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2017 (11) TMI 831 - HC - Central ExciseCENVAT/MODVAT credit - imported raw material - duty paying documents - the case of the assessee was that, they did produce the original triplicate copy of the Bill of Entry, at the time of paying the duty and only thereafter, it was lost during transit as the assessee company is having its factory at Cuddalore and head office at Chennai - whether the production of attested / certified photocopy of the triplicate Bill of Entry can be treated as a valid document for the purpose of allowing the MODVAT credit to the assessee? Held that - the goods imported were received in the factory of production and the same were covered by the requisite documents including the triplicate Bill of Entry which was lost subsequently and in lieu thereof, the assessee had produced duly attested / certified photocopy of the triplicate Bill of Entry. The facts as well as the finding given by the Division Bench of the Allahabad High Court in the case of Commissioner of Customs And Central Excise Versus M/s. Matsushita Television And Audio India Ltd. 2015 (8) TMI 1057 - ALLAHABAD HIGH COURT would be squarely applicable to the present case, where it was held that it is undisputed that the inputs were received in the factory under the cover of a triplicate copy of the bill of entry which was subsequently misplaced, and the credit was allowed. Even after the amendment made to Rule 57G by insertion of Rule 11 by N/N. 7/99 dated 09.2.1999, the filing of documents is only procedure for availing MODVAT credit and therefore, the substantive right of the assessee would in no way get affected - The aspects mentioned in Rule 57G, especially in the context of filing documents to claim MODVAT credit is procedural and if at all there is any lacuna on the part of the assessee in complying with these procedural requirements of filing documents that would not affect the substantive right of the assessee to claim MODVAT credit. The impugned order of the first respondent / Tribunal is set aside and the questions of law framed in this appeal are answered in favour of the assessee and against the Revenue.
Issues Involved:
1. Acceptance of certified copy of Bill of Entry under Rule 57G of Central Excise Rules, 1944 for MODVAT credit. 2. Denial of MODVAT credit on technical grounds despite no dispute on duty payment and input usage. 3. Substantial compliance with Rule 57G(2) of Central Excise Rules. Detailed Analysis: 1. Acceptance of Certified Copy of Bill of Entry: The appellant, a manufacturer of proprietary medicines, imported raw materials and availed MODVAT credit based on the original triplicate Bill of Entry. The original documents were lost in transit. The appellant subsequently produced certified photocopies of the Bill of Entry, duly attested by Customs authorities. The Revenue issued a show cause notice and denied MODVAT credit, arguing that the original triplicate copy was mandatory under Rule 57G(3). The appellant contended that certified copies should suffice, citing the Allahabad High Court judgment in *COMMR. OF CUS. & C.EX. VS. MATSUSHITA TELEVISION & AUDIO INDIA LTD.*, which allowed MODVAT credit based on alternative documents when the original was lost. The High Court of Madras agreed with the appellant, ruling that certified copies verified by Customs should be acceptable for MODVAT credit. 2. Denial of MODVAT Credit on Technical Grounds: The Revenue's denial of MODVAT credit was based on the non-production of the original triplicate copy of the Bill of Entry. The appellant argued that the duty was paid, inputs were received and used in manufacturing, and the loss of the original document was unintentional. The High Court noted that the procedural requirement of submitting the original document should not override the substantive right to claim MODVAT credit, especially when certified copies were provided. The court emphasized that procedural lapses should not defeat the substantive right, aligning with the principles laid down in various judgments, including the Allahabad High Court's ruling. 3. Substantial Compliance with Rule 57G(2): The appellant's compliance with Rule 57G(2) was questioned due to the loss of the original triplicate Bill of Entry. The court examined whether substantial compliance was achieved through the submission of certified copies. The High Court referred to the Madhya Pradesh High Court's judgments in *Union of India Vs. Klockner Supreme Pentaplast Ltd.* and *Union of India Vs. Kataria Wires Ltd.*, which upheld MODVAT credit claims based on certified copies when originals were lost. The court concluded that the appellant's actions constituted substantial compliance, as the certified copies were verifiable and the inputs were indeed used in manufacturing. Conclusion: The High Court of Madras set aside the Tribunal's order, ruling in favor of the appellant. The court held that certified copies of the Bill of Entry, duly attested by Customs, were acceptable for claiming MODVAT credit. The denial of credit on technical grounds, despite no dispute on duty payment and input usage, was deemed unjustifiable. The court emphasized the importance of substantive compliance over procedural formalities, ensuring that the appellant's right to MODVAT credit was upheld. The Civil Miscellaneous Appeal was allowed, and the questions of law were answered in favor of the appellant.
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