HYDRAULICS PVT. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal is against an order of the Commissioner (Appeals) denying to the appellants Cenvat credit of Rs. 87,670/ - taken on 19 -1 -2001 on the basis of a supplementary invoice issued on 23 -11 -2000 by M/s. Hydraulics Ltd., Chennai.

(2.) EXAMINED the records and heard both the sides. It appears from the records and the submissions that the appellants had received various consign - ments of inputs (components of motor vehicle parts viz. Shock Absorbers) under cover of Rule 52A invoices from M/s. Hydraulics Ltd., Chennai over the period January, 1996 to October, 2000 and that they had taken Modvat credit on those goods on the strength of the said invoices. Subsequently, it appears, the Department suspected undervaluation of those goods at the end of the input -supplier and accordingly booked a case against them. In the course of the Departmental proceedings against the input -supplier, the value of the inputs was enhanced and differential duty on that basis was paid by M/s. Hydraulics Ltd., Chennai. Thereafter, the aforesaid supplementary invoice dated 23 -11 -2000 was issued by M/s. Hydraulics Ltd., Chennai to the appellants to enable the latter to take Mod -vat credit of the above differential duty paid by the former on the goods (inputs) cleared during January, 1996 to October, 2000. The differential duty covered by the supplementary invoice was Rs. 87,670/ - which was the sum total of the differentials in respect of all the aforesaid consignments of inputs. Cenvat credit of this amount was taken by the appellants on 19 -1 -2001. This action was objected to by the Department, which issued show -cause notice to the appellants seeking to recover the duty from them under Section HA of the Central Excise Act and to impose penalty on them. The proposals were contested. The adjudicating authority disallowed the credit and ordered recovery thereof. It also imposed a penalty on the party. The appeal preferred by the aggrieved party against the order of the original authority was rejected by the Commissioner (Appeals). Hence the present appeal.

(3.) THE learned Counsel for the appellants submits that the impugned order was passed by the Commissioner (Appeals) without observing the principles of natural justice inasmuch as the order was passed without a proper hearing. Nevertheless, the learned Counsel does not insist on a remand of the matter and is ready to argue on the merits of the case. The Counsel submits that the supplementary invoice was a valid document under Rule 57AE of the Central Excise Rules, 1944 as on 19 -1 -2001, on which date the credit in question was taken. The Commissioner (Appeals) has denied the credit to the appellants by giving retrospective effect to the amendment to the Rule brought about by Notification No. 6/2001 -C.E. (N.T.), dated 1 -3 -2001. The Counsel submits that this action of the lower appellate authority was unwarranted as the said amendment had no retrospective operation. The denial of the credit cannot be justified inasmuch as there is no dispute of the duty -paid nature of the inputs or of the factum of utilization of the goods in the process of manufacture of final product in the appellants factory. 3. The learned DR reiterates the findings recorded in the impugned order. He, further, submits that the payment of differential duty on the inputs was occasioned by the booking of a case of undervaluation against the input -supplier. That case is yet to be finalized. Therefore, the authorities were not to be faulted for denying the credit taken pursuant to the payment of differential duty.