ORDER
P.G. Chacko, Member (J)
1. This appeal is against an order of the Commissioner (Appeals) denying to the appellants Cenvat credit of Rs. 87,670/- taken on 19-1-2001 on the basis of a supplementary invoice issued on 23-11-2000 by M/s. Hydraulics Ltd., Chennai.
2. Examined the records and heard both the sides. It appears from the records and the submissions that the appellants had received various consign-
ments of inputs (components of motor vehicle parts viz. Shock Absorbers) under cover of Rule 52A invoices from M/s. Hydraulics Ltd., Chennai over the period January, 1996 to October, 2000 and that they had taken Modvat credit on those goods on the strength of the said invoices. Subsequently, it appears, the Department suspected undervaluation of those goods at the end of the input-supplier and accordingly booked a case against them. In the course of the Departmental proceedings against the input-supplier, the value of the inputs was enhanced and differential duty on that basis was paid by M/s. Hydraulics Ltd., Chennai. Thereafter, the aforesaid supplementary invoice dated 23-11-2000 was issued by M/s. Hydraulics Ltd., Chennai to the appellants to enable the latter to take Mod-vat credit of the above differential duty paid by the former on the goods (inputs) cleared during January, 1996 to October, 2000. The differential duty covered by the supplementary invoice was Rs. 87,670/- which was the sum total of the differentials in respect of all the aforesaid consignments of inputs. Cenvat credit of this amount was taken by the appellants on 19-1-2001. This action was objected to by the Department, which issued show-cause notice to the appellants seeking to recover the duty from them under Section HA of the Central Excise Act and to impose penalty on them. The proposals were contested. The adjudicating authority disallowed the credit and ordered recovery thereof. It also imposed a penalty on the party. The appeal preferred by the aggrieved party against the order of the original authority was rejected by the Commissioner (Appeals). Hence the present appeal.
3. The learned Counsel for the appellants submits that the impugned order was passed by the Commissioner (Appeals) without observing the principles of natural justice inasmuch as the order was passed without a proper hearing. Nevertheless, the learned Counsel does not insist on a remand of the matter and is ready to argue on the merits of the case. The Counsel submits that the supplementary invoice was a valid document under Rule 57AE of the Central Excise Rules, 1944 as on 19-1-2001, on which date the credit in question was taken. The Commissioner (Appeals) has denied the credit to the appellants by giving retrospective effect to the amendment to the Rule brought about by Notification No. 6/2001-C.E. (N.T.), dated 1-3-2001. The Counsel submits that this action of the lower appellate authority was unwarranted as the said amendment had no retrospective operation. The denial of the credit cannot be justified inasmuch as there is no dispute of the duty-paid nature of the inputs or of the factum of utilization of the goods in the process of manufacture of final product in the appellants factory.
3. The learned DR reiterates the findings recorded in the impugned order. He, further, submits that the payment of differential duty on the inputs was occasioned by the booking of a case of undervaluation against the input-supplier. That case is yet to be finalized. Therefore, the authorities were not to be faulted for denying the credit taken pursuant to the payment of differential duty.
4. Having carefully examined the submissions, I observe that the short question to be considered in this case is whether the conditions for availment of Cenvat credit were fulfilled. The credit in question was taken on 19-1-2001. That credit was 01 the differential duty paid by the input-manufacturer consequent upon enhancement of the value of the goods. How the value of the inputs happened to be enhanced at the end of the input -manufacturer is totally irrelevant to the context of availment of Cenvat credit on the inputs at the end of the manufacturer of final product. What requires to be ascertained is whether the differen-
tial duty of Rs. 87,670/- had actually been paid by the input-manufacturer. I find that payment of the said duty by the input-manufacturer has not been disputed in these proceedings. The goods are, therefore, duty-paid. The receipt of the goods and utilization thereof in the process of manufacture of final product in the appellants’ factory are facts already acknowledged by the Department at the time of original availment of Modvat credit way back in the period 1996 to 2000. Thus, all the essential conditions stand fulfilled.
5. The learned Commissioner (Appeals) appears to have been carried away by the amended provisions of Rule 57AE. The relevant amendment was brought about w.e.f. 1-3-2001 under Notification No. 6/2001-C.E. (N.T.). Before this amendment, the relevant Clause (i) of Sub-rule (1) of Rule 57AE of the Central Excise Rules, 1944 read as under :-
“(i) a supplementary invoice issued by a manufacturer of inputs or capital goods under Rule 52A or 52AA or Rule 100E from his factory or from his depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the aid manufacturer, in case additional amount of excise duties has been paid on finalization of provisional assessment or on account of cost escalation as provided for in accordance with normal commercial practice.”
The above clause prescribed a supplementary invoice like the one issued by M/s. Hydraulics Ltd. for the purpose of availment of Cenvat credit of any additional amount of excise duty paid on the inputs. The above provision was in force on 19-1-2001, the date on which the credit in question was taken. An exception was added to the above clause w.e.f. 1-3-2001 by Notification No. 6/2001 ibid. Had the credit in question been taken on or after 1-3-2001, it would have been hit by that exception. The amended provision had no retrospective effect. The unamended Clause (i) undisputedly entitled the appellants to take Cenvat credit of the differential amount of duty on the strength of the supplementary invoice. The credit was lawfully taken by the appellants. In the result, the impugned order is set aside and the appeal is allowed. The amount pre-deposited in this appeal shall be refunded to the appellants without delay.