2004 (97) ECC 332 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(B)

Shri S.S. Kang, Member (J) and Shri V.K. Agrawal, Member (T)

Shakthi Chemicals

Versus

Commissioner of Central Excise, Ghaziabad

E/CO/136/2004-B
Appeal No. E/432/2004-NB(B)

[Arising out of Order-in-Appeal No. 461/2003 dated 29.10.03 passed by Commissioner of Customs & Central Excise (Appeals), Ghaziabad]

Final Order No. 516/2004-B, dt. 1.6.2004, Certified on 30.6.2004

Cenvat

Documents -- Eligibility of issuing invoices -- Appellants were eligible to issue modvatable invoices on the strength of the invoices received directly from the manufacturers of the goods wherein their name has been specifically mentioned -- Regarding non-authentication of the invoices issued by the appellants as a secondary stage dealer, no such allegation has been made therein in SCN -- Hence, a new case cannot be made by revenue -- Rule 57GG, 52A, 57AE of CER, 1944.

PRESENT :

Shri A.R. Madhav Rao, Adv. for the Appellant.

Shri Vikas Kumar, SDR for the respondent.

Cases Cited :

1. Aditya Trading Company v. CCE, Meerut, 2003 (86) ECC 175 (Tri)..................... [Para 2]

2. CCE Chandigarh v. Rayon Engg. Pvt. Ltd., 2001 ELT 117 (Tri)........................... [Para 3]

3. CCE New Delhi v. Avis Electronics Pvt. Ltd., 2000 (69) ECC 272 (LB)................ [Para 3]

4. Jay Vinyls Ltd. v. CCE, New Delhi, 2001 (130) ELT 186 (Tri).............................. [Para 3]

5. Mittal Containers (P) Ltd. v. CCE, Meerut, 2000 (117) ELT 741 (Tri).................... [Para 3]

6. Suraj Diamonds (India) Ltd. v. CCE, Jaipur, 2001 (137) ELT 227 (Tri)................. [Para 3]

Per : V.K. Agrawal

M/s. Shakthi Chemicals have filed this Appeal against Order-in-Appeal No. 461/2003 dated 29.10.03 by which the Commissioner (Appeals) has confirmed the imposition of penalty of Rs. 44 lakhs against them for passing the Cenvat credit wrongly to their buyers in contravention of the provisions of Rule 57AE of the Central Excise Rules, 1944.

2. Shri A.R. Madhav Rao, learned Advocate submitted that the appellants are engaged in the trading of Caustic Soda, soda flex, soda ash light and sodium sulphate and are registered with Central Excise Department as dealer for issue of modvatable invoices; that Appellants buy these goods from various dealers of the manufacturers, who in turn buy the materials from the manufacturer like IPCL, M/s. Grasim Industries Ltd.; that for the sake of saving transport cost etc. the goods for which orders are placed by the Appellants on the dealers are consigned directly by the manufacturer from their premises to the Appellants premises; that the goods are accompanied by the invoices issued by the manufacturers under Rule 52A of the Central Excise Rules, 1944; that the invoices issued by the manufactures duly indicated the Appellant's name and address as the consignee of the goods; that the buyers name is indicated as the dealers from whom they are purchasing the goods in transit; that after the goods are so received by the manufacturers they maintain necessary records in the form of RG 23 D Part I and Part II as required under the Central Excise Rules; that for the purpose of selling these goods of various industrial consumers they issued invoices under Rule 57 GG of the Central Excise Rules wherein they duly indicated the invoices under which the consignment was originally received and the Appellants mentioned the duty payment details; that on the basis of invoices issued by them, their customers have taken Modvat credit of the duty originally paid by the manufacturers; that a show cause notice dated 3.8.01 was issued to them as to why the Cenvat Credit cannot be held as irregular and recovered from them and penalty may not be imposed as the invoices on the basis of which they had issued the modvatable invoices were not issued in their name by the manufacturers; that the Deputy Commissioner under Order-in-Original No. 52/2001 imposed a penalty of Rs. 44 lakhs on them which has been confirmed by the Commissioner (Appeals) under the impugned order. Learned Advocate, further, submitted that the issue involved in the present Appeal has already been decided in favour of another similar other trader M/s. Aditya Trading Company by the Tribunal in the case of Aditya Trading Company v. CCE, Meerut, 2003 (86) ECC 175 (Tri) : 2003 (152) ELT 103 (Tri); that the present case is squarely covered by the said decision and accordingly no penalty is imposable on them; that the said decision has again been followed by the Tribunal in the case of Aditya Trading Company v. CCE, Meerut, Final Order No. 681/03-B dated 23.9.03. He finally submitted that the Commissioner (Appeals) under the impugned order has also held that the invoices issued by them to a second stage dealer were not pre-authenticated as required under the Rules, that the said finding is incorrect since the invoices raised by them were pre-authenticated by the proper officer; that the said allegation was never raised in the show cause notice issued to them nor there was any finding to this effect in the Order-in-Original passed by the Deputy Commissioner; that the Commissioner (Appeals) cannot make out a new case against them at the Appeal stage.

3. Countering the arguments Shri Vikas Kumar, learned Senior Departmental Representative, submitted that it has been held by the Larger Bench of the Tribunal in the case of CCE, New Delhi v. Avis Electronics Pvt. Ltd., 2000 (69) ECC 272 (LB) : 2001 (117) ELT 571 (Tri) that "when a particular thing is directed to be performed in a manner prescribed by Rules, it should be formed in that manner itself and not otherwise." Learned Senior Departmental Representative contended that as the invoices issued by second stage dealer is required to be pre-authenticated by the proper officer and if the same were not pre-authenticated, there is a contravention for which penalty is imposable. He relied upon the decision in the case of CCE, Chandigarh v. Rayon Engg. Pvt. Ltd., 2001 (131) ELT 117 (Tri) wherein it has been held that the Modvat credit is not available to the respondents on the strength of pre-authenticated invoices issued by a second stage dealer. Reliance has also been placed on the following decisions:

1. Suraj Diamonds (India) Ltd. v. CCE, Jaipur, 2001 (137) ELT 227 (Tri)

2. Jay Vinyls Ltd. v. CCE, New Delhi, 2001 (130) ELT 186 (Tri)

3. Mittal Containers (P) Ltd. v. CCE, Meerut, 2000 (117) ELT 741 (Tri).

4. We have considered the submissions of both the sides. We agree with the learned Advocate for the Appellants that the issue involved in the present Appeal regarding eligibility of the Appellants to issue the modvatable invoices has been decided by the Appellate Tribunal in the case of Aditya Trading Company (supra). The Tribunal has held as under:

"It has not been disputed by the Revenue that the invoices issued by the manufacturer under Rule 52A of the Central Excise Rules did mention name of the Appellants and the goods on which Central Excise duty had been paid were received by the Appellants. No doubt against the name of buyers, the names of some other parties were mentioned. These parties, according to the Appellants, were the first stage dealer who were directly purchasing the goods from the manufacturer and that in view to save transportation cost they requested the manufacturer to send the consignment directly to the Appellants. It has also not been disputed by the Revenue that the buyers whose names appear in the invoices issued by the manufacturer had further issued commercial invoices to the Appellants. The receipt of the duty paid goods has also not been disputed by the Revenue. On the basis of the documents received by them the Appellants have issued Modvatable invoices to the customers who have purchased the material from them. Under Rule 57AE of the Central Excise Rules at the relevant time an invoice issued by a second stage dealer of excisable goods under Rule 52AA was a duty paying document for the purpose of availment of Cenvat credit. Merely because the invoices issued by the manufacturer contained the name of buyers (first stage dealer), validity of the duty paid nature and the fact that the consignment has been received by the Appellants cannot be disputed. We, therefore, find no reason for imposing any penalty on the Appellants. Accordingly the impugned order is set aside and the Appeal is allowed.

5. Following the said decision, we hold that the appellants were eligible to issue modvatable invoices on the strength of the invoices received directly from the manufacturers of the goods wherein their name has been specifically mentioned. Regarding non-authentication of the invoices issued by the appellants as a secondary stage dealer, we observe from the perusal of the show cause notice issued to them that no such allegation has been made therein. In absence of any allegation made in the show cause notice, a new case cannot be made by the Commissioner (Appeals) at the Appeal stage. We therefore, set aside the impugned order and allow the Appeal.

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