2004 (1) TMI 571 - AT - Central Excise

Summary

Issues:
Modvat credit on imported goods stored outside factory premises, validity of stock transfer challans as duty paying documents, requirement of registration for importer's godown, interpretation of trade notice regarding importer-manufacturer.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai concerned the issue of Modvat credit amounting to Rs. 3,50,583.16 related to imported goods stored outside the factory premises. The appellants stored imported goods in an outside godown named Anjali Godown due to space constraints and availed Modvat credit based on subsidiary certificates issued by the Range Superintendent. However, after the withdrawal of the subsidiary certificate system, they started bringing the goods to the factory using stock transfer challans. The dispute arose when it was contended that the stock transfer challans were not appropriate duty paying documents, and the godown was not registered with the Central Excise department. Both the adjudicating authority and the Commissioner (Appeals) ruled against the appellants, leading to the appeal before the Tribunal.

It was established that the Anjali godown belonged to the importers, and the imported goods were owned by the appellants themselves. The goods were initially stored in the godown due to space constraints and subsequently transferred to the factory in parts using stock transfer challans. The appellants relied on a trade notice clarifying that an importer's depot does not require registration if the importer is also the manufacturer. This clarification supported the argument that registration of the importer's godown was not mandatory since the goods stored there were used by the importer for manufacturing purposes without any trading involved.

The key issue revolved around the acceptability of stock transfer challans issued from the importer's godown as duty paying documents. The Tribunal emphasized that the entire quantity imported against the bill of entry was ultimately used as input in the manufacture of final goods by the appellants. While technically the stock transfer challans were not equivalent to dealer's invoices, they were considered issue slips out of the total stock received under the bill of entry. The bill of entry served as the duty paying document, enabling the manufacturer to claim full Modvat credit based on it, despite the goods being temporarily stored in the importer's godown due to space constraints.

In conclusion, the Tribunal allowed the appeal and set aside the impugned order, emphasizing that as long as the goods received under the stock transfer challans could be linked to the bill of entry, Modvat credit could not be denied. The primary document for claiming credit was the bill of entry, and the stock transfer challans were deemed as intermediate issue slips for transportation from the godown to the factory, supporting the appellants' entitlement to the Modvat credit.