Archana Wadhwa, Member (Judicial)
1. After hearing both sides duly represented by Shri M.A. Patel, learned Consultant for the appellant and Shri K.J. Sanchis, learned JDR for the department, we find that during the relevant period, there was dispute about the classification of the goods being manufactured by the appellant i.e. HDPE Tapes, Fabrics, Bags, Sacks etc. The appellant was paying duty under Chapter 54, as claimed by the Revenue, as against their claim of classification under Chapter 39. Inasmuch as Chapter 54 was not one of the specified items for the purpose of Modvat credit, no credit was being availed by them in respect of inputs. However, the dispute on classification was ultimately settled under Chapter 39. As a result the appellant became entitled to refund of excess duty paid, as the duty has been paid under protest under the cover of their letter dated 3.7.89. Inasmuch as Chapter 39 was one of the specified chapter for the purpose of Modvat credit, the appellant also claimed Modvat credit of Rs. 46,87,244/- in respect of the inputs used in the manufacture of such goods. Out of the said credit, original adjudicating authority allowed the credit to the extent of around Rs. 22 lakhs, rejecting Modvat credit of Rs. 24,71,099/-. Appeal against the above order did not succeed before the Commissioner (Appeals). Hence, the present appeal.
2. After hearing both sides, we find that the protest was filed on 3.7.89. A part of the credit stands rejected on ground that the same pertained to the period prior to the said date. Shri M.A. Patel appearing for the appellants does not dispute the above legal position but submits that the observation of the authorities below that the credit is for the period prior to 3.7.89, is factually incorrect.
Inasmuch as the above issue relates to the fact to be verified, we would remand the matter to the original adjudicating authority for doing the needful.
3. Another part of the Modvat credit stands denied on the ground that the same has been claimed on the basis of Xerox copies of the documents, commercial invoices and Port Trust copies of Bill of Entry. Shri Patel submits that in view of the long standing dispute between the industry similarly situate and the Revenue, it was not possible to preserve original duty paying documents. As such, he submits that the authorities should have accepted the parallel evidence produced by them and in the absence of any other dispute as regards the receipt of the raw materials and other utilization in the manufacture of the final product, denial of credit on the ground that the original duty paying documents were not produced, is not justified. He draws out attention to the Tribunal’s order in the case of Prabhu Enterprises, Ahmedabad v. CCEx, Ahmedabad order No. 97/97-C dated 31.1.97, wherein in similar facts and circumstances, the Tribunal directed the lower authorities to reconsider the assessee’s claim and to scrutinize the claim, inasmuch as strict compliance with Modvat Scheme was not possible.
For better appreciation, we reproduce the relevant para of the Tribunal’s order: –
This point relates to the quantification of duty paid on HDPE Granules in respect of which Modvat credit would be availed. Assistant Collector allowed the claim in respect of inputs for which appellant produced “original duty paying documents with proper endorsements” and rejected the claim in respect of inputs for which “original documents” were not produced. This finding is challenged by appellant. According to appellant, Annexures C and D would suggest that Modvat benefit was claimed in respect of imported granules. Having regard to the history of the dispute, Collector (Appeals) rightly held that strict compliance with Modvat Scheme procedure should not be insisted on. It was, therefore, the duty of the adjudicating authority to scrutinize the documents produced, wherever original documents were not available, and deal with each consignment of input separately in the light of documents. The original order and appellate order do not show such consideration or application of mind. Hence, this aspect has to be reconsidered by the appropriate authority. Point answered accordingly.
Apart from above, If Modvat credit is allowed or disallowed in respect of duty paid on different part of inputs, that will affect rate of duty as in regard to finished products manufactured out of inputs admitted to Modvat benefit. Item 40A of the Table to the Notification 53/88 and in respect of remaining finished products. Item 40B may be applicable.
4. Shri Patel also argues that they had submitted original duty paying documents also in respect of Modvat credit of around Rs. 10 lakhs out of the denied credit of Rs. 24 lakhs (approx), which the lower authorities have not taken note of. These are lying shorts with the Revenue. The Assistant Commissioner has not gone for bifurcation on the basis of which he has allowed a part of the credit and disallowed the other part. According to the learned Consultant, duty paying documents involving Modvat Credit of around Rs. 10 lakhs were submitted by them. He prays for direction to the original authority to look into the said documents and allow the credit.
5. In view of the observations made by the Tribunal in the above referred decision (extracted paragraph), we agree with the appellant that the availability of the Modvat credit should be considered in the light of the parallel evidence which may be available in the shape of declaration or certificates of the supplier or his jurisdictional superintendent and commercial invoices, payment made by the appellants to the supplier inclusive of duty etc. We, accordingly, set aside the impugned order and remand the matter to the original adjudicating authority to re-determine the appellant’s entitlement of the credit. The adjudicating authority would also look into the appellant’s grievance to denial of a part of the credit claimed by them on the basis of original documents. Needless to say that the appellant would co-operate in the matter. Inasmuch as the matter relates to the period 1989 to 1992, we would expect the adjudicating authority to complete the proceedings as early as possible are preferably within a period of 4 months from the date of receipt of this order.
6. The adjudicating authority would also examine the appellant’s claim to concessional rate of duty in terms of the provision of Notification No. 58/88-CE, which prescribes the lower rate of duty in case the Modvat credit is not availed. We find that though the said claim was made before the authorities they have not discussed the same.
7. The appeal is disposed off in the above terms.
(Dictated and pronounced in open Court)