ALEMBIC LTD. Vs. COMMISSIONER OF C. EX., VADODARA

JUDGEMENT

(1.) THE appellant is engaged in the manufacture of pharmaceutical products and medicaments falling under Chapters 19, 21, 22, 28, 29 & 30 of the Schedule to the CETA, 1985. The appellant is availing of the MODVAT credit in respect of duty paid on the inputs under Rule 57A. The appellant also sends some of these inputs to the factory of the job worker for further processing. In some cases, the appellant directly sends the inputs to the job worker from the factory of the input manufacturer, or from the port of entry (in cases of imported goods) which is permissible under the MODVAT Scheme. The present appeal deals with such cases where inputs were sent for job work under Rule 57F(3) of Central Excise Rules directly to the job workers factory by the suppliers of the inputs. The appellant submits that in cases where the inputs are required to be sent directly to the job worker, the appellant takes credit of the quantity of the inputs in its RG -23A Part I account, which is statutory record to be maintained by the appellant. The appellant issues the challans prescribed under Rule 57F(3). However, the appellant had not taken the MODVAT credit of the duty in RG -23A Part II account, as it is not possible to do so without physically receiving the inputs in its factory. The appellant, therefore, availed of the MODVAT credit of the duty in RG -23A Part -II only on receipt of the inputs in its factory after being duly processed by the job worker and that too under the cover of the challans prescribed under the said Rule. The appellant submits that during 1998 -99, the appellant had sent several consignments of imported goods as well as indigenous inputs directly to the job worker without receiving the same in its factory. However, for the purpose of issuing the prescribed challans, the appellant had recorded the receipt of such inputs in his RG -23A Part I account, on the basis of copies of Central Excise invoices or Bills of Entries received by the appellant. The job worker of the appellant, after processing the inputs, as per the requirement, returned the same to the appellant on different dates. The appellant thereafter availed of MODVAT credit in RG -23A Part II. Proceedings were initiated by way of issue of show cause notice dated 15 -9 -1999 which resulted in denial of MODVAT credit amounting to Rs. 11,60,818/ - with interest.

(2.) THE learned counsel on behalf of the appellant submitted that the stipulation of six months period for availment of credit under Rule 57G(5) of Central Excise Rules, 1944 (Rules) applies only to those inputs which are received in the factory of the manufacturer. Similarly, the stipulation of nine months period under Rule 57G(5) read with Rule 57J applies to only those cases where inputs are sent to job worker to manufacture intermediate products which are then received by the final product manufacturer. According to him, Rule 57G is not applicable where duty paid inputs are not received in the factory of the appellant but are sent directly to the job worker. He submits that the appellant has taken the quantitative credit of the inputs in RG -23 Part I within six months from the date of issue of the duty paying documents. The appellant could not have taken MODVAT credit without receiving the inputs from the job worker and after processing, some inputs had been sent directly to the job worker. The appellant had fulfilled the obligation of taking credit as envisaged under Rule 57G(5) by taking credit in RG -23A Part I Register. He relies upon the following decisions in support of his submission : -

(3.) HE also relied on point No. 3 of C.B.E. and C. Circular No. 265/99/96 -CX., dated 12 -11 -1996, wherein it is clarified that the credit can be taken in respect of inputs sent directly to the job worker only when the same are received from the job -worker.