EL FORGE LIMITED Vs. CCE

JUDGEMENT

(1.) This appeal is directed against the Order -in -Appeal No. 137/98 (M -III) dated 27.3.1998 passed by the Commissioner of Central Excise (Appeals) Chennai by which the Commissioner has upheld the order passed by the original authority rejecting the prayer of the appellants for issue of Certificate of payment of duty in respect of the capital goods removed by them without payment of duty initially, but subsequently duty on the goods were paid by making necessary debit entries in the PLA.

(2.) The brief facts of the case are that the appellants are engaged in the manufacture of Steel Forgings falling under Chapter 73.29. They avail Modvat facility for inputs as well as capital goods in terms of Rule 57A and Rule 57Q respectively. They have three units situated at Thoraipakkam and Kandanachavadi and Gummidipundi. Their units were previously known as Chendur Forge Exports Ltd. Pursuant to amalgamation of the above units with M/s. El Forge Ltd., the name of the units is changed as M/s. El Forge Ltd. They have obtained Dies and Trimming Tools and have availed capital goods credit on those goods declaring that the said goods are acquired for the purpose of manufacture of forged steel articles. It was noticed by the Range Officer that during the period 1.4.94 to 31.5.95, Thoraipakkam Unit had removed certain quantity of Dies and Tools to various job workers and also to their other units without intimating the department and without payment of duty. Therefore, the Range Officer vide his OC No. 1549/95 dated 27.12.95 directed the appellants to discharge the duty liability in respect of Tools and Dies since the goods were removed in contravention of Rule 57S. Consequently, the appellants (Thoraipakkam unit) have debited the duty viz. Rs. 3,36,550 through PLA in respect of Dies and Tools removed outside the factory during the period from 1.4.94 to 31.10.95. Similarly, at the instance of the department, the Kandanchavedi Unit has paid a duty of Rs. 5,54,893 vide PLA No. 515 dated 29.2.96, and another sum of Rs. 1,32,066 vide RRG -23A Part I in respect of Tools and Dies removed to job workers. Thereafter, both the units viz. Thoraipakkam Unit and the Kandanchavedi Unit, of the appellants requested the Range Supdt. to issue necessary certificate regarding payment of duty made by them. The Range officer rejected their request vide his letter dated 29.3.96 on the ground that the question of issue of certificate under Rule 57E would only arise if the goods were initially assessed to duty and the buyer had availed the credit of duty. Thereafter the appellants vide their letter dated 17.6.96 sought for a speaking order to seek redressal of their grievance through the appellate forum. Thereafter, the Assistant Commissioner vide Order -in -Original No. 114/96 dated 22.7.96, after considering the case, has rejected the request of the appellants for issue of certificate of payment holding that the provisions of Rule 57R (4) does not apply to goods which escaped assessment. While holding so, he has noted that (i) capital goods were not cleared under invoice (ii) goods were not assessed to duty at the time of clearance (iii) buyer did not take credit of duty on receipt of capital goods. Aggrieved by the said order of the Original authority, the appellants filed appeal before the lower appellate authority who upheld the Order -in -original and rejected the appeal, hence this appeal by the assessee -appellants:

(3.) Shri R. Parthasarathy, learned Consultant for the appellants submitted that the appellants were under the bona fide belief that the dies and tools continued to be exempted in terms of Notification No. 58/86 -CE dated 10.2.86 and the appellants were not aware of the withdrawal of the exemption Notification because of the Budget change in 1994 -95. In any case on coming to know that the removals should have been effected on payment of duty, the appellants made the payment of duty by making necessary debit entries in the PLA. This factual position is not disputed by the department. He has further submitted that all that the appellants prayed for was to issue a certificate to the effect that the appellants have made necessary payment in respect of removal of the dies and tools made by them and when payment has been made though belatedly, the certificate should have been issued. He has further submitted that benefit of Modvat Credit is a substantive right and the benefit cannot be denied merely on the ground that the duty has been paid belatedly. He has also invited our attention to the decision of the Tribunal in the following cases: (1) CCE v. SAIL, 1991 (31) ECC 192 (T) : 1990 (47) ELT 389 (Tri) (2) CCE v. SAIL, Rourkela Steel Plant, 1990 (30) ECC 114 (T) : 1990 (47) ELT 394. (3) Larsen & Toubro Ltd. v. CCE, 1991 (31) ECC 34 (T): 19.90 (50) ELT 312, (4) Durga Magnets Pvt. Ltd. v. CCE & C, 1992 (40) ECC 461 (T) : 1993 (64) ELT 342. (5) CCE & CE Bhubaneswar -II, 2001 (129) ELT 641. (6) PAM Instruments Pvt. Ltd., v. CCE, New Delhi -II, 2002 (148) ELT 944. He, therefore, prayed for setting aside the impugned order and allowing the appeal.