AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 375
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.... the job contract. The applicant claimed MODVAT credit for the period April to August, 1994. A show cause notice was issued contending that MODVAT credit was obtained on the strength of invoice endorsed by PCT in their favour, which is inadmissible as endorsed invoices were not proper documents for the purpose of availing MODVAT credit under Section 57A and 57G of the Central Excise Rules, 1944. Subsequently, the authorities disallowed the MODVAT credit on the ground that endorsed invoices were not valid documents for taking MODVAT credit, inasmuch as there was no mention of any particulars indicating payment of excise duties on the document accompanying the endorsed invoices. Being aggrieved, the applicant filed an appeal before the Tribunal, who rejected the appeal in view of the Larger Bench decision of the Tribunal in the case of M/s Balmer Lawrie and Com. Ltd. Vs. CCE, Kanpur, 2000 (116) ELT 365. The applicant being aggrieved, filed a reference application under Section 35H, which was allowed. The High Court directed the Tribunal to draw a statement of case and refer the following substantial question of law, namely: "(i) Whether M/s PCT Ltd. having supplied the raw m....
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....f the view that the applicant was not eligible for MODVAT credit on the basis of endorsed invoices as it was not a valid document for availing MODVAT credit and, accordingly, a show cause notice was issued and the MODVAT credit was disallowed and a penalty was imposed. The applicant filed an appeal before the Tribunal, which was dismissed by the Larger Bench of the Tribunal. The applicant thereafter, filed a reference under Section 35H, which was allowed and the Tribunal was directed to send the statement of case along with the following questions of law, namely:- "1. Whether, Steel Authority of India Limited having supplied the steel to the applicant-appellant (job worker) under the instructions of Indian Oil Corporation Ltd. for converting it into drums (metal containers), the applicant was entitled for the benefit of MODVAT credit under Central Excise Rules? 2. Whether, in the absence of transfer of title by endorsement on the documents of title, the property in the goods is never transferred by the endorser in favour of the endorsee and the Appellate Tribunal was not justified in denying the benefit of the MODVAT credit to the applicant on the ground that they....
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....n this rule, and in any other rule, where the term invoice or gatepass, as the case may be, is issued it shall mean - (i) assessee's own document such as invoice, challans, advice or other document of similar nature generally used for sale or removal of excisable goods and which shall contain all the particulars as required under the said Act or in these rules; or (ii) such other form as the Central Board of Excise and Customs may notify. (2) The invoice, shall be made out in quadruplicate. The manufacture may make extra copies of the invoice for his own use and each such extra copy shall be clearly marked with its sequential number. The duplicate copy shall be produced by the transporter on demand by any officer while the goods are en route to such destination from the factory: Provided that in respect of removal of excisable goods consumed within the factory for manufacture of other goods in a continuous process, the manufacturer may make out a single invoice, at the end of the day: Provided further that for any excisable goods, other than those to which the provisions of Chapter VII-A apply, the invoice shall be presented to the p....
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....cation. 57G.Procedure to be observed by the manufacturer. - (1) Every manufacturer intending to take credit of the duty paid on inputs under Rule 57A or Rule 57B shall file a declaration with the Assistant Commissioner of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in the said final products and such other information as the said Assistant Commissioner may require, and obtain a dated acknowledgement of the said declaration. (2) A manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgement aforesaid, take credit of the duty on the inputs received by him. (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 fr....
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....clause (g) of sub-rule (3) after the 30th September, 1996. (5) Credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3) and where the intermediate products manufactured by the user of inputs specified under Rule 57J are received by the manufacturer, after nine months. (6) Notwithstanding anything contained in sub-rule (3) or Rule 52A - (i) a manufacturer may take credit on inputs received in his factory; or (ii)a person registered under Rule 174 for issue of invoice under Rule 57G, or as the case may be , under Rule 57 T may make receipt entries in register maintained under Rule 57GG. On the basis of - (a) original invoice, if duplicate copy of the invoice has been lost in transit; or (b) a certificate issued by the proper officer of Customs at the port/airport of the importation of such goods, if triplicate copy of bill of entry or duplicate copy of bill of entry generated on Electronic Data Interchange System installed in any Customs or Central Excise Commissionerate, as the case may be, has been lost in transit, subject to the satisfaction of t....
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....) and for reasons to be recorded in writing, condone the delay in filing of such declarations and allow the manufacturer to take credit of the duty already paid on the inputs. (10) The Assistant Commissioner shall not condone the delay unless he is satisfied that: (i) the inputs were received in the factory not before a period of six months from the date of filing of such declaration; (ii)the amount of duty for which credit is sought has actually been paid on such inputs; and (iii) the inputs have actually been used or are to be used in the manufacturer of final products." As a result of the aforesaid amendment, MODVAT credit could be availed on the basis of an invoice but not on the basis of a gate pass. Further, two endorsement on the gate pass was done away. This caused unavoidable expenditure on account of double transportation and material handling besides loss of time, inasmuch as some of the inputs on which MODVAT credit was taken had to be initially sent to another manufacturer, namely, the job worker who after processing returned it to the manufacturer. As a result of the amendment made in Rule 57G, the manufacturer was required to cl....
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....;s invoice issued under Rule 52-A. This invoice under Rule 52A will however contain, in addition to the prescribed details including the consignee's name and address mentioned therein, the registered person's name and address, on account of whose instructions, the goods have been dispatched. The consignee in this case will be the end user (job worker). 4. It has been decided that the aforesaid circular shall apply mutatis mutandis to those cases also where inputs are supplied to a job worker under the instructions of another manufacturer. In such a situation the consignee will be the job worker and invoice under Rule 52A, in addition to the prescribed details including the consignee's name and address will also bear the name and address of manufacturer on whose instruction the goods have been so dispatched. The duplicate copy of the manufacturer's invoice under Rule 52A will serve as a cover for transport and for availment of Modvat by the input user (job worker). 5. Receipt of this Circular may please be acknowledged. 6. Field formations may please be informed accordingly." Under this circular, it was clarified that where inputs are su....
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.... is mandatory or directory and whether it provides for a procedure for availing facility of MODVAT credit or is substantive in nature was considered by a Division Bench of this Court in Commissioner of Central Excise, Allahabad Vs. Hindalco Industries Pvt. Ltd., 2013 293 ELT 208 wherein the Court, after considering the provision of Rule 52A and 57G of the Rules, held that Rule 57G of the Rules only prescribed the procedure for availing MODVAT credit and did not affect any substantive right. The Court held that from a conjoint reading of Rule 52A and 57G, filing of documents for availing MODVAT credit was only a procedural matter and that MODVAT credit could not be denied on the ground that the documents referred to in the Rules did not strictly comply with the said Rules, especially when it contained the details of payment of dues, description of goods, assessible value, name of address of the factory, etc. In our opinion, we need not dwell any further on this subject. We are in entire agreement with the said decision and we hold that Rule 57G is only procedural in nature. In Commissioner of Central Excise, Salen Vs. M/s Chemplast Sanmar Ltds. Mettur Dam, 2009 (239) ELT 398, ....
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....Consequently, when the genuineness of the transaction is established and the inputs received by the applicant has suffered excise duty, there is no reason why the applicant should be denied what is legitimately due to it. In the facts and circumstances of the case, the applicant is entitled to MODVAT credit. Prior to 1st April, 1994 gate passes were considered as valid documents under which goods were cleared by the manufacturer and also could be transferred by a dealer to a third party. Two endorsements were made permissible on the gate passes. Gate passes were omitted under Rule 57G by issuance of Notification No.15 of 1994 dated 30th March, 1994 and invoices were brought in their place as valid documents under which the goods could be cleared from the factory by the manufacturer or could be further passed on by the dealer to a third party. Rule 57G as amended provides that no credit shall be taken unless the inputs are received in the factory under the cover of an invoice, issued under Rule 52-A and AR-1 on Bill of Entry evidencing payment of duty on such inputs. From the aforesaid, it is clear that credit would be given on an invoice bill, which indicates payment of duty ....