Revenue in Circular No. 441/7/99 CX dated 23.2.1999, is extracted hereunder: 2. The Assistant Commissioner, before issuing Show Cause Notice for wrong availment of Modvat credit by the assessee on any procedural grounds, shall conduct enquiries with regard to duty paid nature of the goods as the suppliers send, ensure that necessary information as mentioned in the Notification are available on the invoice and satisfies himself whe .....

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It should hereafter be ensured that Show Cause Notices are not issued for procedural lapses as mentioned in the Notification without making proper enquiries. Wherever the Assistant Commissioner, after making due enquiry, is satisfied that the Modvat credit taken by the assessee is incorrect, adjudication proceedings in the normal course should be initiated. Efforts, however, should be directed toward reduction of litigation. 4. All pending cases may be disposed of accordingly. 5. Trade and field .....

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nto two or more lots and, each of which is dispatched separately either on the same day or on different days, separate invoice shall be made in respect of each lot. Only in that context, single invoice produced by the assessee was not accepted by the Revenue and therefore, that stand was accepted by the Division Bench of this Court in the said Judgment. Therefore, the facts mentioned in the said case also, in our considered view, would not be applicable to the facts of the present case and there .....

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is of the said factors of the case, in the context of Circular instructions given by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, New Delhi in Circular No.68/68/94-CX, dated 24.10.1994, the Division Bench, has decided the issue in favour of the Revenue. However, the fact situation and the context under which, such a decision was made by the Division Bench, can be easily noticed, as it has been recorded in paragraph 5 of the Judgment. The ca .....

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follows (para 4): 4. The credit can be availed only on the duplicate invoices issued under Rule 52A or Rule 57GG and the original invoices can be used for taking credit only where the duplicate invoice is lost in transit and that too after proper scrutiny and the satisfaction of the Assistant Collector. As such taking a credit against original instead of duplicate documents should be exceptional rather than general practice. It seems that this aspect is not properly verified due to routine inspe .....

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s Circular No.39/99-Cus., dated 25th June, 1999 extends the benefit of Brand Rate of Drawback to compensate exporters for the re-rolled steel products and processed fabrics. The High Court has rightly come to the conclusion that the circulars issued by the Board are binding on the department. An effort was made by the learned Solicitor General to get this case referred to a Larger Bench. We do not accept this contention in view of number of decisions and especially the Constitution Bench decisio .....

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