Credit on Courier Bill of Entry

Prepared By:

CA Pradeep Jain,
Sukhvinder Kaur, LLB [FYIC]
And Megha Jain, B. Com

Introduction: -

Cenvat Credit of duty on inputs, input services and capital goods can be taken as per the provisions of Cenvat Credit Rules, 2004. And Rule 9 of the CCR, 2004 prescribes the list of documents on which cenvat credit can be availed. In case of import of goods, the Bill of Entry has been prescribed as document for taking credit. In the case under study, the assessee was being denied cenvat credit on the ground that the Courier Bill of Entry on which credit was taken was not a prescribed document under Rule 9.

Relevant Legal Provisions:

Rule 9 of the Cenvat Credit Rules, 2004:

Rule 9. Documents and accounts.- (1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely :-

(a)	an invoice issued by-
	(i)	a manufacturer for clearance of -
		(I)	inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer;
		(II)	inputs or capital goods as such;
	(ii)		an importer;
	(iii)		an importer from his depot or from the premises of the consignment agent of the said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002;
	(iv)		a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002; or
(b)	a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any wilfulmisstatement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made there under with intent to evade payment of duty.
	Explanation.- For removal of doubts, it is clarified that supplementary invoice shall also include challan or any other similar document evidencing payment of additional amount of additional duty leviable under section 3 of the Customs Tariff Act; or
(c)	a bill of entry; or
(d)	a certificate issued by an appraiser of customs in respect of goods imported through a Foreign Post Office; or
(e)	a challan evidencing payment of service tax by the person liable to pay service tax under sub-clauses (iii), (iv), (v) and (vii) of clause (d) of sub-rule (1) of rule (2) of the Service Tax Rules, 1994; or
(f)	an invoice, a bill or challan issued by a provider of input service on or after the 10th day of, September, 2004; or
(g)	an invoice, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994.

Provided that the credit of additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) shall not be allowed if the invoice or the supplementary invoice, as the case may be, bears an indication to the effect that no credit of the said additional duty shall be admissible;

M/s Shree Pet, Ajmer (Rajasthan) v/s Assistant Commissioner, Ajmer
[Order-In-Appeal no. 129(CB)CE/JPR-II/2011, Dated: 21.06.2011]

Brief facts of the case: -

- Appellant is engaged in the manufacture of Pet Preform falling under Chapter 39 of First Schedule to Central Excise Tariff Act, 1985. They imported capital goods through courier. The appellant availed cenvat credit of the duty paid on the said capital goods on the strength of Courier Bill of Entry.

- Department contended that the Courier Bill of Entry was not a documents prescribed under Rule 9 for taking credit and issued show cause notice to the appellant proposing to recover wrongly availed cenvat credit taken on the strength of Courier Bill of Entry.

- The Adjudicating Authority confirmed the demand of cenvat credit under Rule 14 of the CCR, 2004 read with Section 11A of the CEA, 1944. However, no penalty was imposed under Rule 15 (1) of Cenvat Credit Rules, 2004.

- Aggrieved by the impugned order in original, the appellant have filed appeal before the Commissioner (Appeal).

Appellant’s Contention: -

The appellant made the following submissions before the Commissioner (Appeal):

- The appellant submit that impugned order is denying the Cenvat Credit on the courier bill of entry by saying that it is mentioned in Circular no. 56/95-Customs dated 30.5.95 and 31/2007-Customs dated 29.8.2007 that where the consignee intends to take the benefit of Cenvat Credit, he is required to file the normal bill of entry. In this respect, it is submitted that the Circulars are not binding on the assessee and they have liberty to disagree and challenge such Circulars. This has been held in the case of BIRLA JUTE AND INDUSTRIES LTD. Versus ASSISTANT COLLECTOR OF C. EX. [1992 (57) E.L.T. 674 (Cal.)]wherein it was held that Board Circulars are not binding on the assessees and they may opt not to follow these Circulars.

It was submitted that applying the ratio of aforementioned decision in BIRLA JUTE AND INDUSTRIES LTD, it is ample clear that the Circulars are not binding on the assessees. Appellant relied upon the similar decision given in the case of COMMISSIONER OF CENTRAL EXCISE Versus ESWARAN & SONS ENGINEERS LTD. [2005 (179) E.L.T. 272 (S.C.)]. Accordingly, it was submitted that the appellant does not agree with the Circular cited by the learned Assistant Commissioner. As such, the credit should be allowed to the appellant and the impugned order in original should be quashed.

- With regard to denial of applicability of decision of M/s Ruby Millsrelied upon the Appellant on the ground that that the Circular no. 56/95 & 31/2007 were not placed before the hon’ble CESTAT and no findings has been given on these Circulars; as such the facts of this case are not similar to that of the appellant’s case and its ratio cannot be extended to the appellant; the appellant submit that as per discussion made here above, it is ample clear that the Circulars contrary to the assessee’s interest are not binding on them. As such, even if these Circulars were reported in the above stated case laws, then too the decision would have been the same. Therefore, the fact of non-availability of these Circulars does not have any impact and the ratio of this decision should be extended to them and the impugned order should be set aside to the extent of denial of Cenvat Credit and interest thereon.

- The appellant submit that the contention of the impugned order that the decision of Tecumseh Products India Pvt.Ltd. is not applicable on them is not sustainable. The impugned order is contending that this decision is relating to the ‘bill of entry’ and whereas in the case of appellant ‘courier bill of entry’ is there and due to this its facts are not identical to the instant case. In this respect, it is submitted that while interpreting the decision, the intention is to be seen rather than going by the rigid outline of the decision. Since in the case of Tecumseh Products India Pvt Ltdcredit was allowed on the basis of photocopy of bill of entry. Of course, the credit is not allowed on the basis of photocopy of the documents prescribed in rule 9 of the Cenvat Credit Rules, 2004. The analogy on which credit was allowed in this case is that so long as the inputs are received and used in or in relation to the manufacture of the final products, credit is allowed on the same. The technical discrepancies should not be taken shelter of to deny the credit. If the Hon’ble Tribunal would also have taken the rigid interpretation of the Rule 9 of Cenvat Credit Rules, 2004; it would have denied the credit on the same as “photocopy of the bill of entry” is also not a prescribed document under this rule. Going by the same analogy, the ratio of this decision should be extended to the appellant and the credit should also be allowed on the courier bill of entry. The impugned order in original should be set aside to the extent it confirms denial of Cenvat Credit and interest. The appeal should be allowed.

- Appellant further relies upon the judgment given in the case of M/s Twenty First Century Printers Ltd v/s CCE, Surat-II [2008-TIOL-1820-CESTAT-AHM] wherein it was held that credit cannot be denied on technical and procedural grounds. It was submitted accordingly that credit of duty on the courier bill of entry should not be denied to the appellant.

- The appellant submit that the impugned order is alleging that the decision given in the case of Controls & Drives Coimbatore (P) Ltd. v/s Commissioner of Central Excise, Coimbatore [2007 (083) RLT 0894 (CESTAT-Che)]as cited by them in the reply to show cause notice is also not applicable on them as the aforesaid circular was not placed before hon’ble Tribunal. In this regard, it is reiterated that the Board Circulars are not binding on the assessee as decided by the hon’ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE Versus ESWARAN & SONS ENGINEERS LTD. [2005 (179) E.L.T. 272 (S.C.)] and BIRLA JUTE INDUSTRIES as referred hereabove. As such, even if the aforesaid circular was placed before hon’ble Tribunal, the credit would have been duly allowed. Therefore, non-placing of Circular cannot be a ground for denying the Cenvat Credit in the light of Supreme Court Judgment. As such, the impugned order should be set aside and the appeal should be allowed.

- The appellant further submit that the impugned order has squarely denied the applicability of the decisions cited by them wherein the credit was allowed on the courier bill of entry or photocopies of bill of entry. Further, learned Adjudicating authority has cited certain decisions wherein credit was denied on the courier bill of entry. The decisions relied upon by the adjudicating authority are Tata Precision Industries (India) Ltd v/s Commissioner of Central Excise & Customs, Indore [2005 (192) ELT 0353 (Tri-Del)] andCommissioner of Central Excise, Chandigarh v/s Vision Electronics [2004 (175) ELT 653 (Tri. – Del.)]. In these decisions credit was denied on the courier bill of entry. Certain decisions were cited by the appellant in the reply to show cause notice wherein credit was allowed on the courier bill of entry and certain decisions are cited by the adjudicating authority wherein the credit is denied on the courier bill of entry. This shows that this issue is contentious and a number of contradictory decisions are there on this issue. It has been held in various cases that in case of Contradictory Decisions relating to an issue, the one favouring the assessee shall have precedence. Reliance is placed on following case laws in this regard:-

·                     CCE, Jamshedpur v/s Tata Iron & Steel Co. Ltd. [1999 (114) ELT 160 (Tri-Kolkata)]
·                     CCE, Trichy v/s Dalmia Cements (P) Ltd. [1999 (114) ELT 836 (Tri-Madras)]
·                     Crompton Greaves Ltd. v/s CCE, Mumbai-II [1997 (94) ELT 629 (Tri.-Mumbai)]
·                     Hoolidevi v/s Asst. Collector of Customs (P), Madras [1995 (78) ELT 669 (Mad.)]

In the aforesaid cases, it was held that in the cases where there are contradictory decisions, those decisions will be binding which are favourable to the assessee. In the instant case also, there are contradictory decisions given by thevarious appellate authorities. Thus, in the light of decisions cited hereabove, the decisions cited by the appellant in their favour will be binding. Therefore, the credit should be allowed to them and the impugned order should be set aside.

- The appellant submit that the impugned Order is denying the credit on the courier bill of entry by alleging that as per Regulation 13(a) of Courier Imports and Exports (Clearance) Regulations, 1998; the authorized courier has to obtain the authorization from the consignee which is not being done by the courier agency. In this regard, it is submitted that these regulations are the guidelines to be followed by the Courier Agencies. Referring to the provisions of Regulation no. 13 it was submitted that the analysis of opening para itself makes it ample clear that these regulations are the obligation of the Courier Agency. As such, for any default conducted by the Courier Agency, the appellant cannot be made liable. Therefore, denial of Cenvat Credit to the appellant for any negligence on part of the Courier Agency is not justified and so the impugned Order is not legally viable and is liable to be set aside.

- In continuation to above, the appellant submit that the Courier Imports and Exports (Clearance) Regulations, 1998 are applicable on the Courier Agencies only and as such, no action can be taken against any other person for breach of these regulations. The consequences of breach of these regulations are prescribed in regulation no. 14 of these regulations. Regulation no. 14 provides that the registration of Authorized Courier may be revoked and his security may also be forfeited due to failure to comply with the provisions of these regulations. Referring to provisions of Regulation no. 14 it was submitted that the analysis of above provision makes it clear that if any of the provisions of these regulations is violated, action is to be taken against the Authorized Courier. No other provision in case of breach of regulations has been prescribed. This further clarifies the fact that these regulations are not binding on any person other than authorized Courier. Had it be the case, the consequences/penal provisions should have been prescribed in these regulations just like regulation no. 14 as prescribed for defaulting Courier Agency. This also supports the contention of the appellant that they cannot be denied the benefit of Cenvat Credit on account of any procedural breach by the Courier Agency. As such, denial of credit due to non fulfillment of conditions by the courier agency under the provisions of Courier Imports and Exports (Clearance) Regulations, 1998; is not tenable and it should be quashed. The appeal should be allowed.

- Appellant further submit that the learned Adjudicating Authority has not followed the ratio of the Order-in-Appeal No. 251(DK)CE/JPR-II/2008 passed by the Commissioner (Appeals), Central Excise, Jaipur-II in the appeal of M/s R.K. Marble on the ground that the Department has challenged the same before the Tribunal. In this regard, the appellant submits that merely because an appeal has been filed before the Higher Forum is not a sufficient reason to not to follow the precedent set by the Higher Judicial Authority. Unless and until a stay is granted in the appeal, the order challenged in the Higher Forum has to be followed as it is still in force. It has been held in the case of UNION OF INDIA VersusKAMLAKSHI FINANCE CORPORATION LTD. [1991 (55) ELT 433 (SC)]that mere filing of appeal to higher authority is not a ground for not following the decision. Thus, the Supreme Court has held that mere filing of appeal to higher level cannot be the ground of not following any decision. Reliance also placed on the following decisions:-

·                     VEENA COMMERCIAL CORPORATION Versus UNION OF INDIA [1993 (68) ELT 569 (Bom.)]
·                     KUMARPLYWOOD PALACE VersusCOLLECTOR OF CUSTOMS, CALCUTTA [1994 (71) ELT 295 (Tri.)]
·                     GRASIM INDUSTRIES LTD. Versus COLLECTOR OF CENTRAL EXCISE, MADRAS [1996 (82) ELT 457 (Mad.)]
·                     TOPLAND ENGINES PVT. LTD. Versus UNION OF INDIA [2008 (9) STR 331 (Guj.)]
·                     MODI CEMENT LTD. Versus COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2000 (123) ELT 982 (Tribunal)]

The analysis of the above cases makes it clear that if the tribunal has passed some order it is the duty of the lower authorities to follow them. Mere filing of appeal is no ground of not following that decision. In the light of above referred decisions, the filing of appeal by department against the order in appeal of M/s R.K. Marbles cannot be a ground of not following the same. Thus, the ratio of this decision should be extended to the appellant and the impugned order should be set aside.

Issue:

The issue involved in this appeal is that whether the Courier Bill of Entry is prescribed document under Rule 9 of Cenvat Credit Rules, 2004 for availing cenvat credit on the same?

Judgment of the Appellate Authority:-

The learned Commissioner (Appeal) held as under:

The Commissioner (Appeal) noted that Board Circular no. 56/95-Cus dated 30.05.1995 also clarifies that whenever consignee intends to take credit on imported goods, a normal bill of entry may be filed.

The Commissioner (A) found that the issue has been decided by his predecessor vide order-in appeal NO. 251(DK)CE/JPR-II/2008 wherein the courier bill of entry was held to be prescribed document under Rule 9(c) of the Cenvat Credit Rules, 2004 relying on the Regulation no. 5 of the Courier Imports and Exports (Clearance) Regulations, 1998 which laid down the procedure for clearance of the goods imported through courier. Regulation no. 5(3) prescribes various forms for courier bill of entry provided that the authorized courier or with the concurrence of authorized courier, the consignee or a custom house agent on behalf of the consignee, may file a bill of entry in the form prescribed in the Bill of Entry (Forms) Regulations, 1976 for clearance of any of the imported goods. The Id. Commissioner further held that as per definition in Section 2(26) of the Customs Act, 1962, “importer”, in relation to any goods at any time between their importation and clearance for home consumption, includes any owner or any person holding himself out to be the importer. Regulation 13(a) of the said Regulation provides that an authorized courier shall obtain an authorization, from each of the consignees of the imported goods for whom such courier has imported such goods to the effect that authorized courier may act as agent of such consignee for clearance of such imported goods by the proper officer. He relied Board Circular no. 31/2007 dated 29.08.2007 which permits authorized courier to file regular bill of entry.

- The Commissioner (A) found that UPS Jetair Express Pvt Ltd. has filed bill of entry in the Form V under (Regulation 7) which is courier bill of entry for dutiable goods and the name of the consignee mentioned in the bill of entry along with the details of consignment and duty payment.

- The Commissioner (A) also found that the aforesaid order of the Commissioner has been accepted by the department. The above decision also applies to the facts of the case and relying on this decision, Commissioner (A) also held that courier bill of entry is like any other bill of entry, is a prescribed document for availing cenvat credit in terms of Rule 9 (c) of CCR, 2004. Hence, CENVAT credit is admissible to the appellant on the strength of courier bill of entry hence cenvat credit is allowed. The demand raised was held to be not sustainable.

Decision:-

Impugned order set aside and appeal allowed.

Conclusion:-

Cenvat Credit on the basis of Courier Bill of Entry was rightly allowed to the assessee as the Courier Bill of Entry is also a bill of entry and in case inputs or capital goods are imported through courier, the duty paid cannot be denied to the assessee as cenvat credit.

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PJ/CASE STUDY/2011-12/19
10 August 2011

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PJ/CASE STUDY/2011-12/19
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