Customs, Excise and Gold Tribunal - Mumbai
Aegis Chemical Indus. Ltd. vs Commissioner Of C. Ex. on 21 December, 1998
Equivalent citations: 1999(106)ELT492(TRI-MUMBAI)
ORDER G.N. Srinivasan, Member (J)
1. These are fine appeals filed by the appellant against the decision of the Commissioner (Appeals), Central Excise and Customs, Auran-gabad whereby the Commissioner (Appeals) has denied the Modvat credit. The Modvat credit has been denied in these cases because the appellants did not comply with the provisions of Notification 23/95, dated 30-5-1995.
2. The appellants are engaged in the manufacture of Industrial fatty alcohols, Glycerine and by-product falling under Chapter 15, 28 and 29 of the Central Excise Tariff Act. They were availing the facility of Modvat credit under Central Excise Rules. One of their inputs is industrial furnace oil as an input, which is required for heating the raw-materials. Such an input is obtained from Hindustan Petroleum Corporation Ltd. (HPCL). During the course of their commercial transactions they had filed the required information as evidenced by the invoices which did not contain full dated particulars as desired by the Notification 23/95, dated 30-5-1995. Five show cause notices were given raising the demand as indicated below:
_______________________________________________________ Period Amount of duty Amount of penalty _______________________________________________________ October 1996 Rs. 1,12,813.94 Rs. 11,300.00 November 1996 Rs. 1,39,583.08 Rs. 14,000.00 December 1996 Rs. 1,96,874.50 Rs. 19,700.00 January 1997 Rs. 2,80,000.00 Rs. 28,000.00 February 1997 Rs. 2,02,508.00 Rs. 20,000.00 _______________________________________________________
2. The Assistant Commissioner confirmed the demand and Commissioner (Appeals) also confirmed the order passed by the Assistant Commissioner. Hence the present appeal.
3. Today only stay petitions were filed. When it is found that the issue falls in a narrow compass, the appeals itself were taken up for disposal after waiving the pre-deposit and with the consent of both the parties.
4. Ld. Consultant argues that the inputs have been received and certain defects, no doubt, were there in the invoice which is evidencing the duty paying document. However, those defects have been rectified and that is evidenced by the finding recorded in the appellate order. Moreover, he says that in respect of subsequent period namely by his Order No. 45/98, passed on 26-2-1998, the same Assistant Commissioner in respect of the same assessee has dropped the demand in respect of the subsequent show cause notice. Hence, justice demands that the instant appeals should be allowed.
5. The ld. DR adopts the reasoning of the lower authorities.
6. I have considered rival submissions. The Assistant Commissioner in the impugned order has held as follows :
"I have carefully gone through the records of the case and written submissions, dated 2-6-1997, 5-6-1997 and 26-6-1997 and the records of the personal hearing held on 28-8-1997.1 find that the assessee has raised and availed the Modvat credits as mentioned above on the strength of invoices which do not incorporate the information as per Notification No. 23/95-C.E. (NT), dated 30-5-1995, as amended and the assessable value of the goods and total duty paid amount is shown as the same. The name of Range/Division/Commis-sionerate, date and time of issue of invoices, Central Excise Registration Nos., quality sold, rate of duty, amount of duty and assessable value of the goods are also not incorporated in all the invoices in question. It has also not been mentioned on the invoices whether these invoices are issued by first stage dealer or second stage dealer. This clearly indicates that particulars which are required under Rule 57GG of Central Excise Rules, 1944 are not incorporated in the invoices issued by the depots and as per Notification No. 23/95-C.E. (N.T.), dated 30-5-1997 as amended.
In the instant case, I find that the depot has not indicated the mandatory details such as time of issue of invoice, Central Excise Registration No., assessable value and amount of duty etc. Therefore, the Range Superintendent has correctly raised the demand for denial of Modvat credit on the basis of invoices which are not issued in compliance of the mandatory provisions of Rule 57G and 57GG of Central Excise Rules, 1944 and as per Notification No. 23/95-C.E. (NT.), dated 30-5-1995 as amended. I also find that if the invoices are not in conformity with the provisions of Rule 57GG and 57G of Central Excise Rules, 1944 read with Notification No. 23/95, dated 30-5-1995 as amended, which is statutory requirement, it cannot be treated as the valid document for raising the Modvat credit and the credit availed on such invalid documents is not permissible. I also find that the Notification No. 23/95, dated 30-5-1995 informs of Rule 57GG of Central Excise Rules, 1944 prescribing the particulars to be incorporated in the invoices was issued well in advance. Therefore, the dealer/depots should have issued the invoices in terms of the said Notification and the assessee who is availing the Modvat credit, was also required to ensure that the documents on which the credit availed should be complete in all respect. In support of my view, I rely upon the decision in the case of Galaxy (ERO) Pvt. Ltd. v. C.C.E., Delhi 1996 (85) E.L.T. 91 (Tribunal) given by CEGAT."
The appellate authority in the impugned order has held as follows:
"I have carefully considered the submissions made by the appellants. I find that the appellants have admitted the omissions pointed out in the invoices as alleged in the show cause notices. The invoices were totally incomplete and the relevant details regarding assessable value, amount of duty, duty per unit and in some cases the description of the goods, date and time of issue of invoice and time of removal was not shown. These are very material requirements, as in the absence of these the invoices are liable to be misused by making double transportation under the same invoice, once the time of issue and removal is not shown. Similarly, manufacturer's details are very relevant and are mandatory. It is not correct to say that the receipt of the inputs and its utilisation in the final product is not being disputed. The fact is that department has not gone into the matter whether the inputs were indeed received and utilised in the manufacture of final product because in the absence of any prescribed inputs/outputs ratio. D-3 intimation, it is not possible for the department to verify these facts, once the inputs have already gone into production and the manufacturers can easily hoodwink department by making book entries, without utilizing the inputs. Since the department has only documentary control, it is a must that the documents should be complete in every respect so that they do not lead to any suspicion. In the present cases, the documents were not only lacking in minor technical details but major requirements like date and time of issue, the manufacturer's details etc. were not available. The credit has therefore, been correctly denied. The Assistant Commissioner has rightly relied on the CEGAT decision in the case of Galaxy (FRP) Ltd. v. C.C.E. - 1996 (88) E.L.T. 101 wherein it was held that invoices where full particulars as per Notification 15/94 are not indicated, then Mod-vat credit will not be admissible."
However, I find that arguments of Shri Mondal is quite attractive inasmuch as it is not the case of the department that the input was not received and the same was not utilised in the manufacture of declared final product. The Modvat scheme is a beneficial legislation. The defects as pointed out by Assistant Commissioner have been rectified and this has been noted by the appellate authority in the appellate order. Moreover, under similar circumstances in the subsequent order in respect of subsequent period, the Assistant Commissioner has granted the Modvat credit.
"There is no dispute with regard to the duty paid nature of the inputs received. There is also no dispute with regard to the receipt of inputs and its use in or in relation to the manufacture of dutiable declared final product. The assessee has availed Modvat credit on the basis of invalid duty paying documents which were not showing the required particulars. Therefore, they have submitted the copies of duplicate invoices duly rectified with proper attestation. Therefore, this is only a technical lapse. As it is a fact that inputs are received and used in the manufacture of final product, such Modvat credit cannot be denied due to procedural deviation. What is important is the production of genuine/documents and the defects which are remediable can be cured subsequently. My above view is based on the case in respect of Amal Rasayan Ltd. v. Collector of Central Excise, 1998 (87) E.L.T. 133 and Mangalore Chemical & Fertilisers Ltd. v. The Deputy Commissioner, 1991 (56) E.L.T. 437".
Therefore, the assessee no doubt could not procure the proper invoice. Later on he had rectified the said defects. The inputs have been received and used in the manufacture of final product and Modvat credit cannot, in my view, be denied in the said circumstances. It is not the case of the department that the assessee has not filed any declaration. Therefore, I am of the view that the appeals have to be allowed and I set aside the impugned orders and allow the appeals with consequential relief, if any, permitted by law.