2005 (98) ECC 161 (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)

Showpla (Delhi) Ltd.

Versus

CCE, Noida

Misc. E/447/2003-B & Appeal No. E/262/2003-NB(B)

[Arising out of Order-in-Original No. 37/2002 dated 30.10.2002 passed by the Commissioner of Central Excise, Noida]

Final Order No. 425/2004-B, dt. 3.6.2004, Certified on 14.6.2004

Cenvat Credit

Capital goods -- Shifting goods from manufacturing unit to another place by issuing challan under Rule 57AE(1)(h) -- Challan is to be accepted as proper document for shifting of the capital goods, the receipt of which at Noida unit has not been disputed. Regarding taking of Credit at Pune unit in respect of machines covered under Bill of Entry was debited/reversed in the same month -- Rule 57A(1)(h) of CER.

PRESENT :

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

Shri O.P. Arora, SDR for the respondent.

Per : V.K. Agrawal

The issue involved in this appeal, filed by M/s. Showpla (Delhi) Ltd., relates to availment of Cenvat Credit of the duty paid on capital goods transferred from their factory at Pune to their factory at Noida after lapse of a few years.

2. Shri A.R. Madhav Rao, learned Advocate, submitted that the Appellants have two units -- one at Pune and another at Noida; that as their unit at Pune was to be expanded, they had imported Injection Moulding machines, etc. and also procured machines from the domestic market during the period from June 1998 to August 1998 on payment of the appropriate Additional Customs Duty/Central Excise duty; that the capital goods imported under 3 Bills of Entry Nos. 1576, 2912 and 2615 were received at Pune and entered in RG23C, Part-I; that, however, credit was not taken in RG23C, Part II in respect of one Bill of Entry No. 1576 dated 5.6.98; that in respect of Bill of Entry No. 2912 dated 9.6.98 they had taken part Modvat Credit and in respect of Bill of Entry No. 2615 they had taken the entire Credit at Pune; that three machines covered by Bill of Entry No. 2912 were sent from Pune unit to Noida unit in April 2001 under Challans giving a cross reference of the duty payment to the corresponding Bill of Entry; that the total credit amount involved is Rs. 69,09,321 which was not taken at Pune and they took 50% Credit (i.e. Rs. 34,54,660) at Noida; that the Bill of Entry was also endorsed in favour of Noida unit; that in respect of Bill of Entry No. 1576 also, the machines were transferred to Noida unit under their challans along with the endorsed Bill of Entry; that these machines were not used at all at Pune unit which is apparent from the verification report given by the Range Officer at Pune; that the Central Excise Officers at Noida have also verified the machineries against the foreign suppliers invoices and the installation of machineries at Noida; that in these circumstances when the credit was not taken at Pune, Cenvat Credit is not deniable for the reasons that Rule 57AE of the Central Excise Rules, 1944 provides that Credit can be taken on the basis of inter alia, Bill of Entry or an invoice issued by manufacturer of final products for clearance of inputs or capital goods as such; that there is no qualification in regard to Bill of Entry and credit can be taken in the manner done by them on the endorsed Bill of Entry. The learned Advocate also submitted that alternatively the Cenvat Credit can be taken on the invoice/challan issued by Pune unit in favour of Noida unit since clause (h) of Rule 57AE does not specify any particular format of the invoice unlike for example, in clauses (a), (c), (d), (e), (f) and (g). He mentioned that after amendment of Rule 57T by the Notification No. 7/99-CE(NT) dated 9.2.99, a Circular No. 441/7/99-CX dated 23.2.1999, a Circular No. 441/7/99-CX dated 23.2.1999 was issued that Credit should not be denied and Department should ensure only that the capital goods in question have suffered duty and are being used in the process of manufacture.

3. The learned Advocate, further, submitted that the Commissioner has proceeded on the assumption that the Credit had been originally availed at Pune unit; that as no credit was taken in respect of the machines at Pune, the Credit of duty paid on capital goods cannot be denied to them at Noida. He also mentioned that in respect of Bill of Entry No. 2912 dated 9.6.98; they had a taken credit at Pune, out of Rs. 1.50 crores Additional Customs duty (approximately) paid by them, only Rs. 81,18,752 in respect of two machines out of 5 machines; that the balance amount of Rs. 69,09,321 was not taken at Pune; that those two machines were cleared to Noida unit after payment of duty in 1998 itself and corresponding credit was taken at Noida unit; that the said credit is not the subject matter of dispute in the present proceedings; that in respect of Bill of Entry No. 2615 dated 9.6.98, the Credit of the duty had been taken at Pune unit, and, therefore, the credit of Rs. 1,17,164 taken at Noida unit was not correct which has been paid back by the Appellants with interest. Finally he submitted that the simplest thing for them was to have simply issued invoice after taking the Credit of the duty paid on capital goods at Pune and the credit would have been available to Noida unit; that thus the entire issue is Revenue neutral; that thus there cannot be any intent to evade payment of duty and the show cause notice issued on 9.5.2002 for the extended period is time barred; that imposition of penalty on them is totally unsustainable inasmuch as there is no suppression from the Department and in the monthly return filed, details of the documents, namely, the Bills of Entry on the strength of which the credit was taken, etc., were all shown.

4. Countering the arguments Shri O.P. Arora, learned SDR, submitted that on enquiry Superintendent, Central Excise Range I, Division VI, Pune has reported that in the month of July 1998, the Appellants had availed the credit against Bill of Entry Nos. 2615 and 2912 which was debited/reversed in the same month; that once the credit has been taken against a Bill of Entry, the endorsed bill of entry does not remain a proper duty paying document under Rule 57AE; that Rule 57AE specifies the duty paying documents for the purpose of taking Cenvat Credit; that the endorsed duty paying document is not specified in Rule 57AE; that Board's Circular No. 179/13/96-CX dated 29.2.1996 is not applicable to the facts of the present matter inasmuch as Para 3 of the said Circular mentions that the Credit will not be denied where the Bill of Entry is in the name of the Registered office/head office provided that entire consignment covered by the Bill of Entry is received in the factory in original packed conditions and triplicate copy of Bill of Entry is endorsed by the Registered office/head office; that the Bills of Entry are not in the name of the registered office/head office as the same are in the name of their another manufacturing unit and they had also taken Cenvat Credit; that moreover there is no proof that the entire goods were in the original packed condition at the time of transfer after a period of two years; that similarly Circular No. 275/109/96-CX dated 26.11.1996 also does not help the Appellants as the said Circular pertains to transfer of inputs imported in the name of manufacturer who instead of availing the Credit transfers such inputs to his sister unit following the procedure laid down in Circular dated 29.2.96; that they have wilfully suppressed the vital fact of availment of credit at Pune and as such extended period of limitation is invocable and penalty is imposable under Rule 57AH(2) of the Central Excise Act.

5. In reply the learned Advocate mentioned that Para 7 of the Circular dated 29.2.96 provides that in case of split consignments and other types of cases not covered by the preceding paragraphs, the inputs can be cleared on payment of duty as envisaged under Rule 57F/57S of the Central Excise Rules, 1944 and on the basis of such duty paying documents Credit can be availed; that as such the entire exercise will be Revenue neutral.

6. We have considered the submissions of both the sides. The facts which are not in dispute are that the impugned capital goods were imported under three Bill of Entry and the appropriate Additional Duty of Customs, besides basic Customs duty had been paid by the Appellants and the said goods were received in their Pune unit. The Appellants' contention is that in respect of three machines covered by Bill of Entry No. 2912, they had not taken the Cenvat Credit of duty at Pune unit and similar was the case in respect of machines imported by them under Bill of Entry No. 1576. In respect of Bill of Entry No. 2615, they had taken credit at Pune unit and they had thus reversed the credit taken by them at Noida. Thus, as far as credit in respect of Bill of Entry No. 2615 is concerned, the Appellants are not disputing the fact that credit was not admissible to them for Noida unit and to this extent the denial of Cenvat Credit is upheld.

7. In respect of other capital goods covered under Bills of Entry Nos. 2912 and 1576 and removed from Pune unit to Noida unit, the Appellants have submitted that they had not taken the Credit in the statutory Records maintained in their Pune unit. We observe here that the removal of capital goods from Pune and their installation in their Noida unit has not been disputed by the Revenue. The Cenvat Credit has been disallowed only on the grounds that there were no proper duty paying documents as specified in Rule 57AE of the Central Excise Rules and the Credit had already been taken by them at Pune.

--The learned Advocate has contended that the capital goods were shifted from Pune unit to their Noida unit under covers of their challans which contain a cross reference of the duty payment under corresponding Bill of Entry. Such challans have been brought on records also. Rule 57AE(l)(h) prescribes the "invoice issued by a manufacturer of final product for clearance of inputs or capital goods as such" as one of the duty paying documents on the basis of which Cenvat Credit can be taken. No doubt this invoice is to be issued in respect of capital goods of which credit has been taken and is cleared as such to some other unit. We find force in the submission of the learned Advocate that this challan is to be accepted as proper document for shifting of the capital goods, the receipt of which at Noida unit has not been disputed. Regarding taking of Credit at Pune Unit in respect of machines covered under Bill of Entry Nos. 2912 and 1576, we observe that the Range Superintendent in charge their Pune unit has reported in his letter dated April 2002 that M/s. Showpla (Delhi) Pvt. Ltd. availed the Credit against Bill of Entry No. 2615 and 2192 only which was debited/reversed in the same month. Firstly he has not referred to Bill of Entry No. 1576 dated 5.6.98 and as such there is no material/evidence available with the Revenue to show that the Credit of the Additional Customs duty paid in respect Bill of Entry No. 1576 was taken by the Appellants at Pune. Secondly in respect of Bill of Entry No. 2912, the Appellants had taken Part Credit of Rs. 81,18,352 which had been reversed by them in the month of July 1998 itself. According to the Appellants this credit relates to only 2 machines out of 5 machines imported by them under Bill of Entry No. 2912 and which were transferred in 1998 itself to Noida Unit. Photocopy of RG23C (Part-II) produced by the learned Advocate clearly shows that credit, taken and reversed on the basis of Bill of Entry No. 2912, was only Rs. 81,18,352 and not the credit of entire Additional duty paid by them. Thus it is apparent that the Appellants had not taken the Credit of the amount now in dispute in their Pune unit.

--Accordingly we allow the appeal in respect of Appellant's eligibility to take Credit at their Noida unit in respect of Bills of Entry Nos. 2912 and 1576. The appeal is disposed of in these terms.

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