ORDER
Jeet Ram Kait, Member (T)
1. These two appeals, arising out of two separate orders in appeal, involve a common question of law and facts and hence they are taken up together for disposal by a common order, according to law.
Appeal No. E/154/2000
2. Briefly stated, the facts are that the appellants are engaged in the manufacture of motor vehicles falling under Chapter 87 of the CETA, 1985 and they are also availing Modvat Credit on the inputs under Rule 57A and on capital goods under Rule 57Q. The appellants have taken credit on Rule 57E certificate during the period prior to December 1996 and January 1997. The contention of the department was that if the credit had been taken before 16.3.95, then the same would have lapsed in terms of erstwhile Rule 57F(4A) (now 57F(17)). In this case, the appellants had availed the credit on 57E certificate received from the manufacturer for the goods received prior to 16.3.1995 on which they have availed the credit before 16.3.1995, and, therefore, on 16.3.1995, the credit available in RG 23A Part II had lapsed on account of Notification No. 11/95-CE dated 16.3.95 which amended Rule 57F to the said effect. They have stated that since the manufacturers of these inputs had to pay differential duty for the clearances of the said inputs for different reasons and Rule 57E certificate was issued after payment of such differential duty, they are entitled to the said credit. The Commissioner (Appeals) did not agree with the above views of the appellants and held that if the original credit as and when taken before 16.3.95 had lapsed (or would have lapsed) on 16.3.95 by operation of Rule 57F(17), the supplementary credit on such goods cannot have a better title than the original credit. He also held that Rule 57 has no independent existence unless read in conjunction with Rule 57 A and the manufacturers are not entitled to carry forward the credit standing to their balance as on 16.3.95 beyond that date. He therefore, held that supplementary credit based on Rule 57E certificate cannot survive beyond that date and he agreed with the view taken by the original authority and rejected the appeal.
Appeal No. E/1864/1999
3. Brief facts in this appeal are that the appellants are manufacturers of IC Engines of Chapter 84 and motor vehicle chassis of Chapter 87 and they are also availing Modvat Credit on the inputs and capital goods. They were issued with show cause notice dated 3.4.98 for disallowing wrongly availed credit amounting to Rs. 20,40,591 on items covering serial Nos. 1 to 94 of Annexure 1 to the show cause notice for Rs. 19,84,476 and differential duty @ 5% on certain items amounting to Rs. 56,115. After consideration of their submissions, the Assistant Commissioner partly allowed credit on several counts but disallowed input credit totally of Rs. 7,37,707. Aggrieved by the said order of the original authority they filed appeal before the Commissioner (Appeals), who after careful consideration of their submissions noted that the short question involved for consideration was whether the disallowance of input credit can be sustained in law or not. The Commissioner (Appeals) has given detailed order in paras 4 (sic) [3 to 10] which are reproduced herein below:
3. I have given my careful consideration to all the submissions on record and I have also seen the impugned order. The short question here is whether the disallowance of input credit, as outlined above, can be sustained in law or not. For the reasons discussed below, I am deciding the main appeal itself.
4. The matter was heard through Shri R. Raghavan, Advocate on 19.7.99 when the appeared along with Shri K.K. Sekar, Deputy Manager of the appellants company and stated that they have filed two affidavits pertaining to SI. Nos. 2 and 15 of the Annexure; that in respect of SI. Nos. 5 to 7 of Annexure the credit was available within 9 months under Rule 57-J challans having cross reference to respective invoices; that in respect of SI. No. 13 the TR 6 challan dated 19.8.97 related to Bill of Entry dated 25.8.97 signed by the Superintendent, Custom House, Bangalore and that the consignment was addressed to the Madras office and the endorsement was made in the Bill of Entry that the consignment was transferred to their Hosur factory; that in respect of SI. Nos. 16 and 17 they have availed the credit based on Certificate “A” which provides particulars regarding original payment of duty prior to 16.3.95; that in respect of SI. No. 18 they would concede; that in respect of SI. Nos. 82 to 93 they would rely on the Order-in-Appeal No. 388/98 (M-III) dated 14.9.98; and that as regards SI. Nos. 43 to 81, though the Assistant Commissioner allowed the credit (Rs. 29,009), the Assistant Commissioner wrongly included the same in the total disallowed credit.
5. As regards the first issue i.e. denial of credit pertaining to SI. No. 2 and 15 of the Annexure, on account of technical lapse such as overwriting in the invoices relating to the date of issue/removal, the appellants have filed necessary affidavits from the suppliers, namely M/s. Luman Autolite Pvt. Ltd., New Delhi and M/s. Bharat Forge Ltd., Pune certifying the genuineness of the corrections. I therefore direct the Assistant Commissioner to extend the credit after necessary verification.
6. Regarding SI. Nos. 5, 6 and 7 of the Annexure, it is seen that the credit has been disallowed on the ground that the 57-J challans having cross reference to respective invoices were not produced. Now, the appellants have filed the documents to prove that the credits were availed within nine months. I therefore direct the Assistant Commissioner to extend the credit after verification.
7. In respect of SI. No. 13 of the Annexure, the credit was disallowed on the ground that the TR 6 challan produced did not relate to the Bill of Entry and that credit was availed by the appellants at Hosur is respect of the Bill of Entry addressed to Madras office. The appellants rely on the Tribunal decision in the case of CCE v. L&T reported in Vol. 72 of the ELT, and pleaded that the Bill of Entry has been noted as Ashok Leyland Corporate Office which has been endorsed in the name of Ashok Leyland, Hosur. Further they have also pleaded that the No. SEAV 079-12425 mentioned in the Bill of Entry and the amount of duty thereon and the TR6 challan tallied and pleaded that while the total duty payment was Rs. 8,52,802, they are seeking credit of the countervailing duty only which is part of the above amount. I agree with the arguments of the appellants and direct the Assistant Commissioner to extend the credit after due verification.
8. With regard to disallowance of credit (SI. Nos. 16 and 17) on the ground that the 57-E certificate issued related to duty paid on the inputs prior to 16.3.95, the appellants pleaded that the credit was availed prior to 16.3.95. However they have conceded–vide their further submission received on 26.7.99–the very same issue was decided against them–vide Order-in-Appeal No. 104/99 (M-III) dated 31.5.99, and admitted that credit would not be available to them. The relevant portion of my order is extracted below:
6. The third group in the Annexure to show cause notice covers SI. Nos. 18 to 21 wherein the reason given for disallowance of credit was that the credit was taken under Rule 57E certificate for goods received in the factory before 16.3.95 and that if differential duty had been taken as credit before 16.3.95, the amount would have lapsed as per Rule 57F(17). To this, the appellants have stated that they received the inputs from different manufacturers prior to 16.3.95 on which credit was availed and that on 16.3.95, credit standing to their balance lapsed on account of Notification 11/95 dated 16.3.95 which amended Rule 57-F to the said effect. However, since the manufacturers of these inputs had to pay differential duty for clearances of said inputs for different reasons and Rule 57-E certificate was issued after payment of such differential duty, they are entitled to the said credit. I am afraid I do not agree with the appellants point of view here. If the original credit as and when taken before 16.3.95 had lapsed (or would have lapsed) on 16.3.95 by operation of Rule 57-F(17), the supplementary credit on such goods cannot have a better title than the original credit. Rule 57-E has no independent existence unless read in conjunction with Rule 57-A. Here, the manufacturers are not entitled to carry forward the credit standing to their balance as on 16.3.95 beyond that date. So, any supplementary credit based on Rule 57-E certificate cannot survive beyond this date. I therefore agree with the Act in rejecting this credit. Accordingly, the appeal with regard to SI. Nos. 18 to 21 is rejected”.
In the light of the above, I reject the appeal on this count,
9. In respect involved in SI. Nos. 43 to 81 of the Annexure, the appellants have pleaded that the allegation in the show cause notice that the goods removed under Rule 57F(4) were returned beyond sixty days, was dropped in the impugned order but however while confirming the duty demand, this part of the amount was not deduced from the total demand. I find force in the appellants’ plea as seen form the penultimate para at the bottom of page 4 of the order. I therefore direct the Assistant Commissioner to carry out necessary rectification in this regard. The appeal on this count is therefore allowed.
10. Coming to SI. Nos. 82 to 93 of the Annexure, credit has been denied mainly on the ground that the credits were taken after six months from the date of issue of documents. The appellants have explained that the inputs were no doubt received after sixty days but have sought allowing the credit based on the recent CEGAT decision in the case of UP Twiga Fibre Glass Limited v. CCE Meerut 1998 (28) RLT 858 (CEGAT). In the cited decision it has been held that the credit should not be disallowed even if the goods were returned beyond the period of sixty days as prescribed under the Rules. Accusingly, I concede this point as I have already allowed credit in several cases–Order-in-Appeal No. 216/99 (M-III) dated 10.9.99 following the above cited decision of the Tribunal and accordingly direct the Assistant Commissioner to grant credit after verification in respect of SI. Nos. 82 to 93 of Annexure.
4. Shri R. Raghavan, learned Counsel of the appellants submitted that originally duty was paid for the components by the manufacturer of these components and prior to 16.3.95 also the appellants took credit of duty paid by the components manufacturers. Subsequently in 1996-97 the components manufacturers were agitating for price increase and the price increase was given to them. The component manufacturers had paid duty on these escalated price. He also vehemently argued that duty who paid by the components manufacturers after 16.3.95 and the 57E certificate was issued by the Supdt. of Central Excise, for the amount paid as duty after 16.3.95.
5. Shri C. Mani, the learned DR of the Revenue defended the orders passed by the authorities below and prayed for rejection of the appeals since the manufacturers are not entitled to carry forward the credit balance standing as on 16.3.1995 by way of supplementary credit based on 57-E certificate issued by the Supdt. of Central Excise.
6. We have gone through the whole cas records and the impugned orders of the Commissioner (Appeals). The learned Counsel confined his argument only in respect of Rule 57E in both these appeals. Accordingly we proceed to decide the appeals. The plea of the learned Counsel was that fresh duty was paid after 16.3.95 and 57E certificate was issued by the Supdt. in respect of this amount and, therefore, they are claiming Modvat Credit of this amount. We do not find any evidence on record that fresh duty was paid after 16.3.95. The Supdt. of Central Excise had issued certificate under Rule 57E for the Modvat Credit which has been expunged/lapsed and not for any amount paid after 16.3.95 as duty. From the grounds of appeal also we find that the appellants has submitted that credit in any case had been availed only after 16.3.95 and the certificate has been issued much later than 16.3.95. They have further stated that there is nothing in Rule 57E to suggest that credits if any that may arise under Rule 57E in respect of such credits already availed prior to 16.3.95 and which has been lapsed on account of Rule 57F(17) would also lapse when such credit is availed. They contend that Rule 57F(17) (erstwhile 57F(4A) has not stated that any subsequent credits to which the assessee may become eligible on account of other provisions of law would also lapse if the original credits in regard to such differential duty credits which had been availed prior to 16.3.95 had also lapsed on account of Notification No. 11/95 dated 16.3.95. They submit that they are entitled for the credit availed based on certificates under Rule 57E. We would have accepted their contention if they had made original payment of duty after 16.3.95 and certificate-A was issued in respect of duty paid on the inputs on or after 16.3.95. Since the facts are otherwise in our opinion, the orders passed by the Commissioner (Appeals) cannot be faulted with. We therefore, do not find any merits in the appeals and the same are rejected.