2002 (12) TMI 266 - Commissioner - Central Excise

Issues Involved:
1. Denial of Modvat credit due to non-compliance with Rule 57G and 57H(1).
2. Disallowance of credit taken on the basis of invalid documents.
3. Allegation of the adjudicating authority deciding beyond the scope of the show cause notice.
4. Time-barred demand for Modvat credit.
5. Entitlement to credit/refund despite departmental appeals.
6. Validity of endorsed gate passes/subsidiary gate passes for Modvat credit.
7. Non-production of proof that no one else has availed credit.

Issue-wise Detailed Analysis:

1. Denial of Modvat Credit:
The Assistant Commissioner of Central Excise denied Modvat credit of Rs. 2,89,487/- to the appellant, M/s. Leo Oils and Lubricants, citing non-compliance with Rule 57G read with 57H(1). The appellant had not filed any declaration under Rule 57H, and the gate passes/challans were not issued in the appellant's name but in the name of M/s. IBP Ltd., without endorsements in their favor.

2. Disallowance of Credit Taken on Invalid Documents:
Credit of Rs. 54,16,855/- for the period from 21-1-94 to 30-9-94 and Rs. 2,51,390/- for the period from 1-10-94 to 17-10-94 was disallowed because the Modvat credit was taken on the strength of documents that were not valid according to the law. The documents were endorsed invoices issued by M/s. Indian Oil Corporation, Lube Blending Plant, Chennai, after 1-4-1994.

3. Decision Beyond Scope of Show Cause Notice:
The appellant argued that the Assistant Commissioner decided the matter beyond the scope of the show cause notice, violating principles of natural justice. The show cause notice was issued to disallow Modvat credit of Rs. 2,89,487.08 based on non-filing of declaration under Rule 57H and receipt of goods prior to registration. However, the impugned order denied credit for reasons not mentioned in the show cause notice.

4. Time-Barred Demand:
The appellant contended that the demand for Rs. 2,89,487.08 was time-barred. The period of dispute was from 2-3-94 to 18-4-94, while the show cause notice was issued on 6-10-94 and received by the appellants on 19-10-94, making the demand time-barred.

5. Entitlement to Credit/Refund:
The appellant argued that they had not taken the credit of Rs. 11,07,296.38 despite the Asstt. Commissioner and Commissioner (Appeals) allowing the claim. The department had not filed an appeal against the said orders, and it is settled law that the benefit accrued by an order has to be allowed unless a stay was obtained from the appellate authority.

6. Validity of Endorsed Gate Passes/Subsidiary Gate Passes:
The appellant relied on Notification No. 16/94, dated 30-3-94, which allowed endorsed GPs/subsidiary GPs/certificate copies as valid documents for taking Modvat credit till 30-6-94. The department's observation that the appellants had not taken credit on or before 30-6-94 was contested, as the department had not allowed the appellants to take credit. The Tribunal's decisions in similar cases supported the appellant's claim.

7. Non-Production of Proof:
The appellant admitted that they could not get the certificate from M/s. IBP immediately, but they have now obtained the necessary certificate, which was enclosed with the appeal. The appellant requested the remand of the case for de novo adjudication to verify the documentary evidence.

Conclusion:
The appellate authority, after examining the case records and submissions, noted the lack of seriousness from the appellant despite the prolonged litigation. However, in the interest of justice, the case was remanded for de novo adjudication with a directive for the appellant to cooperate fully and ensure the proceedings are completed expeditiously within three months.

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