2005 (4) TMI 89 - HC - Central Excise

Tribunal's Error Recognized: Appellant Lawfully Availed Duty-Paid Credit Under Central Excise Rules, 1944.

The High Court concluded that the Tribunal erred in holding that the appellant contravened Rule 57G of the Central Excise Rules, 1944. The appellant ... Cenvat/Modvat on inputs - Duty paying documents - Whether the Tribunal was justified in holding that the appellant has wrongly availed credit of duty under Rule 57G of the Central Excise Rules, 1944 as the bills of entry produced by the appellant were not endorsed in the name of the appellant, even though the appellant had established that the inputs received in the factory of the appellant were the duty paid goods under the said bills of entry and that the original importer had not claimed credit of duty on the said goods? - HELD THAT:- In the facts of the present case, the evidence on record i.e. the bills of entry together with the certificates issued by excise authorities at Surat and Goa, clearly show that the goods imported and cleared under the bills of entry on payment of duty were received and utilised by the appellant as inputs in its factory and that the importer has not utilised the credit of duty paid on the said goods. Thus, the appellant has established that the inputs received under the bills of entry were duty paid and, therefore, the authorities below were not justified in denying the credit of duty to the appellant. The two decisions relied upon by the Tribunal do not support the case of the revenue. In the case of Balmer Lawrie & Co.[2000 (1) TMI 74 - CEGAT, NEW DELHI], the issue was not relating to the endorsement on the bills of entry and, therefore, the said decision is distinguishable on facts. Similarly, the decision of the Tribunal in the case of Tata Iron & Steel Co. Ltd.[2000 (11) TMI 248 - CEGAT, KOLKATA] is also distinguishable on facts as the said decision is based on erroneous concession made by the Counsel for the appellant therein, that in the case of Balmer Lawrie & Co. it is held that the Modvat credit is not available on the basis of endorsed copies of bills of entry. Thus, we are of the opinion that in the facts of the present case, the Tribunal was in error in holding that the credit of duty taken by the appellant was in contravention of Rule 57G. Accordingly, the question raised by the appellant is answered in the negative i.e. in favour of the appellant and against the Revenue. Appeal is disposed of in the above terms with no order as to costs. At this stage, Mr. Pakale applies for stay of this order. We see no reason to stay the operation of this order. The application is rejected. Issues Involved:1. Whether the Tribunal was justified in holding that the appellant wrongly availed credit of duty under Rule 57G of the Central Excise Rules, 1944.2. Whether the bills of entry need to be endorsed in the name of the appellant for availing credit of duty.3. Whether the certificates issued by the Superintendent of Central Excise are relevant for taking credit of duty under Rule 57G.4. Interpretation and application of Rule 57G of the Central Excise Rules, 1944.Issue-wise Detailed Analysis:1. Whether the Tribunal was justified in holding that the appellant wrongly availed credit of duty under Rule 57G of the Central Excise Rules, 1944:The appellant, M/s. Marmagoa Steel Ltd., received 3314.159 M.T. of shredded scrap from M/s. Essar Gujarat Ltd., on which countervailing duty was paid. The appellant took credit of duty amounting to Rs. 27,83,198/-. A show cause notice was issued to the appellant on the grounds that credit was taken based on delivery challans, which are not covered under Rule 57G. The Commissioner confirmed the demand and levied penalties. The Tribunal upheld the duty demand but reduced the penalty. The High Court found that the appellant had established that the credit of duty on the received goods was taken in accordance with the law, as the goods were duty-paid and used as inputs in the appellant's factory.2. Whether the bills of entry need to be endorsed in the name of the appellant for availing credit of duty:The Tribunal held that the credit could not be taken because the bills of entry were neither in the name of the appellant nor endorsed in their name. The appellant argued that Rule 57G does not require the bill of entry to be in the name of the party claiming credit or endorsed in their name. The Court agreed, stating that Rule 57G does not stipulate that the bill of entry should be in the claimant's name. The essential requirement is to establish that the inputs are duty-paid and that the credit has not been claimed by the original importer.3. Whether the certificates issued by the Superintendent of Central Excise are relevant for taking credit of duty under Rule 57G:The appellant submitted certificates from the Superintendent of Central Excise, Surat, and Panaji, Goa, confirming that M/s. Essar Gujarat Ltd. had not taken credit of the duty paid on the shredded scrap and that the appellant used the scrap as inputs in their factory. The Court found these certificates to be relevant and undisputed by the Excise authorities, thus supporting the appellant's claim for credit.4. Interpretation and application of Rule 57G of the Central Excise Rules, 1944:Rule 57G allows credit of duty on inputs received, provided the duty is evidenced by documents such as invoices, AR-1, or bills of entry. The Court emphasized that the rule does not mandate that the bill of entry be endorsed in the claimant's name. The appellant established that the imported duty-paid goods were received and used as inputs, and the original importer did not claim the duty credit. The Court concluded that the authorities below erred in denying the credit based on the non-endorsement of the bills of entry.Conclusion:The High Court concluded that the Tribunal was incorrect in holding that the appellant contravened Rule 57G. The appellant had established that the inputs received were duty-paid, and the credit was taken in accordance with the law. The appeal was disposed of in favor of the appellant, with the question answered in the negative, i.e., in favor of the appellant and against the Revenue. The application for stay of the order was rejected.