In the case of import, bill of entry in the name of contractor is a valid document

PJ/Case Laws/2010-11/1012

Case: Bando India (P) Ltd v/s CCE, Delhi-III

Citation: 2010 (103) RLTONLINE 276 (CESTAT-DEL)

Issue:- Whether in the case of importing the goods, bill of entry in the name of contractor is a valid document?

Brief Facts:- Appellants are engaged in the manufacture of power transmission belts, rubber belts and other items and for the purpose of setting up of its plant, the machinery equipments were imported from M/s Bando Singapore Pte Ltd. The work of installation of the plant was entrusted to M/s Mitsui Kensetsu India Limited.

M/s Bando Singapore Pte Ltd had issued Letter of Intent dated 15.06.2003 in favour of the contractor M/s Mitsui Kensetsu India Limited stating that Bando (Singapore) Pvt. Ltd. were the promoters and proposed to set up a company under the name of Bando (India) Pvt. Ltd. or Bando India Ltd. and necessary steps had already been initiated by the said company to incorporate the said company in terms of Indian Companies Act, 1956 much prior to import of the goods in question. On incorporation of such company in India, the Letter of Intent was to be assigned and transferred to such company in India which was to enter into a detailed agreement with the contractor and to issue the works order for installation of the factory.

The Letter of Intent further specifically mentioned that “terms and conditions of this LOI shall be legally binding on Bando India, and all payments shall be made to you under this LOI/contract by Bando India, failing which we stand full guarantee to you for all the payments due and payable to you under this LOI/contract”.

Pursuant to the LOI, Mitsui placed an order on the Singapore Company, for supply of equipment for setting up the factory of the appellant. The goods were supplied to Mitsui under cover of invoice dated October 29, 2003 alongwith the Certificate of Origin and Bill of Lading.

The bill of entry was issued in the name of the contractor with a rider that “notify M/s Bando India (P) Ltd.”. In the bill of lading disclosed the consignee to be the contractor alongwith the name of the appellants in the bracket stating that the consignment was on account of the appellants.

The imported goods were directly taken to the factory of the appellant for installation and setting up. After installation of capital goods, appellant took credit of 50% of the additional duty of customs (CVD) paid under the aforesaid Bill of Entry, with due intimation to the Department in the ER-1.

Revenue issued show cause notice disallowing the credit on the ground that the credit was not taken on a valid document as specified in Rule 7/Rule 9 of the Cenvat Credit Rules, 2002/2004.

The Adjudicating Authority observed that there is no provision for endorsement of bill of entry and ex-facia bill of entry is in favour of the contractor and, therefore, there is no valid document in favour of the appellants to claim cenvat credit in relation to the goods stated to have been received by the appellants in their factory.

In appeal, the Commissioner (Appeals) dismissed the appeal by holding that the issue involved relates the eligibility for availing cenvat credit of duty paid in respect of the goods imported under the bill of entry and the said bill of entry had been in the name of the contractor and, therefore, on the basis of such document and taking into consideration the provisions of the said Rules, the appellants were not entitled to avail the cenvat credit.

Appellant’s Contentions:- Appellant relied upon the judgment given in Marmagoa Steel Ltd v/s Union of India [2005 (192) ELT 82 (Bom.)]which was confirmed by the Apex Court in the matter of Union of India v/s Marmagoa Steel Ltd. [2008 (88) RLT 893 (SC)] and also on judgment in Vimal Enterprise v/s Union of India [2005 (69) RLT 403 (Guj.)]. It was submitted that records clearly disclose that the credit was availed in relation to the duty paid goods which were factually received in the factory premises of the appellants and were utilised by the appellants and, therefore, the Authorities below erred in denying the credit to them.

Respondent’s Contentions:- Revenue relied upon the judgment given in Forma Pack Industries v/s CCE, Delhi-II [2005 (192) ELT 525 (Tri. Del.)] and also referred to Rule 9 of the CCR, 2004 and submitted that the appellants were not entitled to claim credit on the basis of the document which could not be the basis for claiming the cenvat credit in view of the specific provisions comprised under Rule 9 of the said Rule. It was further submitted that the decisions sought to be relied upon by the appellant are on the basis of Rule 57A read with Rule 57G of the Central Excise Rules, 1944 which were not in para materia with Rule 9 of the said Rules.

Reasoning of Judgment:- The Tribunal observed that the credit availed corresponded to the amount of duty paid on the imported goods. The Tribunal perused the Letter of Intent with the bill of entry and the bill of lading and noted that the goods under the bill of entry were for the appellants and further there being no dispute that the said goods were subjected to the payment of duty and were directly transported to the premises of and utilized by the appellants and that the contractor had not availed the credit. Therefore, the benefit of credit could not be denied.

The Tribunal further held that Rule 7 of CCR, 2002 and sub-rule (9) of CCR, 2004, undoubtedly describes the various documents based on which the cenvat credit can be claimed. They include invoice issued by the importer as well as bill of entry. Sub-rule (1A) of Cenvat Credit Rules, 2002 and sub-rule (2) of Rule 9 of Cenvat Credit Rules 2004, however, further clarifies that in case of any deficiency to be found in such documents in relation to the particulars which are required to be disclosed therein to justify the claim of credit, such deficiency shall not be in relation to the relevant aspects which are specified in those provisions. However, the said clarification nowhere provides that the presence of name of the contractor in the invoice alongwith that of consignee would disentitle the manufacturer to avail credit on the basis of such invoice irrespective of the fact that goods were actually received and utilized by the manufacturer and the contractor had not availed any credit in respect of the duty paid on such goods. Therefore, merely because the invoice discloses the name of the contractor alongwith that of the consignee, but the documentary materials placed before the authority establish to the satisfaction of the Adjudicating Authority that the goods which described in the invoice were in fact received in the factory of the consignee/manufacturer and those goods were subjected to payment of duty as disclosed in the invoice and further that the goods were utilized or were to be utilized by the manufacturer, certainly the credit in relation to duty paid on such goods cannot be disallowed to such manufacturer.

Reliance was placed on judgment in Commissioner of Central Excise, Ludhiana v/s Ralson India Ltd [2008 (77) RLT 36 (P&H)] wherein in referring to sub-rules (3) and (6) of Rule 57G it was held that “Being a beneficial legislation, its object of input duty relief to a manufacturer should not be defeated on a technical and strict interpretation of the Rules governing modvat”. Reliance was also placed on judgments given in Marmagoa Steel, Vimal Enterprise, Commissioner of Central Excise, Ludhiana v/s Ralson India Ltd [2008 (77) RLT 36 (P&H)], Commissioner of C. Ex., Delhi-III, Gurgaon v/s Myron Electricals Private Limited [2007 (78) RLT 467 (P&H)].

It was further held that the decision given in Forma Pack Industriescase is not applicable to the facts of the present case as the said decision was given in a totally different set of facts as well as on the basis of the Board Circular dated 29.02.1996.

It was further held that contentions raised by the Revenue were without substance for the following reasons. Firstly, the credit is taken not because of endorsement but on the basis of bill of entry which also disclosed the name of the appellant, apart from the fact that the goods accompanying the Bill of entry were subjected to the payment of duty, and on clearance, were directly transported to the appellant’s factory premises and were utilized by the appellants for installation of their factory, and no credit in respect of duty paid on those goods was taken by the contractor. Secondly, the effect of endorsement is only to amend the name of consignee and nothing more. Black’s Law dictionary depicts the term “endorsement” as amendment of the installment signifying the same being made referable to a person other than the one disclosed earlier. And, it is not the case of the department that on endorsement of the Bill of entry in favour of the appellant, it was, in any manner, rendered to be invalid document or that the import under such document become unlawful.
Impugned order set aside.

Decision:-Appeal allowed with consequential relief.

Comments

PJ/Case Laws/2010-11/1012

Post a Comment

Query