2004 (96) ECC 513 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(B)

Shri C.N.B. Nair, Member (T) and Shri P.S. Bajaj, Member (J)

Ambica Steel Industries

Versus

CCE, Chandigarh

Appeals No. E/1342-1347/04-B

[Arising out of Order-in-Appeal No. 1250-1255/CE/CHD/2003 dated 26.12.2003 passed by the Commissioner(Appeals), Central Excise, Chandigarh]

Final Order No. 755-760/04-B, dated 21.9.2004, Certified on 4.10.2004

Modvat Credit

Notification No. 58/97-CE -- Compounded Levy Scheme -- Credit under Notification 58/97-CE is a flat rate (as a % value of the inputs) and has no bearing on the amount of duty paid by the manufacturer of the inputs. The only requirements are that purchase of input should be directly from manufacturer and the sale invoice should contain a declaration that "appropriate duty of excise" has been paid -- There is no requirement in the notification that assessee has to lead evidence to show that the supplier had discharged its excise duty liability -- Deemed Modvat credit can be claimed in terms of Notification No. 58/97 and that the only requirement of the notification is that the assessee should produce the invoices covering the goods in which the manufacturer should give a declaration that the manufacturer had suffered excise duty.

PRESENT :

Shri K.K. Anand, Adv. for the appellant.

Shri Shri Vikas Kumar, SDR for the respondent.

Cases Cited :

1. Kapoor Steel Industries v. CCE, Chandigarh 2003 (55) RLT 48.......................... [Para 2]

2. Vikas Piple v. C.C.E., Chandigarh II, 2003 (158) ELT 680 (P&H)....................... [Para 2]

Per : C.N.B. Nair

These appeals arise out of the denial of modvat credit under Notification No. 58/97-CE. The appellants had received their inputs in question directly from manufacturers who were covered under compounded levy scheme under Section 3A of the Central Excise Act. The invoice covering the sale of the inputs stated that "certified duty liability discharged as per Section 3A of the Central Excise Act, 1944 read with Rule 96ZP(3)" and "goods cleared under Rule 96ZP(3)". The credits have been denied on the ground that full amount of duty had not been paid by the manufacturer of input.

2. The contention of the appellant is that credit under Notification 58/97-CE is a flat rate (as a % value of the inputs) and has no bearing on the amount of duty paid by the manufacturer of the inputs. The only requirements are that purchase of input should be directly from manufacturer and the sale invoice should contain a declaration that "appropriate duty of excise" has been paid. During the hearing of the case. Learned Counsel took us to the decision of the Hon'ble High Court of Punjab and Haryana in the case of Vikas Piple v. C.C.E., Chandigarh II, 2003 (158) ELT 680 (P&H) and the decision of this Tribunal in the case of Kapoor Steel Industries v. CCE, Chandigarh 2003 (55) RLT 48. Learned Counsel has pointed out that Hon'ble High Court has held that there is no requirement in the notification that assessee has to lead evidence to show that the supplier had discharged its excise duty liability. The decision of the Tribunal is to the effect that declarations such as "duty liability discharged under Rule 96ZP(3)", "duty liability to be discharged under Rule 96ZP(3)" or "goods cleared under Rule 96ZP" satisfied the requirement in the Notification No. 58/97-CE. regarding declaration in the invoice that "appropriate duty of excise has been paid".

3. We have perused the records and have heard the learned SDR also. There is no dispute between the parties that the supplier of the inputs was working under compounded levy scheme under Section 3A of the Central Excise Act. Further, Rule 96ZP(3) relates to payment of duty under compounded levy scheme. In these circumstances, it is clear from the invoices that appropriate duty of excise has been paid. Some disputes between the Department and the manufacturer of the inputs as to what the exact amount of duty to be paid can, in no way, be relevant for the grant of credit under Notification No. 58/97-CE. This position remains settled by the following observations of the High Court of Punjab and Haryana:-

"3. In that case the Tribunal had taken a contrary view and this Court had upheld the same holding that the deemed Modvat credit can be claimed in terms of Notification No. 58/97 and that the only requirement of the notification is that the assessee should produce the invoices covering the goods in which the manufacturer should give a declaration that the manufacturer had suffered excise duty. In the case before us the show cause notice issued to the assessee itself points out that the suppliers have been declaring on these invoices that the inputs suffered excise duty but the Tribunal obviously went wrong in holding that since excise duty had in fact not been paid by the supplier the assessee was not entitled to claim Modvat credit benefit. Since there is no requirement in the notification that the assessee has to lead evidence to show that the supplier had discharged its excise duty liability, we are clearly of the view that the Tribunal was in error in disallowing the Modvat credit to the assessee. Consequently, the aforesaid question which arises from the order of Tribunal in answered in favour of the assessee and against the Department holding that the assessee in the circumstances of the present case is entitled to the benefit of Modvat credit. The petitions stands disposed of as above."

4. In the result, the appeals succeed and are allowed with consequential relief, if any, to the appellants.

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