2016 (7) TMI 487 - AT - Central Excise

Disallowance of MODVAT credit - carbon copy of the bill of entry produced - Held that - No justification for the Commissioner (Appeals) to have come to a conclusion that the document against which the credit was taken was a carbon copy. It would appear that the first appellate authority refers to copy of the bill of entry in which the entries are found to have been imprinted using carbon interleaves that was the practice in the customs during the period referred to. The original and duplicate copies of the bill of entry are retained in the Customs House for its own closure transactions and the importer is in custody of the triplicate and quadruplicate copies. Since these were, by nature, carbon imprints and the original remains with the Customs House, there is no reason to deny the credit taken on a triplicate copy of the bill of entry when the connected provision in the MODVAT rules refers merely to bill of entry . Thus, disallowance is without any basis and is set aside. Appellant has paid the amount of duties held as liable on account of erection, commissioning and installation charges. These were paid before issuance of the show cause notice. Accordingly, we find no reason for invoking the penal provisions and imposition thereof. We therefore, modify the impugned order to the extent of dropping the penalties and setting aside the disallowance of MODVAT credit. - Decided in favour of assessee

Summary

Issues:
Appeal against orders-in-Appeal confirming demands on charges collected for erection and commissioning, disallowance of credit, imposition of penalties under Central Excise Rules.

Analysis:
The appellant contended that goods were cleared in dismantled condition for subsequent erection, disputing the findings of the Commissioner. It was argued that there was no allegation in the show cause notice regarding clearance of compressor parts without manufacturing a compressor. The appellant highlighted the short-payment of duty when the compressor was cleared, emphasizing that charges for erection and commissioning were not included against product sales.

Regarding the prescribed procedure for clearing goods in knocked down condition, the appellant argued that the CBE&C Manual of Supplementary Instructions, 2005 was issued after the disputed period, thus not applicable. The appellant criticized the lack of discussion by the Commissioner on the contentions raised in the memorandum of cross-objection, asserting that the impugned order lacked jurisdiction and did not align with established legal principles.

The disallowance of credit amount was contested by the appellant, emphasizing that the bill of entry copy in question was not a carbon copy but a triplicate copy. The appellant clarified the customs practice of retaining original and duplicate copies, while importers held triplicate and quadruplicate copies, justifying the credit taken on a triplicate copy as per MODVAT rules. Consequently, the disallowance was deemed baseless and overturned.

Furthermore, the appellant had already paid duties related to erection, commissioning, and installation charges before the show cause notice issuance. Hence, the Tribunal found no justification for invoking penal provisions and decided to drop the penalties, along with setting aside the disallowance of MODVAT credit. The appeals were disposed of accordingly, with penalties dropped and disallowance of credit reversed.