ORDER
Rajesh Balia, J.
1. This is a reference application under Section 35H(1) of the Central Excise Act, 1944 (in short “the Act of 1944”) for directing the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (in short “CEGAT”) to state the case and refer the following question of law said to be arising out of its order dated 14-2-2003.
“Whether Modvat credit is available on endorsed invoice, under the provisions of erstwhile Rule 57G of Central Excise Rules, 1944 read with Notification No. 15/94-C.E. (NT,), dated 30th March, 1994”.
2. The facts giving rise to this application are that the respondent-assessee is engaged in the manufacture of Spun Yarn and is availing the benefit of Modvat credit in respect of inputs used by it in the manufacture of final product and during the period, with which this reference application concerns, it is availing the Modvat credit on certain inputs used by the respondent-assessee for its manufacture between 10th April, 1994 to 19th April, 1994. The respondent-assessee has not purchased the inputs directly from the manufacturer of those inputs namely; M/s. Terene Fibres India Ltd., but it purchased the inputs from M/s. Reliance Industries Ltd., Mumbai, which was the first purchaser of the goods from M/s. Terene Fibres India Ltd. The invoices in respect of goods in question were issued by M/s. Terene Fibres India Ltd., Thane to M/s. Reliance Industries Ltd., Mumbai against supply of five consignments of Polyester Staple Fibre. M/s. Reliance Industries Ltd. subsequently transferred the entire consignment covered by the said invoices to the respondent-assessee while the goods were in transit and before it reached the godowns of M/s. Reliance Industries Ltd., M/s. Reliance Industries Ltd. endorsed these invoices to the respondent-assessee. The invoices were endorsed by certifying that “the entire consignment covered under this gate pass/invoice is endorsed to M/s. Rajasthan Spinning and Weaving Mills Ltd. Banswara”. M/s. Reliance Industries Ltd. also issued separate invoices in favour of buyer.
3. The Assessing Officer was of the opinion that the endorsed invoices were not the prescribed documents under Rule 57G and the sale notes supporting the purchase by the assessee by M/s. Reliance Industries Ltd. appear to have been issued subsequently. Therefore, the respondent-assessee was not entitled to avail the Modvat credit on the basis of endorsed invoices only, as the endorsed invoices, according to the Assessing Officer, were not valid duty paying documents for the purpose of taking credit.
4. It appears that in appeal by the assessee before the Commissioner (Appeals) when it was ultimately heard on merits, the only contention, between the assessee and the revenue urged before the Commissioner (Appeals), was that the assessee has availed the Modvat credit on the basis of invoices issued by the seller (RIL) without actually having received the excisable goods in its premises, as it was a case of transit sale.
5. The Commissioner (Appeals) specifically recorded that the impugned order does not deny the credit on the grounds that the documents were not endorsed. The Commissioner (Appeals) found that the Trade Notice dated 2-9-1994 No. 63/Bombay-III/Gen (33) 94, dated NIL and other parallel trade notices relied on by the Revenue do not require that goods should have physically been moved to dealer’s premises before subsequent sale. The Board also allowed such transit sale for Modvat credit, which is otherwise allowable. Relying on the earlier decision of the Tribunal, the appeal of the assessee was allowed, which incidentally covered two periods and allowed by a common order.
6. In appeal against the order of Commissioner (Appeals) in Appeal No. 77(KDT)CE/JPR-II (48)2002, the Revenue has raised the issue that the assessee has availed the Modvat credit on the strength of endorsed copy of invoices when the goods were not received by the dealer, who has made endorsement on the invoice issued by the manufacturer. The Tribunal following its earlier decision in the matter of Eveready Industries Ltd. v. Commissioner of Central Excise, 1997 (89) E.L.T. 180 (T) has held that for the subsequent sale by a dealer, it is not necessary that goods must physically move to his premises before he can re-sale the goods. Therefore, issuing the invoice and endorsing the invoice issued by the manufacturer does not affect the availing of Modvat credit by the user of the input ultimately on the basis of endorsed invoices issued by the manufacturer.
7. It is urged by the learned Counsel for the applicant that a substantial question of law does arise in this case whether the endorsed invoice can be basis availing the Modvat credit by the subsequent purchaser.
8. It is not in dispute and doubt that availing of Modvat credit is not confined to an immediate purchaser from the manufacturer. The Modvat credit is availed by the person who has actually used any duty paid goods as inputs in the manufacture of goods, of the excise duty paid on such inputs by the manufacturer of such goods and the credit has not been availed in respect thereof by any other person. In the present case, on facts it is not in dispute that the invoices were issued by the manufacturer, M/s. Terene Fibres India Ltd. in favour of M/s. Reliance Industries Ltd. and M/s. RIL has transferred the goods in favour of the respondent-assessee in transit, without receiving them in its godown by endorsing the invoices issued by the manufacturer as under :
“The entire consignment covered under this invoice is endorsed to M/s. Rajasthan Spinning & Weaving Mills Ltd. Banswara”.
9. Thus, the goods were transferred to the respondent-assessee by the first purchaser in transit by making an endorsement on the invoices received by him, which was the document of title in the goods and is a normal mode of transacting the goods in transit. It is also not in dispute that the subsequent purchasers of the inputs using the same in the manufacture of goods can avail the Modvat credit and it need not be availed by purchaser at the first instance, as the first purchaser need not be a manufacturer by himself. That is even clear from reading of Rule 57G, which was in force at the relevant time. There is no dispute about the fact that the assessee has furnished the declaration required by him under Sub-rule (1) of Rule 57G of Central Excise Rules. The proviso to Rule 57G at the relevant point reads as under :
“Provided that no credit shall be taken unless the inputs are received in the factory under the cover of a Gate Pass, an AR-1, a Bill of Entry or any other document as may be prescribed by the Central Board of Excise and Customs [(constituted under the Central Board of Revenue Act, 1963 (54 of 1963)] in this behalf evidencing the payment of duty on such input”.
10. These requisite documents to be produced along with the declaration were to provide proof to the satisfaction of the authorities about payment of duty on such inputs in respect of which the Modvat credit is availed by a manufacturer using those inputs. There is no dispute in the present case also about the fact that the endorsed invoices issued by the manufacturer evidenced payment of duty on such inputs. Therefore, the only controversy, which emanates from combined reading of the order of the Assessing Officer namely; Assistant Commissioner, Central Excise, goes to show that the impediment felt by the revenue in allowing the respondent-assessee to avail the Modvat credit was about the first dealer having sold the goods in transit by endorsing invoices before or without receiving the goods at its premises, before issuing invoices in favour of the respondent-assessee and the invoices issued by the manufacturer were endorsed evidencing the transfer of goods in transit, which carried with it proof of payment of duty on such inputs.
11. The trade notices referred to by the Commissioner (Appeals) clearly indicated that it was not imperative for the intermediary purchaser to have issued a separate invoice, when even the material has not actually reached the godowns to the first purchaser and who has sold to the subsequent purchaser. The seller, in such circumstances can only issue an invoice of the goods in transit and endorse the invoice issued by manufacturer to enable the buyer in transit to take delivery of goods covered under invoice. The presentation of his invoice would also satisfy the requirement of Rule 57G. In fact, the requirement was to produce the gate pass and the invoice issued by the manufacturer evidencing payment of duty on such input as proof of payment of duty on such inputs can be covered by the gate pass issued by the manufacturer or the invoice issued by the manufacturer himself. The endorsement put on it does not take away its value as evidence of payment of duty on such goods.
12. Construing the said proviso to Rule 57G(2) in connection with availing the Modvat credit in respect of customs duty paid on raw material imported from outside the country and not used by the importer, but was used by the manufacturer or by the subsequent purchaser, by obtaining endorsed bill of entry.
13. The Division Bench of this Court in Union of India v. Alcobex Metals Ltd., decided on 2nd December, 2003, has said :
“Apparently, so far as the Rule itself is concerned, it speaks that what is required is a bill of entry evidencing payment of duty on such inputs whether such imported goods are used by importer for manufacture or the importer himself does not use the goods to manufacture as inputs but transfers to other who use such imported goods as inputs in manufacturing. In latter case, it is further required to prove that importer has not availed refund or dues paid by him while claiming adjustment against countervailing duty”.
14. Having thus concluded, the Court further found on that count no question of law arises for considering whether the endorsed bill of entry can be considered as a document, fulfilling the requirement of Rule 57G(2) of producing the prescribed documents.
15. Moreover, the trade notification relied on by the Assessing Authority does not require that the goods in transit cannot be transacted by endorsement of the documents of title and on that basis the Modvat credit cannot be availed. Merely by providing an alternative method or the additional method for availing the Modvat credit in respect of transaction, which has taken place in transit, does not take away the entitlement to avail the Modvat credit on the basis of original endorsed document evidencing the payment of duty on such inputs.
16. In view thereof, we are of the opinion that in the facts and circumstances of the present case, no substantial question of law arises for consideration in this reference application arising out of the order dated 14-2-2003 passed by the CEGAT.
17. The reference application, therefore, fails and is hereby dismissed with no order as to costs.