IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.E.A. No. 98 of 2007 DATE OF DECISION: JANUARY 29, 2008 Commissioner of Central Excise, Jalandhar (HQ at Chandigarh) .....APPELLANT Versus M/s. Satish Steel Works, C-27, Focal Point, Jalandhar ....RESPONDENT CORAM: HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE RAKESH KUMAR GARG --- Present: Mr. Kamal Sehgal, Advocate, for the appellant. .. SATISH KUMAR MITTAL, J. The Commissioner of Central Excise, Jalandhar has filed this appeal under Section 35G of the Central Excise Act, 1944 against the order dated 29.12.2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as `the CESTAT'), in which it is stated that in the present appeal from the facts and circumstances of the case, the following substantial question of law arises from the order of the Appellate Tribunal for consideration of this Court:- Whether the manufacturer of final products is entitled to deemed credit under Notification 58/97-CE dated 30.8.1997 when the manufacturer-supplier of inputs has not paid Central Excise duty and given a wrong certificate/no certificate on the body of invoices about duty discharged under Rule 96ZP of the erstwhile Central Excise Rules, 1944? In the present case, the respondent (assessee) is engaged in the manufacture of excisable products. It had availed deemed modvat C.E.A. No. 98 of 2007 -2- credit during the period October, 1998 to March, 1999, April, 1999 to June, 1999 and October, 1999 to December, 1999 on the strength of invoices total amounting to Rs.4,29,760/- issued by various manufacturers working under the provisions of Section 3A of the Central Excise Act, 1944. It is the case of the appellant that the assessee availed the deemed modvat credit during the said period in violation of the provisions of Rule 57A(6) of the erstwhile Central Excise Rules, 1944 read with Notification No.58/97- Central Excise dated 30.08.1997. It is further the case of the appellant that during the modvat verification, it was noticed that the manufacturer of inputs did not discharge full duty liability for the relevant period. Therefore, the deemed modvat credit availed by the assessee on the strength of those invoices was not admissible to it. Accordingly, show cause notices were issued for recovery of the alleged amount along with interest and penalty. The adjudicating authority vide its order dated 12.08.2004 disallowed the modvat credit as proposed and ordered recovery of the same along with interest and also imposed a penalty. Aggrieved against the said order, the assessee filed an appeal before the Commissioner (Appeals). Vide its order dated 25.11.2004, the Commissioner (Appeals) while following the decision of this Court in Vikas Pipe Versus Commissioner of Central Excise, Chandigarh-II, 2003(158) ELT 680 (P&H) had allowed the appeal of the assessee and set aside the orders in original dated 12.08.2004 while observing as under:- “The issue involved in this case is denial of deemed modvat credit to the appellants on the ground that the manufacturer C.E.A. No. 98 of 2007 -3- of inputs had not discharged the full duty liability. I observe that in terms of provisions of notification no.58/97-CE dated 30.08.97 credit of deemed duty paid by manufacturer under Section 3A of the Central Excise Act, 1944 is available subject to the condition that the inputs are received directly from the factory of manufacturer under cover of an invoice declaring there that the appropriate duty of excise has been paid on such inputs under the provisions of Section 3A of Central Excise Act, 1944. There is no dispute about receipt of inputs directly from the factory of manufacturers in all the cases involved in present proceedings. I observe that all the invoices involved in appeal no.376/2004 while one invoice each in appeal nos.378/2004 and 382/2004 bear the necessary declaration about payment of appropriate duty. In this regard, I observe that Hon'ble High court of Punjab & Haryana at Chandigarh in the case of Vikas Pipe Vs. Commissioner of Central Excise, Chandigarh-II-2003 (158) ELT 680 (P&H) while dealing with the issue of admissibility of deemed modvat credit in terms of provisions of notification no.58/97- CE dated 30.08.97 held as under:- “In the case before us the show cause notice issued to the assessee itself points out that the suppliers have been declaring on these invoices that the inputs suffered excise duty but the tribunal obviously went wrong on holding that since excise duty had in fact not been paid by the supplier the assessee was not entitled to claim Modvat benefit. Since there is no requirement in the notification that the assessee has to lead evidence to show that the supplier had discharged its excise duty liability, we are clearly of the view that the Tribunal was in error in disallowing the Modvat credit to the assessee. Consequently, the aforesaid question which arises from the order of Tribunal is answered in favour of the assessee and against the Department C.E.A. No. 98 of 2007 -4- holding that the assessee in the circumstances of the present case is entitled to the benefit of Modvat credit.” Aggrieved against the aforesaid order passed by the Commissioner (Appeals), the Department filed an appeal before the CESTAT. Vide its order dated 29.12.2006, the CESTAT dismissed the appeal of the Department while observing as under:- “In this case, the respondents availed deemed credit under Notification no.58/97-CE(NT) dated 30.8.97 on the strength of invoices issued by the manufacturer of inputs. The contention of Revenue is that on verification, it was found that input manufacturer had not discharged full duty liability. That Commissioner (Appeals) relied upon the decision of Punjab & Haryana in the case of Vikas Pipes Vs. CCE Chandigarh ( 2003 (158) ELT 680) and held that respondent is entitled for deemed credit. The contention of the Revenue is that against the decision of Punjab & Haryana High Court, the appeal has been filed. The respondent submitted that the Tribunal in the case of H.S. Sons Vs. CCE Chandigarh (2006 (75) RLT 438) after following the decision of the larger Bench, has held that the assessee is entitled for deemed credit even in case the declaration is given to the effect that duty liability is to be discharged under Rule 96-ZP. It is also pointed out by the respondent that the Hon'ble Punjab & Haryana High Court in the case of CCE Vs. Plasto Bombay Engineers dismissed the appeal filed by the Revenue where Revenue raised the issue that deemed credit is not available in case where no declaration regarding appropriate discharge of duty was given in the invoices. 2. In this case, the issue is whether deemed credit is available to the respondents where as per the Revenue, a manufacturer of inputs has not paid appropriate duty. This issue has been settled by the decisions of Punjab & Haryana High Court in C.E.A. No. 98 of 2007 -5- the case of Vikas Pipes (supra) and in the case of Plasto Bombay Engineers (supra) in favour of the respondents. In view of the above, I find no merit in the appeals and the same are dismissed.” Against the said order, the instant appeal has been filed by the Department. After hearing the counsel for the appellant and going through the impugned orders as well as a Division Bench decision of this Court in Vikas Pipes (supra), we do not find any illegality in the impugned orders. Counsel for the appellant could not cite any contrary judgment. In view of this, we are of the opinion that no substantial question of law is arising, as referred to above, from the impugned orders. Dismissed. (SATISH KUMAR MITTAL) JUDGE January 29, 2008 (RAKESH KUMAR GARG) vkg JUDGE