Punjab-Haryana High Court
Commissioner Of Central Excise vs Ralson India Ltd. on 19 December, 2005
Equivalent citations: 2006(202)ELT759(P&H), 2008[10]S.T.R.505, [2007]6STT134
Author: D.K. Jain
Bench: D.K. Jain, Hemant Gupta
JUDGMENT D.K. Jain, C.J.
1. These five appeals, by the Revenue, under Section 35G of the Central Excise Act, 1944 (for short, 'the Act'), are directed against a common order, dated 5-10-2004, passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short, 'the Tribunal') in Appeal Nos. E/3365-09/08-NBS.
2. Since these appeals arise out of a common order, the same are being disposed of by this order. According to the Revenue, the order of the Tribunal gives rise to the following substantial question of law:
Whether Modvat credit on original documents, which were not prescribed documents, could be availed without following the procedure laid down in this regard?
3. Briefly stated, the background facts, giving rise to the present appeals, are as follows:
The respondent-assessee is engaged in the manufacture of Carbon Black, falling under Chapter 28 of the Schedule to the Central Excise Tariff Act, 1985. It was availing the facility of Modvat credit under Rule 57A of the erstwhile Central Excise Rules, 1944 (for short, 'the Rules'). On scrutiny of RT-12 returns, filed by the assessee, it was noticed that the assessee had taken Modvat credit on the strength of original copies of invoices without taking/applying for any permission from the competent authority, as required under Rule 57G(2A) of the Rules. Consequently, notices were issued to the assessee to show cause as to why the said credit availed of be not withdrawn; recovered and penal action under Section 173Q(1)(bb) of the Rules be not taken against it. In its reply, the assessee stated that when the inputs were received in the factory, the driver did not hand over the duplicate copy of the invoices. Affidavits of the drivers, to the effect that they have lost the duplicate transport copy, were also filed. Not being satisfied with the explanation furnished by the assessee, the adjudicating authority disallowed the Modvat credit and confirmed the demands under Rule 57-I of the Rules. Penalties under Rule 173Q(bb) were also levied.
4. Aggrieved, the assessee preferred appeals to the Commissioner (Appeals) Central Excise Commissionerate, who remanded the case to the adjudicating authority for de novo proceedings. In remand proceedings, the adjudicating authority allowed the Modvat credit, inter alia, holding that there was no dispute regarding the duty-paid character of the inputs and their receipt/utilisation in the manufacture of final product.
5. Being aggrieved, the revenue successfully took the matter in appeals to the Commissioner.
6. Not being satisfied with the view taken by the Commissioner, the assessee took the matter in further appeals to the Tribunal. By the impugned order, the Tribunal has allowed the appeals. Hence, the present appeals.
7. We have heard Mr. M.S. Guglani, learned Central Government Counsel appearing on behalf of the revenue. Learned Counsel has submitted that the provisions relating to claim for Modvat credit being substantive in character, furnishing of duplicate copies of invoices, under sub-rule (2A) of Rule 57G of the Rules, inserted on 28-5-1994, is a mandatory condition, which an assessee is required to comply with. Learned Counsel has argued that since, in the instant case, the assessee had not sought permission of the Assistant Commissioner to make the claim on the basis of original invoices, its claim for Modvat credit could not be entertained. Learned Counsel submits that while allowing assessee's appeals, the Tribunal has ignored the statutory provisions and therefore, its order gives rise to the afore-mentioned substantial question of law.
8. We are unable to agree with the learned Counsel. The question whether a statutory provision is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. It needs little emphasis that all parts of the Statute or Sections have to be construed together with reference to the context, so that construction put on a particular provision makes it consistent with the enactment and does not lead to manifestly absurd results not intended by the Legislature. A literal construction which makes a particular provision manifestly absurd or leads to anomalous results is to be avoided.
9. Rule 57A of the Rules allows to a manufacturer credit of any duty of excise etc. paid on the goods used in the manufacture of the specified goods. Rule 57G lays down the procedure to be observed by the manufacturer intending to take credit of the duty paid on the inputs. Sub-rule (3) contemplates that no Modvat credit shall be taken by the manufacturer unless the inputs are received in the factory under the cover of various documents enumerated thereunder. However, sub-rule (6), which is in the nature of a non-obstante clause, carves out an exception to sub-rule (3). It provides that a manufacturer may take credit on the inputs received in his factory on the basis of original invoice, if duplicate copy of the invoice has been lost in transit, subject to the satisfaction of the Assistant Commissioner of Central Excise that: (i) the inputs have been received in the factory of the said manufacturer and (ii) the duty was paid on such inputs. The scope of satisfaction of the Assistant Commissioner is restricted to the two aforenoted aspects. From a conjoint reading of sub-rules (3) and (6), the intent and object of the Legislature is manifestly clear. It is to prevent the misuse of the modvat claims and any fraud being played by a manufacturer. 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. In fact, in order to obviate any difficulty on account of loss of duplicate copy of the invoices, Notification No. 23/94-C.E. (N.T.), dated 20-5-1994 has been issued by the Board enabling a manufacturer to take Modvat credit on the basis of original copy of the invoice, provided the loss of duplicate copy of the invoice had occurred only in transit and the Assistant Commissioner is satisfied about its loss.
10. In the instant case, while holding that the assessee was entitled to take Modvat credit on the basis of original invoice, the Tribunal has relied on a Trade Notice issued by the Chandigarh Collectorate, dated 23-5-1994, wherein it has been provided that an assessee could take credit on the basis of original invoice, subject to the satisfaction of the jurisdictional Assistant Collector. The Tribunal has held that in view of the finding recorded by the Commissioner to the effect that there was no dispute regarding the duty-paid character of the inputs and their receipt/utilisation in the manufacture of final product, the requisite twin conditions contemplated in sub-rule (6), the Modvat credit taken on original invoices was admissible.
11. We are of the view that in the light of the aforesaid concurrent findings of fact recorded by the two appellate authorities below, Modvat credit could not be denied to the assessee, on merits. In this view of the matter, the question proposed by the Revenue is rendered academic and cannot be said to be a substantial question of law, when tested on the touch-stone of the broad principles laid down by the Constitution Bench of the Supreme Court in Sir Chunilal Mehta v. Century Spinning and Manufacturing Co. Ltd. , for determining whether a question raised in a case is a substantial question of law or not.
12. Resultantly, we decline to entertain the appeals. Dismissed.