2000 (9) TMI 331 - AT - Central Excise

Summary

Issues:
1. Validity of taking credit on goods with endorsed invoices.
2. Interpretation of the law regarding endorsed invoices for taking Modvat credit.
3. Exemption under Notification 27/92 for manufacturers getting goods manufactured by others.
4. Determining the term "manufacturer" in the context of the law.
5. Consideration of specific situations by the Tribunal regarding endorsed documents.
6. Compliance with Rule 57Q for taking credit on specified documents.
7. Procedure for facilitating credit for job workers manufacturing goods for others.
8. Validity of the Commissioner (Appeals) order and restoration of the Assistant Commissioner's order.

Analysis:

1. The case involved the issue of the appellant, a manufacturer of medicaments, taking credit on duty paid inputs with endorsed invoices not directly invoiced to them. The Assistant Commissioner disallowed this credit, which was appealed. The Commissioner (Appeals) allowed the credit, referencing past Tribunal decisions. The department appealed this decision.

2. The Tribunal referred to a previous decision regarding the validity of endorsed invoices for taking Modvat credit post-amendment. The appellant argued that as a loan licensee, a different consideration should apply based on specific Tribunal decisions. However, the Tribunal held that the law did not exempt loan licensees from the amendment, emphasizing the need for specified documents under Rule 57Q.

3. Notification 27/92 exempted manufacturers getting goods made by others from certain rules, subject to conditions. The Tribunal analyzed the notification's language to determine if a manufacturer who outsources production should be considered a manufacturer under the law, concluding it unnecessary in the context of the case.

4. The Tribunal deliberated on the term "manufacturer" in light of outsourcing production and the notification's conditions, emphasizing that the actual producer should be considered the manufacturer requiring registration, not the outsourcing party.

5. The Tribunal rejected the argument that specific situations were not considered by the Larger Bench, asserting that the issue at hand was the same - the validity of endorsed documents for credit post-amendment.

6. Compliance with Rule 57Q was crucial for taking credit, and endorsed invoices were not considered valid documents. Past Tribunal decisions supporting endorsed invoices were deemed invalid post-amendment.

7. The Tribunal acknowledged a trade notice outlining procedures for job workers to take credit, ensuring invoices were issued in the name of both the job worker and the actual manufacturer, minimizing trade disruptions.

8. Ultimately, the Tribunal found the Commissioner (Appeals) order unsustainable, overturning it and reinstating the Assistant Commissioner's decision disallowing the credit on goods with endorsed invoices.