ORDER
Archana Wadhwa, Member (J)
1. We have heard Dr. D.M. Mishra, learned Advocate appearing for the appellant and Shri K.L. Bablani, learned JCDR in respect of this stay petition. We find that the appeal itself can be disposed of at this stage. As such after allowing the stay petition unconditionally and with the consent of both sides we take up the appeal.
2. As per the facts on record the appellant are engaged in the manufacture of excisable goods failing under Chapter 72 of the Schedule to Central Excise Tariff Act, 1985 and were availing Cenvat credit under the provisions of Rule 57AB of the Central Excise Rules, 1944. The inputs on which the credit was being availed, i.e., CR Coils, was being manufactured by their sister unit situated at Vasind. During the period 01/07/2000 to 28/02/2001 the appellant received certain inputs and availed Cenvat credit of duty paid on the said inputs. However, there was some dispute about the assessable value of the inputs at Vasind unit which resulted in re-determination of the assessable value by adding 15% of the cost of raw material used in the manufacture of finished goods. As a result the assessable value was re-determined at the higher value which resulted in payment of differential duty by Vasind unit. Accordingly the Vasind unit paid duty of Rs. 93,39,434/- (Rupees Ninety Three Lakhs Thirty Nine Thousand Four Hundred Thirty Four only) and raised three supplementary invoices during the month of April, 2001. Such supplementary invoices were sent to the appellant who availed the credit of duty paid by Vasind unit in addition to the duty already paid on the inputs.
3. The Revenue, however, objected that such availment of credit by the appellant was not accordance with law and accordingly issued a show cause notice dated 03/05/2002 proposing disallowance of the said credit along with confirmation of interest and imposition of penalty. The said show cause notice culminated into the impugned order passed by the Commissioner of Central Excise, Thane – II, vide which the duty as proposed in the notice was confirmed along with interest and penalty of Rs. 5,00,000/- (Rupees Five lakhs) was imposed upon the appellant. Hence the present appeal.
4. The appellant’s main grievances is that there is no dispute about the fact that the additional duty on the raw materials already received by them was paid by the input manufacturer when the assessable value was re-determined at the instance of the department. The only ground on which the benefit has been denied to them is that Rule 57AE permitting availment of such credit on the basis of the supplementary invoices was introduced w.e.f 28/08/2000 which was further amended on 01/03/2001 whereas the earlier Rule 57AE allowed taking of Cenvat credit on the basis of supplementary invoices issued by the manufacturer of inputs only in two situations i.e., on finalisation of provisional assessment or on account of cost escalation. The subsequent amendment made on 01/03/2001 deleted the two events for issuing the supplementary invoices for payment additional of duty. The appellant’s contention is that the amendment made on 01/03/2001 would be applicable in their case inasmuch as the supplementary invoices were raised in the month of April, 2001 when the said amended provisions were already in existence. In any case the said amendment is only clarificatory and in the absence of any doubt of payment of duty by the input manufacturer, they should not be denied the consequent benefit available to them under the law on the basis of technicalities. It is also been contended before us that supplementary invoices are also invoices in which case the provisions of Rule 57AB would apply.
5. Shri Bablani, learned JCDR appearing for the Revenue reiterates the reasoning of me adjudicating authority.
6. We have considered the submissions made by both sides. Admittedly the assessable value of the inputs was revised at the input manufacturer’s end at the instance of the Revenue which resumed in payment of additional duty by them, for which purpose they raised supplementary invoices. Inasmuch as the appellant had already received the inputs and had availed the benefit of the credit of duty paid by the manufacturer at the time of clearance of the inputs, they were, in our view, clearly entitled to avail the credit of the additional duty paid by the input manufacturer subsequently in respect of the already received inputs by the appellant. Admittedly Rule 57AE was amended vide Notification 6/2001-CE (NT) dated 01/03/2001 allowing the assessee to avail credit on the basis of the supplementary invoices raised by the input manufacturers. Such supplementary invoices having been raised in April, 2001 would definitely be covered by such amended provisions of law. In any case we find that Rule 57AE allows taking of credit on the basis of invoices issued by the manufacturer of the inputs. Supplementary invoices are nothing but the invoices raised subsequently to the clearances of the inputs under the original invoice and as such it can be said to be covered by the expression “invoices”. As such we find no justification in denying the benefit of the credit to the appellants or to impose penalty upon them. Accordingly we set aside the impugned order and allow the appeal with consequential relief to the appellant.
7. The appellants received the impugned goods from their sister concern at Vasind during the period 1.7.2000 to 28.2.2001 and took credit of the duty paid on the same. Subsequently, the Vasind unit paid additional duty of Rs. 93,39,434/- on the impugned goods and issued supplementary invoices dated 17.4.2001 and 18.4.2001 on account of re-determination of the assessable value. The appellants took credit of the said amount on the basis of supplementary invoices. The relevant rules governing modvat credit: have been amended in between on 29.8.2000 and thereafter, on 1.3.2001. The rules prevailing before 29.8.2000 admittedly did not contain a provision for taking credit on supplementary invoices. During the period 29.8.2000 till 28.2.2001, there was a provision under Rule 57AE to take credit of duty paid on supplementary invoice, if the additional amount of duty was paid on finalization of provisional assessment or on account of cost escalation. After 1.3.2001, Rule 57AE allowed credit on supplementary invoice without any such condition but denied credit if the additional duty was paid on account of non levy or short levy by reason of fraud, collusion, suppression etc.
8. The impugned order denies credit on the supplementary invoice inter alia on the grounds that the rules inforce after 1.3.2001 apply to inputs received in the factory on or after 1.3.2001 and that there was no rule upto 28.8.2001 permitting availment of credit on supplementary invoices and further that in the intervening period between 29.8.2000 and 28.2.2001, the provisions under Rule 57AE covered only cases of additional amount paid as a result of finalization of provisional assessment or on account of cost escalation.
9. I find that neither the show cause notice nor the impugned order alleges the payment of the additional duty to be by reason of fraud, collusion, suppression, etc. The additional payment by the Vasind unit was a result of re-determination of the assessable value due to addition of 15% of the cost of raw-materials. As such, the case merits coverage under the clause of finalization of provisional assessment or on account of cost escalation appearing in Rule 57AE during the intervening period from 29.8.2000 to 28.2.2001.
10. Notwithstanding the foregoing, it is seen that Rule 57AB allows credit of duty paid on any inputs received in the factory on or after 1st day of April 2000. There is no dispute about the duty paid on the inputs and receipt of the inputs in the appellants’ factory and utilization of the same in the prescribed manner. Rule 57AE merely deals with documents and accounts which has been amended on 29.8.2000 to include supplementary invoice and the provisions of this Rule has again undergone a change on 1.3.2001. The substantial provisions governing grant of credit is, however, contained in Rule 57AB. This rule requires the credit to be equal to the duty paid. If the duty initially paid is varied, the credit consequently requires to be varied. If the supplier of the inputs gets refund of part of the duty initially paid, the credit taken by the recipient unit has to be reduced. Similarly, if additional duty is paid by the supplier, as in the instant case, it follows from Rule 57AE that additional credit should accrue to the recipient factory. In my view, the provisions regarding documents and accounts which have been made in Rule 57AE to regulate the procedure of taking credit can not over-ride the basic proposition that the credit has to be equal to the duty paid and that the credit has to be varied if the amount of duty paid is varied.
11. The Commissioner has also held it against the appellants in her impugned order that the impugned goods were not received under the supplementary invoice. Supplementary invoices by their very nature are issued subsequent to removal and delivery of the goods on the original invoice and no goods can therefore be received under cover of a supplementary invoice.
12. In view of the foregoing, I am in agreement with the decision recorded by my learned Sister that benefit of credit in respect of the supplementary invoices can not be denied to the appellants nor is there any justification for imposing penalty on them. Accordingly, I concur with her order in setting aside the impugned order and allowing the consequential relief to the appellants.
(Pronounced in Court On 19/12/02)