CEA55 of 2009 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH.
CEA No. 55 of 2009
Date of decision 20 .7.2009
The Commissioner of Central Excise, Jalandhar .. appellant
Versus
M/s Mahajan Steel and Allied Industries. ... Respondent
CORAM: HON'BLE MR. JUSTICE M.M. KUMAR
HON'BLE MR. JUSTICE JASWANT SINGH
Present: Mr.Sanjiv Kaushik ,Advocate for the appellant
1. Whether Reporters of local papers may be allowed to see the judgement ?
2. To be referred to the Reporter or not ?
3. Whether the judgement should be reported in the Digest ?
M.M.KUMAR, J.
This appeal has been preferred by the revenue proposing
following substantial question of law:
” Whether the manufacturer of final products is entitled to
deemed credit under Notification No. 58/97 CE dated 30.8.
1997 when the manufacturer/ supplier of inputs has not paid
appropriate Central Excuise duty and given a wrong certificate/
no certificate on the body of invoices about duty discharged
under Rule 96 ZP of the erstwhile Central Excise Rules,
1944 ?”.
The claim of the assessee for Modvat Credit was rejected on the
ground that supplier of the inputs who was discharging duty liability under
the compounded levy scheme, through issued invoices but did not discharge
full duty liability in respect thereof. However, the Commissioner (Appeals)
found it as a fact that the deemed Modvat credit availed by the dealer-
respondent was based on the invoices issued by M/s Prince Agro and Allied
CEA55 of 2009 2
Industries, Mandi Gobindgarh, where input manufacturer had discharged
partial duty liability and also on the strength of invoices issued by M/s Shiv
Saraswati Steel Industries, Mandi Gobindgarh, where input manufacturers
had subsequently discharged full duty liability. The Commissioner
(Appeals) had also taken into account that M/s Prince Agro and Allied
Industries, Mandi Gobindgarh had already discharged full duty liablity for
the period September 1997 to March 1998. In respect of the period
commencing from April 1998 it has discharged partial duty liability and a
dispute is pending with the department on the question of determination of
annual capacity of production. He further observed that in case the annual
capacity of production of input manufacture is disputed at the time of
issuance of invoice then the scheme of conveyance of deemed credit cannot
be put on hold. Accordingly, he has held that the benefit of deemed credit
could not be denied to the input purchaser.
Having heard the learned counsel for the appellant and perusing
the averments made in the appeal we are of the considered view that the
matter is no longer res-integra. A Division Bench of this Court vide its
judgement rendered on 26.9.2006 in CEA No. 65 of 2006 “The
Commissioner of Central Excise, Jalandhar v. M/s Kay Kay Industries” has
considered the aforesaid issue. The Division Bench relied on the earlier
decision of this Court in the case of Vikas Pipes v. Commissioner of C.Ex.,
Chandigarh II 2003(158) ELT 680 and a judgment of Hon’ble the Supreme
Court in the case of Collector of Central Excise, Vadodra v. Dhiren
Chemical Industries (2002) 2 SCC 127. In para 8 of the judgement in
Dhiren Chemical Industries’s case (supra) Hon’ble the Supreme Court has
held as under:
CEA55 of 2009 3
“8. An exemption notification that uses the said phrase applies
to goods which have been made from duty paid material. In the
said phrase, due emphasis must be given to the words “has
already been paid”. For the purposes of getting the benefit of
the exemption under the notification, the goods must be made
from raw material on which excise duty has, as a matter of fact,
been paid, and has been paid at the “appropriate” or correct
rate. Unless the manufacturer has paid, the correct amount of
excise duty, he is not entitled to the benefit of the exemption
notification.”
In the present case it has remained undisputed that the goods in
question have been made from duty paid inputs and although there is
dispute of his supplier with the department regarding their annual capacity
of production, the rate of duty has not been disputed. Therefore, the matter
is fully covered against the revenue and in favour of the dealer-respondent.
In view of the above legal position, we are of the view that the
instant appeal is covered by the aforesaid decisions of this Court as well as
of the Hon’ble Supreme Court Dhiren Chemical Industries’s case (supa). The
appeal is accordingly dismissed.
(M.M.Kumar)
Judge
(Jaswant Singh)
20.7.2009 Judge
okg