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Southern Power Systems (P) Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1985)(20)ELT161Tri(Chennai)
AppellantSouthern Power Systems (P) Ltd.
RespondentCollector of Central Excise
Excerpt:
.....dated 4-6-79. the appellants had received the component parts under cover of xerox copies of gate passes issued by the manufacturers thereof, kirloskar electric co. ltd., made out in favour of either 'self or m/s. parry & co., madras. m/s. parry and co. are said to be the sole distributors for alternators manufactured by kirloskar electric co. ltd. ordinarily orders are placed for kirloskar alternators through parry & co. the goods were not unloaded at the premises of parry & co. but sent on by way of endorsements on the lorry receipt to the appellants. based on the above documentation, the appellants had availed of set off of duty to the extent of rs. 12,197.22. the assistant collector held that in terms of para 5(b)of the notification, goods in respect of which.....
Judgment:
1. Appeal under Section 35B of the Central Excises and Salt Act, 1944 praying that in the circumstances stated therein, the Tribunal will be pleased to order refund of duty paid on inputs in terms of Notification No. 207/79.

2. This appeal coming up for orders upon perusing the records" and upon hearing the arguments of Shri Koshy Chandy, Authorised Representative of the appellant, and upon hearing the arguments of Shri S.K.Choudhury, Senior Departmental Representative for the respondent, the Tribunal makes the following order : 3. By his order C.No. IV/16/99 T. 1 dated 18-5-82, the Assistant Collector of Central Excise, Madras VII Divison, Madras ordered deposit of a Such of Rs. 12,197.22 wnich was incorrectly availed of by the appellants in respect of eontrol panels, alternators and I.C. engines used as component parts in the manufacture of diesel generating sets under the provisions of Notification No. 201/79 dated 4-6-79. The appellants had received the component parts under cover of Xerox copies of gate passes issued by the manufacturers thereof, Kirloskar Electric Co. Ltd., made out in favour of either 'self or M/s. Parry & Co., Madras. M/s. Parry and Co. are said to be the sole distributors for alternators manufactured by Kirloskar Electric Co. Ltd. Ordinarily orders are placed for Kirloskar alternators through Parry & Co. The goods were not unloaded at the premises of Parry & Co. but sent on by way of endorsements on the lorry receipt to the appellants. Based on the above documentation, the appellants had availed of set off of duty to the extent of Rs. 12,197.22. The Assistant Collector held that in terms of para 5(b)of the notification, goods in respect of which se;-off is desired had to be brought under cover of an original gate pass or any other documents approved by the Central Board of Excise and Customs, evidencing payment of duty. As in the present case, the gate passes were valid only up to the first destination, viz. the premises of Parry & Co., at the time of receipt of the goods by the appellants, the set-off was not permissible. Hence, the decision. When the matter was raised in appeal with him, the Collector of Central Excise (Appeals) did not interfere with the order of the Assistant Collector vide his order C. No. V/68/214/82 dated 21-9-82.

4. Before us, the appellants referred to the decision of the Government of India in the case of M/s. Hyderabad Allwyn Metal Works Ltd. (1982 E.L.T 585) and requested that the rationale of that decision be followed by us as well. The representative of the appellants also submitted that para 5(b) of the notification requires that the goods should be under cover of a gate pass. It does not specify that the gate pass must be in the name of the appellants themselves. In the present case gate passes were available. Hence, there is no impropriety in the availing of the set off.

5. The Senior Departmental Representative, on the other hand, contends that Notification No. 201/79 is one granting exemption. It has to be construed strictly. The procedure set out in the said notification is similar to the one under Rule 56A. Rule 56A(3)(i)(b) provides for receipt of materials or component parts under cover of gate pass. In interpreting this provision, in the case of Binny Ltd. v. Collector of Central Excise in Appeal No. ED (MAS) 136/83, this Bench of the Tribunal has held that the gate pass must be in the name of the appellant in the context of the scheme set out in Rule 56A. Following the rationale of this decision, the claim of the present appellant should be repelled. The Government have prescribed a separate procedure in the case of receipt of goods through indenting agents. This has not been followed in the instant case. The importance of the original gate pass in favour of the party receiving the goods cannot be over emphasised. In this connection, a reference was invited to para 3 of the Notification, according to which, when there is any variation in the duty paid on the inputs, action to modify the credit taken can be initiated. The proper officer in respect of the factory of manufacture of the raw material/component would not be aware of any party other than the one in whose favour the gate passes had been originally issued. If credit is allowed to be taken by third parties, the liability, if any, should arise under para 3 of the Notification, cannot be effectively enforced.

6. We note that in terms of para 5(b) of the Notification No. 201/79 goods have to be received under cover of the relevant gate pass. The gate pass issued by the manufacturer of raw materials or components is a document valid up to the first point of its destination. By implication, therefore, set off is available only for the first receipts of the component parts from the manufacturer thereof. We also note that where goods bre indented through agents, Government have prescribed a special procedure which admittedly has not been followed by the appellants in the present case. We further note that in a similar situation under Rule 56A, we have already held a similar view in Appeal No. ED (MAS) 136/83. The order of the Government of India relied upon by the appellants may at best serve to have some persuasive value; unfortunately it does not contain any reasoning as to why the relaxation had been granted by the Government and hence does not serve even this limited purpose. In the result the appeal fails and is dismissed.


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