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2017 Supreme(Mad) 3062
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RAJIV SHAKDHER, R. SURESH KUMAR, JJ.
M/s. Shasun Chemicals & Drugs Ltd., Represented by its General Manager-Commercial, C. Bhaskar Rao – Appellant
Versus
The Customs, Excise & Gold (Control) Appellate Tribunal & Others – Respondent
C.M.A. No. 2545 of 2011
Decided On : 15-11-2017
For the Appellant :Ragini for M/s. S. Murugappan, Advocates.
For the Respondent:A.P. Srinivas, Advocate.
The filing of documents for availing MODVAT credit is procedural and does not affect the substantive right of the assessee. Circular instructions issued by the Government of India, Ministry of Finance, clarified that MODVAT credit should not be denied only on the ground of procedural lapses.
Headnote:
MODVAT Credit - Central Excise - Central Excise Act, 1944, Rule 57G(3) - The court allowed the MODVAT credit to the assessee based on the certified photocopy of the triplicate Bill of Entry, which was lost during transit. The court held that the filing of documents for availing MODVAT credit is procedural and does not affect the substantive right of the assessee. The court also referred to circular instructions issued by the Government of India, Ministry of Finance, which clarified that MODVAT credit should not be denied only on the ground of procedural lapses.
Fact of the Case:
The appellant, engaged in the manufacture of proprietary medicines, imported raw materials and claimed MODVAT credit under the Central Excise Rules. The original triplicate copy of the Bill of Entry was lost during transit from the Head Office to the factory. The Revenue issued show cause notices and confirmed the demand of wrongly availed MODVAT credit, leading to appeals and further proceedings.
Finding of the Court:
The court held that the filing of documents for availing MODVAT credit is procedural and does not affect the substantive right of the assessee. The court also referred to circular instructions issued by the Government of India, Ministry of Finance, which clarified that MODVAT credit should not be denied only on the ground of procedural lapses.
Issues: Whether the certified copy of the Bill of Entry can be accepted as a specified document under Rule 57G of Central Excise Rules for the purpose of availing MODVAT credit? Whether the Revenue was justified in denying the MODVAT credit on mere technical grounds when there was no dispute regarding the duty payment and the usage of the inputs in the manufacture of final products? Whether the first respondent was justified in setting aside the order of the second respondent when there was substantive and substantial compliance of Rule 57G(2) of the Central Excise Rules?
Ratio Decidendi: The court held that the filing of documents for availing MODVAT credit is procedural and does not affect the substantive right of the assessee. The court also referred to circular instructions issued by the Government of India, Ministry of Finance, which clarified that MODVAT credit should not be denied only on the ground of procedural lapses.
Final Decision: The court allowed the MODVAT credit to the assessee based on the certified photocopy of the triplicate Bill of Entry, which was lost during transit. The court held that the filing of documents for availing MODVAT credit is procedural and does not affect the substantive right of the assessee. The court also referred to circular instructions issued by the Government of India, Ministry of Finance, which clarified that MODVAT credit should not be denied only on the ground of procedural lapses.
R. SURESH KUMAR, J.
1. This Civil miscellaneous appeal has been filed against the final order Nos. 535 and 536 of 2001 dated 15.3.2001 passed by the first respondent, i.e., the Customs, Excise and Gold (Control) Appellate Tribunal, Chennai, (hereinafter referred to as CEGAT, Chennai).
2. The necessary facts which are required to be noticed for disposal of this miscellaneous appeal are as follows:
(i) The appellant / assessee was engaged in manufacture of proprietary medicines falling under Chapter 30 of the first schedule to the Central Excise Tariff Act, 1985. The assessee company was registered with Central Excise Department for the purpose of accounting the manufacture of various products and for paying appropriate excise duty as applicable in terms of Central Excise Act, 1944 (in short, 'the Act'). One of the products manufactured by the assessee company is “Analgin”. For the manufacture of the said product, among other inputs, three raw materials namely, Methyl Aceto Acetate, Cysteamine and Isoprophyl Alcohol are required, which, the assessee company regularly imported from abroad.
(ii) During the relevant period, under the Central Excise Rules, 1944 (hereinafter referred to as, 'Rules'), there was a scheme called MODVAT scheme. According to the scheme, a manufacturer of excisable goods is permitted to avail credit of excise duty paid on various inputs, or countervailing duty or additional duty paid on the imported raw materials, and utilize the same for the purpose of paying duty on the finished goods.
(iii) The assessee company filed declarations and had details as required under Rules, accordingly, they were availing credit of excise duty paid on the locally procured materials, and credit of additional duty paid on imported materials.
(iv) In such exercise, for the import of Methyl Aceto Acetate, the assessee company paid excise duty as well as additional duty under Bill of Entry No.40821 dated 22.11.1993. The quantity imported was 15,336 Kgs of Methyl Aceto Acetate and additional duty paid was Rs. 1,75,928.17. After payment of duty and once the goods cleared from the customs and when it reached the petitioner's factory located at Cuddalore, they have taken credit of the said amount of the additional duty i.e., 1,75,928.17 in the MODVAT register, namely, RG23A Part I and Part II.
(v) Like that, the other two raw materials, Cysteamine and Isoprophyl Alcohol were also imported and appropriate customs duty including additional duty were paid under cover of Bill of Entry No. 41752 dated 11.11.1993 and 41662 dated 17.11.1993 respectively. The quantity of Cysteamine imported was 6000 Kgs for which the additional duty paid was Rs.1,78,526.57. The quantity of Isoprophyl Alcohol imported was 25,600 Kgs and the additional duty paid for this material was Rs.1,27,096.94. In respect of these consignments also, after the goods were cleared from the customs and reached the factory located at Cuddalore, the assessee company availed the MODVAT credit and entered the details in the MODVAT register, namely, RG23, Part I and Part II.
(vi) It is one of the condition that, in order to avail the credit facility under MODVAT scheme, the duty paid on the materials received at the factory should be accompanied by documents specified in Rule 57 G(4) of the Rules. For the imported materials, the relevant documents to be compared will be the original copy of the triplicate Bill of Entry filed with customs and showing the duty payment particulars. When the assessee company availed MODVAT credit paid on the above three raw materials, the said credit was availed on the basis of the original copy of the triplicate Bill of Entry as provided for in the Rules.
(vii) Thereafter, the original copies of the triplicate Bill of Entry, had been sent for budgetary preparation for the year 1993-94 to the Head Office at Chennai. While the same was sent back to the Cuddalore factory, during transit, it was lost. Thereafter, when the assessee company filed returns
