2023 (6) TMI 541 - AT - Central Excise

Wrongful availment of MODVAT Credit - denial on the ground that Bills of Entry was not in appellant name but in the name of M/s. German Remedies on whose behalf the appellant was carrying out the manufacturing activities - failure to establish with relevant documentary evidences the receipt of the impugned goods in their manufacturing premises - HELD THAT - As per the show cause notices the case of the department is that the appellants have taken credit on the basis of the Bills of entry which were not in their name but in the name of M/s. German Remedies and therefore they are not eligible to take the credit and the said stand of the department was later supported by this decision of the Larger Bench of the Tribunal in the matter of BALMER LAWRIE CO. LTD. VERSUS COMMISSIONER OF C. EX., KANPUR 2000 (1) TMI 74 - CEGAT, NEW DELHI . But the said decision of the Tribunal was distinguished by the Hon ble High Court in the matter of MARMAGOA STEEL LTD. VERSUS UNION OF INDIA 2005 (4) TMI 89 - HIGH COURT OF JUDICATURE AT BOMBAY by holding that Rule 57G ibid does not require that the bill of entry should be in the name of the person claiming credit of duty and what is required to be established for taking credit is that the goods used as inputs are duty paid and the credit of duty paid on the said goods has not been taken. The said view of the Hon ble High Court has been upheld by the Hon ble Supreme Court in an appeal filed by the department against the decision of the Hon ble High Court which has been reported in UNION OF INDIA VERSUS MARMAGOA STEEL LTD. 2008 (7) TMI 95 - SUPREME COURT . When the show cause notices have been issued for rejecting the credit only on the ground that bills of entry were not in the name of the appellant then it is not open for the Commissioner (Appeal) to go in any other issue as no one can go beyond the show cause notice and the said ground itself is sufficient to set aside the impugned order. While remanding the matter back to the first appellate authority, this Tribunal has specifically recorded that the appellant was stating before the lower authorities that they had received the material/inputs covered under the bills of entry and the said bills of entry had endorsement alongwith dealer s invoice. It is established that goods covered with the bills of entry in issue have been received by the appellant and the same were consumed in their manufacturing premises. Therefore the Appellant is eligible to avail the Modvat Credit and has rightly availed the same. Appeal allowed.

Summary

Issues involved:
The issue involves the eligibility of the appellant to avail Modvat Credit for the period 1995-96, based on the Bills of Entry not being in their name but in the name of another entity, M/s. German Remedies. The main contention is whether the appellant wrongly availed the credit, leading to the rejection of the appeal by the Commissioner (Appeals Thane), GST & Central Excise, Mumbai.

Comprehensive details of the judgment for each issue involved:

The case has a history of multiple remands by different authorities, including the Hon'ble High Court and the Tribunal, regarding the appellant's eligibility to avail Modvat Credit. The appellant, engaged in manufacturing anti-cancer drugs for M/s. German Remedies, had availed Modvat Credit amounting to Rs.18,89,616/-, which was initially denied by the department. The department argued that under Rule 57A of Central Excise Rules, the duty paying documents of the inputs should be in the name of the assessee availing the credit. Show-cause notices were issued, leading to the confirmation of demand and penalty by the Adjudicating Authority. Despite several appeals and remands, the first appellate authority rejected the appeal, citing precedent cases. However, the Hon'ble High Court remanded the matter back to the Tribunal for fresh consideration in light of relevant decisions. The first appellate authority, in the impugned order dated 11.06.2018, rejected the appeal on the grounds of the appellant's failure to provide relevant documentary evidence of receiving the impugned goods at their manufacturing premises.

Upon reviewing the case records and submissions, the Tribunal noted that the department's contention, based on the Bills of Entry not being in the appellant's name, was supported by a Tribunal decision but was distinguished by the Hon'ble High Court in a different case. The High Court held that Rule 57G does not necessitate the bill of entry to be in the name of the party claiming duty credit; the crucial aspect is proving that the goods used as inputs are duty paid and the credit has not been taken. This view was upheld by the Supreme Court in a subsequent appeal. The Tribunal observed that when show-cause notices are issued solely on the basis of Bills of Entry not being in the appellant's name, it is improper for the Commissioner (Appeal) to delve into other issues. The Tribunal found that the appellant had received the materials covered by the Bills of Entry, supported by endorsements and dealer's invoices. After examining the records, including the bills of entry, endorsements, RG23A entries, and gate register, the Tribunal concluded that the goods were received and consumed in the manufacturing premises, making the appellant eligible for Modvat Credit.

In conclusion, the impugned order was set aside, and the appeal filed by the appellant was allowed. The judgment was pronounced in open court on 13.06.2023.