Customs, Excise and Gold Tribunal - Mumbai
Bajaj Tempo Ltd. vs Commissioner Of C. Ex. And Customs on 10 September, 1998
Equivalent citations: 1999(63)ECC268, 1999(106)ELT145(TRI-MUMBAI)
ORDER J.N. Srinivasa Murthy, Member (J)
1. Bajaj Tempo Limited has filed these five appeals against the Commissioner of Central Excise & Customs (Pune) against the impugned orders 4 to 7 and 9/CEX/1998, dated 22-1-1998, 28-1-1998, 7-2-1998, 5-2-1998 and 4-2-1998, praying for quashing and setting aside the said orders, whereunder he has disallowed the Modvat credit on some of the inputs and to hold that the denial of Modvat credit on Technical/Procedural defects is illegal and unjustified and the appellant is not liable to pay the said duty as confirmed in the above orders.
1. The facts of the case are that the appellant manufactures motor vehicles parts thereof and I.C. Engines. It availed Modvat credit of the duty paid on inputs under Rule 57A of the Central Excise Rules. Show Cause Notices dated 1-3-1996,29-3-1996,2-4-1997 and 29-8-1996 were issued in disallowing the Modvat credit of the amount mentioned in the respective impugned orders on the grounds that:
(i) Invoices do not bear printed serial numbers.
(ii) The dealers invoices were not in the Pink colour, not authenticated by the Range Jurisdictional Superintendent under Notification No. 23/95 N.T.
(iii) Invoices issued by M/s. HPCL and M/s BPCL dealers did not have three pre-printed names, address and registration no., name of the Range/Division/Commissionerate. (iv) Date and time of issue of invoices as well as the date and time of removal of goods not mentioned in the invoices, (v) Modvat credit was availed after six months from the date of issue of invoices.
(vi) Credit was availed on the basis of the invoices other than duplicate copy bearing rubber stamp.
(vii) Modvat credit was availed on the basis of certificate issued under Rule"57E in respect of:
(a) items which were sent to spare parts department of the assessee
(b) items which were sent to deliver previously.
(viii) Credit was availed on the basis of invoices others the duplicate copy for transporter issued.
(ix) The inputs for not received along with the duty paying documents.
(x) Credit was availed on steel shots, guages, machinery parts, rocker arm pad blanks which are not inputs under Rule 57A.
(xi) Credit was availed on the basis of the invoices wherein the rubber stamp is duplicate for transporter or all remarks printed and invoices and tick mark are worked in hand.
(xii) Credit was availed on Nil duty invoices.
(xiii) Credit was availed on the certificate issued without the name of the consignee and Rule 57E.
(xiv) Invoices did not contain payment particulars and demand contained the required details of original manufacturer.
(xv) Excess credit taken due to clerical error.
(xvi) Quantification error.
(xvii) RG 23 Entry/particulars of original manufacturers not mentioned.
(xviii) Credit availed and other copy.
After the receipt of the reply from the appellant and hearing the appellant through the Counsel, the impugned orders were passed disallowing the Modvat credit and Rule 57-1 of the Central Excise Rules to the extent of the amount mentioned in the impugned orders. Hence these appeals.
2. With the consent of both the sides the appeals are taken for hearing, and the common order is passed in all these cases as the parties are same, and the issues involved are common. The stay is granted and parties are heard on the merits of the case.
3. Shri C.S. Lodha the ld. Counsel for the appellant has submitted in the course of the arguments that the appellant is the main manufacturer, and has paid correct duty under the documents, and it is accepted by the Department. He has drawn the attention to Rule 52A of the Central Excise Rules and further submitted that the Jurisdictional Central Excise Officers of the supplier of inputs have cleared the goods on correct documents, who has more responsibility in this regard, than the Jurisdictional Central Excise Officers of the appellant. Regarding the credit on steel shots, which is held as tools, is covered by the Larger Bench decision in the case of Shri Ramakrishna Steel Industries Ltd. v. Collector of Central Excise, and Union Carbide India Ltd. v. Collector of Central Excise, for the eligibility to the Modvat credit. There is no dispute about the payment of duty, and the utilisation of the input received in the manufacture of the final product, and the maintenance of the accounts and the documents, which can be co-related. The Assistant Collector is also intimated regarding the maintenance of the documents. The substantive benefit cannot be denied in view of the above factors on a technical omission or violations. He has further clarified the definition of printing under Rule 52A on the invoices in the background of the dictionary meaning, as a mark, an expression, an indentation or mark left on the surface by the pressure, and impression something impressed with a print or firm in the mould, referring to the Oxford, Chambers, Collins, Webster, Dictionary. The appellant, being manufacturer of motor vehicles, received various inputs from diverse sources. The copy of the RG 23 entry is produced as per Annexure-V which is not considered in the impugned order. The final product is cleared on payment of duty, the inputs have reached the appellant factory and it is used in the manufacture thereof. Documents are counter-signed by the authorities. The acknowledgment of Assistant Collector is obtained. So the appeals are to be allowed.
4. The ld. JDR has argued that in Rule 57G and Rule 52A printing is not defined. The meaning assigned to it by the appellants is inconsistent. It may amount even writing in pen. The meaning of the word printing in the rules is to be understood as used in common parlance. Mould or machine printing on the invoices book is normally printed or machine used to stamp. Relaxation is only for computer prints. There is no dispute that the Modvat credit is available to steel shots as per the Larger Bench decision referred to by the appellant. Printing is essential to avoid the misuse, under Rule 52A(6) and Rule 57GG regarding the printing Sr. No. RG 23D entry was not available at the time of the impugned order, and now produced. The ld. Counsel for the appellant has replied that on 20-9-1997 in the course of the personal hearing details regarding RG 23D Entry, is furnished, and it is not considered in the order dated 4-2-1998. The invoice by register dealer cover the above requirement, and not by the manufacturers. To give credit, the supplier's document are to be treated as valid documents, as done by the Jurisdictional officer of the supplier. The intention of the Government is very clear that the inputs must be a duty paid one to avail the Modvat credit. Misuse is possible even if the printing is also there.
5. Perused the Show Cause Notice, reply, and the documents produced in this case, and the impugned order, and the appeal memorandum, in all these five cases, and also Rule 52A and Rule 57G of the Central Excise Act which reads as follows:
During the relevant period Rule 57G read :
Rule 57G - Procedure to be observed by the manufacturer. - (1) Every manufacturer intending to take credit of the duty paid on inputs under Rule 57A, shall file a declaration with the Assistant Commissioner of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the said Assistant Commissioner may require, and obtain a dated acknowledgement of the said declaration.
(2) A manufacturer who has filed a declaration under Sub-rule (1) may, after obtaining acknowledgement aforesaid, take credit of the duty paid on the inputs received by him.
Provided that no credit shall be taken unless the inputs are received in the factory under the cover of an invoice, issued under Rule 52A, an AR-I, or Bill of Entry or any other document as may be prescribed by the Central Government by Notification in the Official Gazette in this behalf evidencing the payment of duty on such inputs.
Rule 52A of the Rules read :-
Rule 52A - Goods to be delivered on an invoice. - (1) No excisable goods shall be delivered from a factory of a warehouse except under an invoice signed by the owner of the factory, or his authorised agent: Provided that when the excisable goods, other than those to which provisions of Chapter VII-A apply, are removed on payment of duty such invoice shall be required to be countersigned by the proper officer.
Explanation. - In this rule, and in any other rule, where the term invoice or gate pass, as the case may be, is used it shall mean -
(i) assessee's own document such as invoice, challans, advice or other document of similar nature generally used for sale or removal of excisable goods and which shall contain all the particulars as required under the said Act or in these Rules; or
(ii) such other form as the Central Board of Excise & Customs may notify.
(2) The invoice shall be made out in quadruplicate. The original copy shall be for the buyer, the duplicate for the transporter, the triplicate shall be sent along with RT12 return or similar return prescribed under these Rules and the quadruplicate shall be retained by the manufacturer. The manufacturer may make extra copies of the invoice for his own use and each such extra copy shall be clearly marked with its sequential number. The duplicate copy shall be produced by the transporter on demand by any officer while the goods are en route to such destination from the factory:
Provided that in respect of removal of excisable goods consumed within the factory for manufacture of other goods in a continuous process, the manufacturer may make out a single invoice, at the end of the day:
Provided further that for any excisable goods, other than those to which the provisions of Chapter VII-A apply, the invoice shall be presented to the proper officer for counter signature at least one hour before the actual removal of goods from the factory. After counter signature the proper officer shall return all the copies of the invoice to the manufacturer except the triplicate required for his record.
(3) The copies of the invoice shall be marked at the top in bold capital letters in the following manner, namely :-
(i) the original copy shall be marked as ORIGINAL FOR BUYER;
(ii) the duplicate copy shall be marked as DUPLICATE FOR TRANSPORTER (to be used for taking credit under Rule 57G);
(iii) the triplicate copy shall be marked as TRIPLICATE FOR CENTRAL EXCISE; and
(iv) the quadruplicate copy shall be marked as QUADRUPLICATE FOR ASSESSEE.
(4) If all the packages comprising a consignment are despatched in one lot at any one time, only one invoice shall be made out in respect of the consignment. If, however, a consignment is split up into two or more lots each of which is despatched separately either on the same day or on different days, a separate invoice shall be made out in respect of each such lot. In case a consignment is loaded on more than one vehicle, vessel, pack animal or other means of conveyance which do not travel together but separately or at intervals, a separate invoice shall be made out in respect of each vehicle, vessel, pack animal or other conveyance.
(5) Invoice shall be maintained in two sets -
(i) one for clearance for home consumption; and
(ii) the other for clearance for export.
(6) Each invoice shall bear a printed serial number running for the whole year beginning on first January of each year. Only one invoice book of each type shall be used by a factory for removal of excisable goods at any one time unless otherwise specially permitted by the Commissioner in writing.
(7) Each foil of the invoice book shall be authenticated by the owner or working partner or Managing Director/Company Secretary, as the case may be, before being brought into use by the manufacturer. The serial number of the invoice, before being brought into use, shall be intimated to the Assistant Commissioner of Central Excise and dated acknowledgement of receipt of such intimation shall be retained by the manufacturer.
(8) If any person -
(a) carries or transports excisable goods from a factory or warehouse without a valid invoice, or
(b) while carrying or removing such goods from a factory or warehouse does not on request by an Officer, forthwith produce a valid invoice, or
(c) enters any particulars in the invoice which are or which he has reason to believe to be false, he shall be liable to a penalty not exceeding three times the value of the excisable goods in respect of which any contravention of the nature referred to in Clauses (a), (b) or (c) has been committed and such excisable goods shall be liable to confiscation.
Rule 57GG deals with the accounting procedure for the persons issuing invoices under Rule 57G or Rule 57T, Clause (5) states that each invoice shall bear a printed serial No. running for the whole financial year beginning on the 1st April of each year. Only one invoice book shall be used by the registered person for removal of excisable goods at any one time unless otherwise substantially permitted by the Commissioner in writing. So from the above material it is cleared that the copy of the invoices shall be marked at the top in the bold capital letters as :
(i) The original copy as original for buyer.
(ii) Duplicate copy as duplicate for transporter is to be used for taking credit under Rule 57G & T.
(iii) Triplicate copy as triplicate for Central Excise
(iv) The quadruplicate copy as quadruplicate for assessee, Sub-clause (6) of Rule 52A is same as Rule 57GG.
(v) In the light of the above legal position the present case is considered below.
6. (a) 1996 (82) E.L.T. 575 in the case of Shri Ramakrishna Steel Industries Ltd. v. Collector of Central Excise, Madras and (b) 1996 (86) E.L.T. 613 (Tribunal) in the case of Union Carbide India Ltd. v. Collector of Central Excise, Calcutta-I Northern Bench, and Larger Bench decision, have dealt with inputs in Rule 57A has been used in the sense of goods under Modvat, and in relation to the manufacture of final products. In the case of Union Carbide India Ltd., it is held that words "in relation to the manufacture" has been used to widen and expand the scope, meaning and content of the expression inputs so as to attract also goods which do not enter directly or indirectly into the finished product, but are used in any activity concerned with or pertaining to the manufacture of finished goods (Paras 16 & 17) spares of machine and other goods referred to in exclusion Clause (1) of the explanation to Rule 57 A of the Central Excise Rules are eligible inputs in Modvat credit therefore are admissible in spares of machine (18 IS)". In Shri Ramakrishna Steel Industries the Larger Bench has held that in Rule 57 A of the Central Excise Rules, the expression in relation to the manufacture is an expression of considerably large import and the Modvat credit is admissible in respect of duty paid on the inputs used in the preparation, in the process of manufacturing final product steel castings. So in the light of the above rulings the present case is considered below.
6. Point for consideration is whether there are sufficient grounds to allow the appeals question? My finding thereon is in the affirmative.
7. Regarding RG 23D entry/Extract as contended by the appellant the appellant in the adjudication proceedings had submitted the extract of the RG 23 register along with the letter dated 28-9-1997 to the Commissioner of Central Excise, Pune under Annexure-V. The certificate is obtained from the M/s. Hindustan Petroleum Corporation Limited giving the details of RG 23D entry numbers. In view of this the disallowance of amount of Rs. 2,66,005.69 disallowed has to be set aside.
8. Regarding the input steel shots, as contended by the appellant, and as conceded by the DR, Modvat credit is permissible to the said inputs in view of the decision in Shivaji Works Ltd. v. Collector of Central Excise, Aurangabad -1996 (88) E.L.T. 678 (Tribunal). So, Rs. 54,262.50p. disallowed by the Collector of Central Excise has to be set aside.
9. The invoice not bearing the printed serial no. is a technical violation, not such as to disentitle the appellant to Modvat credit as per the decision in 1998 (26) RLT 602 of the Delhi Bench of CEGAT in the case of R.T. Packaging Ltd. v. Collector of Central Excise, New Delhi vide para 4. In view of this decision Rs. 27,412.77 disallowed by the Collector of Central Excise to be set aside.
10. Regarding the rubber stamping of the duplicate copy of the transporter, the Modvat credit cannot be disallowed as it is a remediable defect and cannot be made the basis for denying the credit. So, also the colour of the invoice in respect of dealers (yellow instead of pink), merely because original duplicate etc. are rubber stamped cannot be disallowed. It was further observed that the evidential value of a rubber stamp is more than that of printed legend as a stamp would be affixed after looking at the paper, unlike printed legend which is used routinely as per the decision in 1994 (72) E.L.T. 948 (T-ERB) in the case of L&T Ltd. v. Collector of Central Excise. For the purpose of availing Modvat what is important is to prove the duty paid character of the inputs, as per the decision of the High Court of Bombay in the case of Bombay Goods Transport Association v. Union of India -1995 (77) E.L.T. 521. There is no dispute, as can be seen from the order and the documents produced and the arguments of both the sides, regarding the supply of the inputs by the supplier under valid duty paying documents cleared by the Jurisdictional Central Excise Authorities of the supplier along with the inputs, and the same reaching the appellant, and the appellant used the same in the manufacture of the final products, and paying duty thereon. As contended by the appellant, it is held that if the copy is not clear as to whether original or duplicate (for transporter), the manufacturer availing credit cannot be penalised for the lapses on the part of the supplier. In such cases, it is noteworthy that the manufacturer should not be denied the benefit as per the decision in 1998 (98) E.L.T. 439 in the case of Collector of Central Excise v. GEC Alsthom India Ltd. (T-SZB). Hand written description, hand-written vehicle number and serial number do not impute mala fide to the manufacturer and the credit cannot be denied for such reasons as per Nahar Spinning Mills Ltd. v. Collector of Central Excise - 1998 (97) E.L.T. 127.
11. Under Rule 52A of the Central Excise Rules as narrated above under Clause (3) the copies of the invoices shall only be marked at the top in capital letters as mentioned therein. So, as contended by the appellant, the question of printing does not arise, marking can be made in any manner.
12. Regarding the tick marking against the duplicate copy of the invoices there is a rubber stamp of duplicate for transporter, and the invoices contained all the particulars as cleared by the Jurisdictional Excise Officer of the supplier and therefore eligible for Modvat credit to the appellant. Regarding the credit availed on Rocker Arm Pad Blank, capital goods is carbide wear parts fixed by induction brazing on top surface of the carbide tip comes in contact with Camshaft, Cam Lobes and bottom surface of the Rocker Arm comes in contact with Valve Stem and Dome Nut. This carbide is selected for longer life of the Rocker Arm. The inputs are used in a Rocker Arm Lever, which is part of OM616 Engine, and which in turn is a part of motor vehicle. So, the Modvat credit is admissible on these inputs.
13. The certificate issued by the Vasai Range, Division XI of Bombay-II Commissionerate, specifically refers to the Invoices, which clearly shows the name of the consignee, such as Invoice No. 232, dated 31-10-1994, 225, dated 22-10-1994 and 246, dated 10-11-1994 referred to in Certificate No. 13/96-97, dated 30-3-1996. The differential duty paid by the supplier on the inputs supplied to the appellant is admissible for Modvat credit. The substantive benefit cannot be denied mainly on the ground of procedural deficiency. The important concern is the fact of payment of appropriate duty on the goods in question, which is evidenced by the documents with which the goods have been received. As already discussed above, this can be checked by the Jurisdictional Central Excise Officers of the appellant. As contended by the appellant when the goods are received by the appellant with the duty paying documents after clearance from the Jurisdictional Central Excise Officers of the supplier, the appellant can take the Modvat credit on the basis of the said duty paying documents on the inputs received along with them. The objections raised by the Department regarding the correct duty paying document in these cases cannot stand the scrutiny in the light of the rulings referred above. So, the contention of the appellant is accepted. The point raised is answered in the affirmative. Hence, I pass the following order.
ORDER
14. For the reasons discussed above the appeals of the appellant are allowed and the impugned order is set aside with consequential relief, if any, according to law.