ORDER
K. Sankararaman, Member (T)
1. Appellants, manufacturers of excisable goods had taken Mod-vat credit in respect of the specified duty paid on the inputs received by them and used by them in the manufacture of their final product, Vanaspati. Objection was taken to their taking such credit on the strength of certain gate passes which were found to be not endorsed in their favour by the persons who had received the goods initially from the manufacturer thereof and who had sold the same to the appellants. After appellants had replied to the show cause notice, the Assistant Collector dropped the demand amounting to Rs. 1,33,191.69 but confirmed it for Rs. 45,435.33. The latter decision was taken by him on the ground that gate passes had two endorsements which was held to be not permissible at the material time. He overruled the contention raised about the notice being barred by limitation holding that Rule 57-I before its amendment vide Notification No. 28/88, dated 6-10-1988 authorised the proper officer to issue show cause notice for period exceeding six months also. The Department did not agree with the finding of the Assistant Collector dropping the demand as aforesaid and accordingly an application was filed before the Collector (Appeals) for setting aside the relevant part of the Assistant Collector’s order. The (present) appellant took the opportunity to file a cross objection challenging the Assistant Collector’s decision disallowing Mod-vat credit to the extent of Rs. 45,433.33. The Collector (Appeals) allowed the Department’s appeal but, as pointed out in the present appeal, the cross objection remained undisposed of. The appellant, aggrieved with both the above aspects of Collector (Appeals) order has filed the present appeal.
2. In the course of arguments, it was pointed out by the learned counsel that the Assistant Collector had, in fact, verified the gate passes in question and had satisfied himself about such documents having been endorsed in their favour. That was as far as larger amount of Rs. 1.33 lakh is concerned where the appellant received the goods from the first consignee of the goods as shown in the relevant gate passes. It was contended that the Collector (Appeals) erred in accepting the plea of the Department taken in their appeal that the endorsement in question in favour of the appellant was got made subsequently. It is contended that the fact that the endorsement in each of such documents was made subsequently and was not there at the time of their taking the credit does not, by itself, render the endorsement inoperative or make the documents invalid. The non-disposal of the cross objection in regard to the other sum of Rs. 45,435.33 was also pointed out by the learned counsel. In conclusion, it was submitted by her that in any case show cause notice issued on 18-8-1988 was clearly time barred for most of the period involved in the present case and the departmental authorities were in error in holding that the notice issued for the period six months prior to 18-8-1988 was not hit by limitation.
3. It was stated in reply by Shri D.K. Nayyar, learned Departmental Representative, that in view of the approach taken by the Department in regard to endorsements and the Tribunal decision in regard to the acceptability of endorsements made subsequently in the gate passes, he would only submit that for the fact of receipt of the goods in the factory of the appellant be verified and got confirmed, and the endorsements also to be got verified by the Assistant Collector the matter may be remanded. If on such verification it is found that the contention regarding the endorsement is correct and the contemporaneous record maintained by the appellants who are a Public Limited Company bear out the fact of receipt of the inputs and their utilisation in their manufacture of the final product, it would be open to the Assistant Collector to decide the matter accordingly.
4. I have considered the submissions made by both the sides. The cross objection filed by the present appellant before the Collector (Appeals) has remained unattended. This would normally require remand of the matter to that authority. However, I find that the Assistant Collector had, in his order, taken an adverse view in regard to the gate passes which had, apparently, two endorsements. The Assistant Collector had decided the matter wrongly as two endorsements were actually permissible. In regard to the other part of the demand which has fallen due as a result of the appellate decision, I find that the Collector (Appeals) has taken the decision only on the ground that the endorsement was not there originally and was got done subsequently. This cannot be a valid ground for rejecting the documents out of hand. If the fact of the receipt of the goods in the factory could be verified with reference to the contemporaneous record maintained by the appellant, this objection would stand overruled. In any case, the application of the extended period of limitation on the ground that the Superintendent was competent to issue notice for demand of duty after disallowing of credit even for a period beyond six months would not stand in view of the Larger Bench decision in Brakes India Limited v. CCE, Madras reported in 1996 (15) RLT 68. The appellant is entitled to succeed on this ground as far as the demand for the period beyond six months is concerned. As, however, certain part of the demand relates to the period within six months, the matter has to be decided on merits. This would necessitate remand of the matter to the Assistant Collector for de novo. After verifying the record about the proper receipt of the inputs in the factory of the appellant and the endorsements on the gate passes showing that the inputs in question were sold/transferred to them. It was pointed out in this connection by the learned counsel that the Assistant Collector had, in fact, carried out this exercise as the original stage and the matter need not be remanded for de novo decision at this stage on this point. I, however, find that Assistant Collector’s order referring to the endorsements on the gate passes is not clear. The name of one manufacturer, namely M/s. Punjab Akalies & Chemicals Limited is mentioned along with a number of dealers. It is not clear from his order whether there was only one endorsement in the gate pass by the first recipient in favour of the appellant or that there were two other parties involved and the second party endorsed the gate passes in favour of the appellant. The matter is, therefore, to be verified by the original authority for being satisfied that the inputs were received by the appellant and that the number of endorsements did not exceed two as claimed by the appellant. The impugned order is set aside and the appeal is allowed by remand to the Assistant Collector for carrying out de novo adjudication in the light of the above observations in respect of the demand pertaining to the period within six months. The appeal is allowed partly in respect of the demand beyond the aforesaid period of six months. It is pleaded by the learned counsel, at this stage, that they had already made the pre-deposit of the sum adjudged as due by the Assistant Collector even before they filed the cross objection before the Collector (Appeals). As part of this amount would become refundable to them in view of the decision on the time barred aspect, she pleaded that the direction may be given to the Assistant Collector for completing the de novo proceedings within a specific time frame. I allow the request and direct that the de novo proceedings may be completed within four months from the date of receipt of this order.