Commissionerate, Jalandhar v. Dinanagar, Distt. Gurdaspur

Coram: Hon’ble Mr.Justice Satish Kumar Mittal Hon'ble Mr.Justice Rakesh Kumar Garg Present: Mr.Rahul Sharma, Advocate for the appellant-revenue. .. Rakesh Kumar Garg,J CM No.23940-CII of 2007 For the reasons mentioned in the application, delay of 27 days in filing the appeal is condoned. CM stands disposed of. CEA No.110 of 2007

#1. The instant appeal has been filed by the Department/ Revenue under Section 35G of the Central Excise Act, 1944 challenging the order dated 29.12.2006 (Annexure P-4) passed by the Customs, Excise & Gold (Control) Appellate Principal Bench, New Delhi by raising the following substantial questions of law:- “1.Whether the manufacturer of final products is entitled to deemed credit under Notification 58/97-CE dated

30.8.1997 when the manufacturer- supplier of inputs has not paid appropriate Central Excise duty and given a CEA No.110 of 2007 2 wrong certificate/no certificate on the body of invoices about duty discharged under Rule 96ZP of the erstwhile Central Excise Rules 1944.”

#2. i) The brief facts giving rise to this appeal are as under:- The respondent M/s Mahajan Steel Tubes Ltd., Dinanagar, Distt. Gurdaspur is registered with the Department under the Central Excise Act, 1944 (hereinafter referred to as the Act) and is manufacturing excisable goods falling under chapter heading 7306.90 of the Central Excise Tariff Act, 1985 (5 of 1986). The respondent is availing deemed Modvat credit facility on inputs under Notification No.58/97-CE(N.T.) dated

30.8.97. ii) During the course of preventive checks by the Headquarters Preventive Staff and examination of modvat documents, it was noticed that the manufacturer of inputs i.e M/s Prince Agro & Allied Industries, Mandi Gobindgarh did not discharge full duty liability for the relevant period. It, thus, appeared that the deemed credit taken by the respondent in terms of Notification No.58/97-CE dated 30.8.1997 issued under sub-rule (6) of Rule 57A of the erstwhile Central Excise Rules, 1944, on the strength of those invoices was not admissible to them. Accordingly, Show Cause Notice was issued proposing recovery of deemed credit of Rs.7,96,038/- along with interest and penal action was also proposed. The adjudicating authority, vide Order-in-Original No.57/CE/ADC/2003 dated 26.12.2003, disallowed the modvat credit of Rs.3,30,154/- pertaining to the period from 4/98 to 7/98 and ordered recovery of the same along with interest and the remaining amount ordered to be vacated. Penalties of Rs.3,30,154/- under Rule 57 I(4) and Rs.25,000/- under Rule 173Q(1)(bb) of the Rules were also imposed on the respondent. However, proceedings against M/s Prince Agro & Allied Industries, Mandi Gobindgarh were dropped. CEA No.110 of 2007 3

#3. Against the order dated 26.12.2003 passed by the adjudicating authority, the respondent filed an appeal before the Commissioner (Appeals) Central Excise, Jalandhar which was allowed vide order dated 28.5.2004 and the Order-in-Original passed by the adjudicating authority was set aside.

#4. The revenue further filed an appeal before the Tribunal. However, the Tribunal following the judgement of this Court in Vikas Pipe vs. Commissioner of Central Excise, Chandigarh-II, 2003(158) ELT 680 (P&H).dismissed the appeal filed by the revenue. The relevant portion of the order of the Tribunal is reproduced:- “In the present case, as the respondents availed credit on the strength of invoices where it is mentioned that the goods were cleared under Rule 96ZP of Central Excise Rules, credit cannot be denied on the ground that manufacturer of inputs has not paid appropriate duty. If there is any dispute regarding payment of appropriate duty with the manufacturer the Revenue can proceed against the manufacturer. Under these circumstances, I find no merit in appeal and the same is dismissed.

#5. We have heard Mr. Rahul Sharma, learned counsel for the appellant and perused the record.

#6. It has been fairly conceded by Mr. Rahul sharma, counsel for the appellant that the question as proposed by the revenue has already been answered against the revenue vide judgement of this court in Vikas Pipe's case (supra).

#7. In view of the above, no substantial question of law arises in CEA No.110 of 2007 4 this appeal for the determination of this Court and therefore, the present appeal is dismissed. (RAKESH KUMAR GARG) JUDGE February 25, 2008 (SATISH KUMAR MITTAL) JUDGE