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TMI Blog2010 (10) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Case No. 14 of 2007 - - - Dated:- 20-10-2010 - Dhirendra Mishra, R.N. Chandrakar, JJ. Bhishma Kinger, Counsel for the Appellant Manish Panda, Counsel for the Respondent JUDGEMENT Dhirendra Mishra: 1. Revenue's appeal under Section 35-G of the Central Excise Act, 1944 (for short 'the Act') against the order dated 11.8.2006 of the Northern Bench of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short 'the Tribunal') has been admitted on following substantial questions of law:- "1. Whether the learned Appellate Tribunal has acted according to law in allowing the appeal of the respondent? 2. Whether the learned Appellate Tribunal has, in regard to availment of Modvat credit on the basis of invalid documents, erred in misinterpreting and misapplying the contents of the Notification No.7/99-CE(NT) dated 9.2.1999 and Board's Circular No.441/7/99-CX dated 23.2.1999, without appreciating the facts of the case enumerated above? 3. Whether the learned Appellate Tribunal has correctly allowed the Modvat Credit to the respondent on the basis of documents, which were not merely invalid in certain terms, but were also not legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 9.8.1999. The respondent was furnished with the copy of the letter dated 9.8.1999 received from the Superintendent of Central Excise Range, ID, Rajendra Nagar at the appellate stage, however, no evidence was adduced by the respondent to counter the version of the jurisdictional Central Excise Officer. For the aforesaid reasons, it was held that the documents furnished by the respondent-assessee were improper and not valid documents for availing duty of credit under the Modvat Scheme. Reliance is placed on the decision of the Supreme Court in the matter of Mangalore Chemicals and Fertilizers Ltd. vs. Dy. Commissioner reported in 1991 (55) ELT 437 (SC) and decision of Delhi Tribunal in the case of Tide Water Oil Co. (India) vs. Commissioner of Central Excise, Ghaziabad reported in 2003 (156) ELT 861 (Tri.-Del). 4. On the other hand, Shri Manish Panda, learned counsel for the respondent/assessee, would argue that Modvat credit was held to be inadmissible only on the ground of procedural lapses on the part of input supplier. There was no dispute regarding payment of duty on the inputs and its utilization in the manufacture of final product by the respondent. From perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 6. Relying upon various decisions of the Supreme Court, it was argued that the allegation, which was not part of the show-cause notices issued to the assessee, cannot be made a ground for confirming the demand or denying the benefit to the assessee. It was further argued that it has not been disputed by the Revenue that the inputs received by the respondent were not duty paid at the hands of supplier and that the inputs have not been used by the respondent for manufacture of their dutiable final product. It is also not the case of the Revenue that the invoices, on which Modvat credit has been availed, do not contain details of payment of duty, description of goods, assessable value, name and address of the factory or the warehouse, as would be evident from the Order-in-Original or the Order-in-Appeal. The Joint Commissioner as well as the Commissioner (Appeals) did not follow the Circular dated 23rd February, 1999 issued by the Board after amendment in Rule 57G by the Central Government and insertion of sub-rule (11). 7. The objection raised by the Superintendent, Central Excise Range-1, Vishakhapatnam, is confined to the limited technical lapses on the part of the supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise, Vishakhapatnam, and it was discovered that the supplier did not submit the subject invoices along with their monthly return and details of the goods received and sold were not entered in their RG 23D Register. 10. In the matters of Commissioner of Central Excise vs. Gas Authority of India Ltd. reported in 2008 (232) ELT 7 (SC) the short question before the Hon'ble Supreme Court for determination was - whether the Lean gas was a by-product or a final product? Without examining the above issue, it was observed thus: "7. As repeatedly held by this Court, show cause notice is the foundation of the Demand under Central Excise Act and if the show cause notice in the present case itself proceeds on the basis that the product in question is a by-product and not a final product, then, in that event, we need not answer the larger question of law framed hereinabove. On this short point, we are in agreement with the view expressed by the Tribunal that nowhere in the show cause notice it has been alleged by the Department that Lean Gas is a final product. Ultimately, an assessee is required to reply to the show cause notice and if the allegation proceeds on the basis that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g enquiries as above. 3. In should hereafter be ensured that Show Cause Notices are not issued for procedural lapses as mentioned in the Notification without making proper enquiries. Wherever the Assistant Commissioner, after making due enquiry, is satisfied that the Modvat credit taken by the assessee is incorrect, adjudication proceedings in the normal course should be initiated. Efforts, however, should be directed towards reduction of litigation. 13. Modvat credit was denied to the assessee by the Joint Commissioner and confirmed by the Commissioner (Appeals) only on the basis of information furnished by the Superintendent, Central Office, Vishakhapatnam, on 9.8.1999 to the effect that the supplier did not submit the subject invoices along with their monthly return and details of the goods received and sold were not entered in RG 23D Register. The above procedural lapse, if any, is attributable to the supplier. The ratio of law laid down by the Hon'ble Supreme Court in Mangalore Chemicals and Fertilizers Ltd. (supra) is not applicable to the facts of the present case as in the cited judgment, while considering the entitlement for exemption and refund, it was, held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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