2005 (5) TMI 477 - AT - Central Excise

Summary

Issues:
- Denial of Modvat credit on the ground of endorsed Bills of Entry.
- Interpretation of Rule 7 of the Cenvat Credit Rules, 2002.
- Applicability of Circular dated 29-2-96 on availing Cenvat credit.
- Validity of taking credit on the strength of endorsed Bills of Entry.
- Comparison with precedents like M/s. Hindustan Cables Ltd. case.
- Requirement of endorsement by Customs Officer for availing Cenvat credit.

Analysis:

The case involved the denial of Modvat credit to the applicants due to taking credit based on endorsed Bills of Entry. The applicants contended that Rule 7 of the Cenvat Credit Rules, 2002 permits availing credit even if the document lacks certain particulars, as long as it contains essential details like duty payment, goods description, assessable value, and factory information. They also cited a Circular dated 29-2-96 allowing diversion of imported goods under specific conditions for credit. Additionally, they referenced a Tribunal decision and argued against procedural lacunae leading to credit denial.

The Revenue's argument centered on the requirement of endorsement by the Customs Officer for availing Cenvat credit based on Bills of Entry. They relied on precedents like Balmer Lawrie & Co. Ltd. case and Tata Iron & Steel Company Ltd. case to support their stance that endorsed Bills of Entry do not qualify as valid duty paying documents. The Revenue emphasized the necessity of Customs Officer's endorsement for diverting/imported goods to claim credit, asserting that the demand was rightfully made in this context.

The Tribunal analyzed the facts, noting that the applicants, independent manufacturers, were not related to the importer, unlike the situation in the referenced Tribunal case. The Tribunal referred to the Board's Circular dated 29-2-96, which outlined conditions for availing credit based on endorsed Bills of Entry. As the Bills lacked Customs Officer's endorsement regarding goods diversion, the Tribunal found the case unsuitable for complete waiver of duty and penalty. Consequently, the applicants were directed to deposit a specified amount within a timeframe, with the waiver granted upon compliance for the appeal hearing scheduled for a later date.