Dhirubhai Naranbhai Patel, J. - (1.) FACTUAL Aspects: • The respondent is manufacturer of excisable goods falling within the tariff heading No. 7605.19. The respondent is manufacturing different varieties of AAAC and ACSR conductors under Chapter 7614.90 and 7614.90 respectively of Schedule II to Central Excise Tariff Act, 1985 and is also manufacturer of conductor grounding 4 solid aluminium wire tie 4 Bare Solid Aluminium under Chapter 7605.19 of Schedule II to Central Excise Tariff Act, 1985. • It appears that the respondent had taken a Modvat credit upon invoice No. 1036 dated 16th March, 1996. This item is Standard Bare Aluminium Alloy Wire. This item was mentioned in R.G. 23A Part -I as well as in R.G. 23A Part -II and the Modvat credit of Rs. 1,16,856/ - was taken under Rule 57(I) of the Central Excise Rules, 1944 (for the sake of brevity hereinafter referred to as the "Rules, 1944"). • It is alleged by the Department that no declaration was made by the respondent as required under Rule 57G of the Rules, 1944 for the aforesaid items and, hence, Modvat credit taken by the respondent was improper and, hence, show cause notice was issued on 30th September, 1996, which was replied by the respondent on 22nd August, 1997 (Annexure -D to the counter affidavit filed by the respondent). • It further appears that Order -In -Original was passed by the Assistant Commissioner, Central Excise, Bhagalpur dated 12th November, 1997, against which, an appeal was preferred by the respondent before the Commissioner (Appeals) and the Order -In -Appeal was dismissed, against which, an appeal was preferred before the Customs, Excise & Gold (Control) Appellate Tribunal (for the sake of brevity hereinafter to be referred to as the "CEGAT"), Eastern Bench, Kolkata which was partly allowed by the Tribunal vide order dated 19th December, 2000 mainly on the ground that the respondent had submitted that they had already made declaration as required under Rule 57 -G of the Rules, 1944 on 27th February, 1995. On this ground, the matter wad remanded for verification to the Assistant Commissioner of Central Excise by the CEGAT, Kolkata. • It appears that again the Assistant Commissioner, Central Excise, Dhanbad has denied the acceptance of such so called declaration dated 27th February, 1995 under Rule 57 -G and, hence, he disallowed the Modvat credit as per the show cause notice vide order dated 27th February, 2002, against which, an appeal was preferred by the respondent before the Commissioner (Appeals), Customs & Central Excise, Ranchi which was also dismissed vide order dated 21st October, 2003, against which, an appeal was preferred by the respondent before the Customs, Excise and Service Tax Appellate Tribunal (for the sake of brevity hereinafter to be referred to as the "CESTAT"), Kolkata, which was allowed by the CESTAT, Kolkata vide order dated 31st March, 2006, against which, this Tax Appeal has been preferred by the Department.
(2.) LEARNED counsel appearing for the appellant submitted that the item for which Modvat credit was taken by the respondent is Bare Aluminium Alloy Wire. For this item, there was no declaration, as required under Rule 57 -G for manufacturing of AAAC conductor and, hence, such Modvat credit cannot be allowed by the Department. The so called declaration dated 27th February, 1995 was never received by the Department and, hence, there is violation of Rule 57 -G. This aspect of the matter has not been properly appreciated by the CESTAT, Kolkata while allowing the appeal being Appeal ESM -60/04, preferred by the respondent. Learned counsel for the appellant has raised substantial question of law to the effect that unless declaration is made, under Rule 57 -G of the Rules, 1944, no Modvat credit can be given in respect of the inputs. Learned counsel for the respondent submitted that the respondent has not committed any violation of Rule 57 -G nor there is any violation of the Rules 173 -Q and 210 of the Rules, 1944. In fact, Bare Aluminium Alloy Wire, for which, Modvat credit was taken through invoice No. 1036 dated 16th March, 1996 particulars of which were entered into necessary registers to be maintained under the Rules, 1944 especially R.G. 23A Part -I and Part -II. Moreover, it is not a case of the dispute that this Standard Bare Aluminium Alloy Wire was never used in the final manufacturing of product, namely, AAAC conductor. Thus, Sine qua non for taking Modvat credit has been fulfilled by using the commodity in the manufacturing of the final product. Rest of the things are procedural in nature. Nonetheless, there is no error on the part of the respondent in mentioning all the aforesaid Standard Bare Aluminium Wire purchase through invoice No. 1036 dated 16th March, 1996 in R.G. 23A Part -I and Part -II. Moreover, there was also declaration dated 27th February, 1995 about the aforesaid input for the final manufacturing of the product, which are annexed at Annexure -A series to the reply filed by the respondent. This is the stand taken by the respondent even in the first round of litigation before the CEGAT and the CEGAT has already observed in its order dated 19th December, 2000 that the respondent has already made declaration dated 27th February, 1995. The acceptance of which is denied by the appellant. In view of the aforesaid facts, it is submitted by the learned counsel appearing for the respondent that - (a) The input for which the show cause notice is given, has already been utilized in the final manufacturing process; (b) The said input namely Standard Bare Aluminium Alloy Wire purchase through invoice No. 1036 dated 16th March, 1996 has already been mentioned in register R.G. 23A Part -I and Part -II; and (c) The declaration dated 27th February, 1995 about the aforesaid input which is annexed at Annexure -A series to the counter affidavit. The aforesaid facts make it clear that no violation is committed by the respondent, much less, of Rule 57 -G and Rule 173 -Q and Rule 210 of the Rules, 1944. This aspect of the matter has been properly appreciated by the CESTAT, Kolkata while allowing the appeal preferred by the respondent especially in light of the decision rendered by Hon'ble the Allahabad High Court reported in : 2013 (293) ELT 208 (Allahabad). Reasons:
(3.) HAVING heard learned counsels for both the sides and looking to the facts and circumstances of the case, it appears that: (i) The respondent is manufacturing several items including AAAC and ACSR conductors, for which, the respondent purchased Bare Aluminium Alloy Wire vide invoice No. 1036 dated 16th March, 1996, for which, entries were made in R.G. 23A Part -I and Part -II. (ii) It further appears that the said input was utilized for the manufacturing of AAAC conductor. (iii) It further appears that the respondent made declaration dated 27th February, 1995 under Rule 57 -G of the aforesaid input which is also annexed in the reply filed by the respondent. The receipt of which has been denied by this appellant. Be as it may, there is a dispute about the signature upon the said declaration. It all depends upon the Department what type of endorsement is to be made. The fact remains that post was sent by the respondent and there is stamp about this fact also upon the said declaration dated 27th February, 1995. (iv) Thus, it appears that input was already utilized for the final manufacturing product. There is due declaration in the necessary R.G. 23A register also. The respondent is able to prove at least sending the declaration under Rule 57 -G. (v) It has been held by the Hon'ble Allahabad High Court in the case of Commissioner, Central Excise, Allahabad Vs. M/s. Hindalco Industries Ltd., reported in : 2013 (293) ELT 208 (Allahabad) in paragraphs 39, 40 and 41, which read as under: "39. Applying the principles laid down by the Apex Court in the aforesaid cases to the facts of the present case, we are of the considered opinion that the amendment made in Rules 57G of the Rules by insertion of sub -rule (11) vide Notification No. 7/99 dated 9th February, 1999 relates to procedure for availing Modvat credit and does not affect any substantive right. The view which we are taking is similar with the view taken by the Punjab & Haryana High Court as also Madhya Pradesh High Court and Chhatisgarh High Court as also the Circular issued by the Central Board of Excise and Customs dated 23rd February, 1999. 40. From the conjoint reading of the Rules 52A, 57G ad the amendment made by Notification No. 7/99 dated 9th February, 1999 by which sub -rule (11) was inserted in Rule 57G, we are of the considered opinion that filing of the documents for availing Modvat credit is only a procedural matter and the amendment made vide Notification No. 7/99 dated 9th February, 1999 which inserted sub -rule (11) in Rule 57G the position was made clear that Modvat credit should not be denied only on the ground that the documents referred to in sub -rule (2) does not strictly comply with the said Rule but contains the details of payment dues, description of goods, assessable value, name and address of the factory or warehouse etc. This position has also been clarified by the Central Board of Excise and Customs by issuing a circular in exercise of its power under Section 37B of the Act and made it applicable to all pending cases. 41. The submission of Sri Shukla that the Notification No. 7/99 dated 9th February, 1999 would come into effect on the date of its publication i.e. 9th February, 1999 only, may be correct but the benefit of that Notification as directed by the Central Board of Excise and Customs has been extended to all the pending cases. As already mentioned hereinabove the provision of sub -rule (2) is procedural for availing Modvat credit, we are of the considered opinion that the benefit of sub -rule (11) is available to the respondent -assessee. (emphasis supplied) In view of the aforesaid decision and in view of several other decisions which are referred in paragraph Nos. 36, 37 and 38 of the aforesaid decision, no error has been committed by the CESTAT, Kolkata in allowing the appeal preferred by the respondent vide order dated 31st March, 2006 because for procedural lapse, the Modvat credit taken by the respondent upon invoice No. 1036 dated 16th March, 1996 upon commodity "Standard Bare Aluminium Alloy Wire" cannot be denied by the appellant.;