- (1.) The applicant M/s Uni Cast Pvt. Ltd. is a job worker of Paharpur Cooling Towers Ltd. (PCT) and received the raw material from PCT for execution of job work and supply of the final product to PCT. PCT purchased the inputs needed from different manufacturers. Invoices were raised by these manufacturers on PCT, which showed payment of duty on the excisable inputs. On these invoices, PCT made an endorsement in favour of the applicant and the inputs were received directly by the applicants. The applicant took credit of duty paid on these inputs on the basis of the invoice in the name of PCT and utilized the same towards payment of duty on the final product manufactured as per the job contract. The applicant claimed MODVAT credit for the period April to August, 1994. A show cause notice was issued contending that MODVAT credit was obtained on the strength of invoice endorsed by PCT in their favour, which is inadmissible as endorsed invoices were not proper documents for the purpose of availing MODVAT credit under Section 57A and 57G of the Central Excise Rules, 1944. Subsequently, the authorities disallowed the MODVAT credit on the ground that endorsed invoices were not valid documents for taking MODVAT credit, inasmuch as there was no mention of any particulars indicating payment of excise duties on the document accompanying the endorsed invoices. Being aggrieved, the applicant filed an appeal before the Tribunal, who rejected the appeal in view of the Larger Bench decision of the Tribunal in the case of M/s Balmer Lawrie and Com. Ltd. Vs. CCE, Kanpur, 2000 116 ELT 364. The applicant being aggrieved, filed a reference application under Section 35H, which was allowed. The High Court directed the Tribunal to draw a statement of case and refer the following substantial question of law, namely: "(i) Whether M/s PCT Ltd. having supplied the raw material to the applicant having company (job worker) and the applicant having received the said raw material directly from the supplier, was entitled for the benefit of MODVAT credit under the Central Excise Rules? (ii) Whether, admittedly the applicant being the job worker and the inputs having been dispatched to the job work's factory premises hence in view of the Circular No.146/57/95-CE dated 12th May, 1995, the applicant was entitled to the benefit of MODVAT credit? (iii) Whether MODVAT Rules only require that there may be a document showing proof of payment of excise duty and the certificate contained in the invoice was only to show that the inputs are being dispatched to the job worker's factory premises even though the said invoice was in the name of M/s PCT Ltd. for whom the job work was done by the applicant showing proof of the payment of duty, the applicant was entitled for the MODVAT credit? (iv) Whether when the manufacturer is a job worker, the inputs are not being purchased by him and therefore the invoices in respect of the inputs cannot be in his name? (v) Whether in the absence of transfer by title by endorsement in the documents of title, the property in the good is never transferred by the endorser in favour of the endorsee and the Appellate Tribunal was not justified in denying the benefit of MODVAT credit to the applicant on the ground that they were not concerned with the nature of the endorsement made by M/s PCT Ltd.? (vi) Whether there being no sale of the inputs to the applicant by M/s PCT Ltd. or anyone else, there can be no invoice in the name of the applicant hence the applicant was entitled for the benefit of MODVAT credit & since PCT Ltd. is not a dealer, hence it was not required to follow the procedure in terms of Rule 57-GG?"
(2.) Accordingly, the Tribunal has referred the aforesaid questions of law for opinion of the High Court.
(3.) Balmer Lawrie and Company are manufacturers of steel metal containers (drums). Invoices were issued by SAIL in favour of M/s IOC Ltd., Mathura, who in turn, endorsed these invoices to the applicant. The applicant availed MODVAT credit on the inputs received for the month of October to December, 1994 on the basis of the invoices issued by SAIL to IOC, Mathura, which was subsequently, endorsed by IOC, Mathura to the applicant. The department was of the view that the applicant was not eligible for MODVAT credit on the basis of endorsed invoices as it was not a valid document for availing MODVAT credit and, accordingly, a show cause notice was issued and the MODVAT credit was disallowed and a penalty was imposed. The applicant filed an appeal before the Tribunal, which was dismissed by the Larger Bench of the Tribunal. The applicant thereafter, filed a reference under Section 35H, which was allowed and the Tribunal was directed to send the statement of case along with the following questions of law, namely:- "1. Whether, Steel Authority of India Limited having supplied the steel to the applicant-appellant (job worker) under the instructions of Indian Oil Corporation Ltd. for converting it into drums (metal containers), the applicant was entitled for the benefit of MODVAT credit under Central Excise Rules? 2. Whether, in the absence of transfer of title by endorsement on the documents of title, the property in the goods is never transferred by the endorser in favour of the endorsee and the Appellate Tribunal was not justified in denying the benefit of the MODVAT credit to the applicant on the ground that they were not concerned with the nature of endorsement made by Indian Oil Corporation Ltd.? 3. Whether, the applicant was entitled for the benefit of MODVAT credit of duty under Rule 57A of the Central Excise Rules and the order of the Appellate Tribunal denying the benefit is erroneous?";