- (1.) This reference has been at the instance of the revenue on the points formulated by the learned Tribunal as per direction of this Court's Order dated 30th July, 2002, as follows: (i) Whether credit of duty can be availed of under Rule 57A when the input manufacturer has not paid the duty? (ii) Whether the respondent was under an obligation under Rule 57(C)(2) to take all reasonable steps to ensure whether the duty on inputs acquired by them had been paid? (iii) In case of duty on inputs was unpaid whether the respondent is liable for payment of the whole duty ? (iv) Whether the remedy of the respondent in the case referred to in (iii) is only by way of recovery of the duty unpaid in respect of inputs from the Input Manufacturer ?
(2.) Before we proceed to give answers to the questions referred to above, we, feel mentioning of the facts will be useful. The admitted facts are as follows: The assessee/respondent was served with a show cause notice alleging that they have utilized MODVAT credit to the extent of Rs. 1,56,409.00 during the period from 14th March, 1996 to 23rd March, 1996 on account of procurement of inputs against improper invoices issued by one M/s. Supreme, Motprods Ltd., Jaipur, who allegedly enhanced their credit balance and cleared the inputs by debiting, such enhanced credit balance. Undisputedly the assessee/respondent is entitled to MODVAT Credit. It is alleged that the assessee/respondent did not take any reasonable steps to ensure whether the inputs supplier, i.e. M/s. Supreme Motprods Ltd., had actually paid duty as per Rule 57G(ii) or whether they issued the documents fraudulently without being sufficient balance in their credit.
(3.) The cause was shown to the said notice explaining their position that they procured the materials from the aforesaid inputs manufacturer and it has been specifically mentioned in the invoices that they are entitled to the amount of MODVAT credit. So. the said amount was debited. After procurement of invoices the input material was produced before the jurisdictional central excise officer for examinations and on examining the same, the officer concerned defaced the same.;