Customs, Excise and Gold Tribunal - Delhi
M/S. Shivalik Agro Chemicals vs Cce, Chandigarh on 22 March, 2001
Equivalent citations: 2001(135)ELT662(TRI-DEL)
ORDER
Lajja Ram
1. In this appeal filed by M/s Shivalik Agro Chemicals, Mohali ('M/s Shivalik' for short), the matter relates to the modvat credit of Rs 3,68,658.03 availed of on the basis of alleged defective/non-prescribed documents. The modvat credit was required to be taken on the strength of the duplicate copy of the invoice which was meant for transporter. M/s Shivalik had taken modvat credit on the strength of original copy of the invoices. Further, requisite particulars were not entered into the invoices. In some cases the dealer had not got himself registered with the Department.
2. The matter was heard on 13.3.2001 when Shri Sandeep Singh, advocate, appearing for M/s Shivalik submitted that the requisite particulars that were missing from the invoices at the time of taking the credit, were given subsequently. The dealer had also got himself registered with the Department subsequently. As regards availing of credit on original copy of the invoices, it was his submission that the appellants had in their possession duplicate copies of the invoices also. He prayed that the discrepancies were of technical nature and that the substantive benefit of modvat credit should not be denied on technical grounds.
In reply, Shri A.K. Jain, DR, submitted that the Commissioner of Central Excise (Appeals) had given clear findings and had analysed the matter on the basis of the legal provisions. The modvat credit has to be taken on the strength of prescribed documents. Any information sought to be given subsequently to cover up the deficiencies in the earlier documents will not meet the requirement of law. The modvat credit had been taken on the strength of irregular invoices and that there was no case for any leniency in this matter. He relied upon the Tribunal's Larger Bench decision in the case of CCE, New Delhi vs Avis Electronics Pvt. Ltd., 2000 (117) ELT 571 (T-LB).
3. I have carefully considered the matter. M/s Shivalik were engaged in the manufacture of pesticides. They were availing of the benefit of modvat credit. It was alleged in the show cause notice dated 28.12.1994 that they had wrongly availed of the benefit of modvat in some cases in contravention of the relevant rules in this regard. In cases where inputs were said to have been obtained from the manufacturers, modvat credit was allowable only on the strength of duplicate copy of the invoices which were the transporters copies. M/s Shivalik had taken a credit of Rs 6,175.75 on the basis of the documents which were not the duplicate copies of the invoices, even when the inputs were said to have been received from the manufacturers. The requirements under which credit could be allowed by the proper officer on a copy of the invoice other than the duplicate copy were not met by the appellants. The argument that the appellants were in the possession of duplicate copies also is of no avail if the credit had not been taken on their strength. Such an argument, in fact, shows conscious disregard of the provisions of the law. If such a plea is allowed, then it will lead to malpractices as when the discrepancies come to light, the assessee could take conveniently such a plea.
4. The modvat credit of Rs 2,95,642.28 has been denied in some cases where the invoices did not contain all the particulars therein. Such important particulars as the name and address of the manufacturers, serial no. and date of the invoice, value, quantity and particulars of duty payments etc. were missing in one or the other invoices which are the subject matter of dispute. Such particulars were very relevant to the authenticity of the documents and the admissibility of the credit. Subsequent communications could not make the irregular documents as regular.
5. In some cases, no evidence was produced to show that the dealer had got himself registered with the Department within the stipulated time. This was also an important requirement and the omission could not be ignored. The registration was to be obtained within the time limit prescribed. The modvat credit of Rs 66,840/- had been denied for this reason.
In this regard, I refer to the Larger Bench decision of the Tribunal in the case of Balmer Lawrie & Co. Ltd. vs CCE, Kanpur, 2000 (116) ELT 364 (T-LB). The Tribunal had held that the registration of dealers issuing invoices for claiming modvat credit was a mandatory requirement in terms of Rule 57-GG of the Central Excise Rules, 1944 read with Rule 174 and this requirement did not relate simply to an area of procedure. Paras 9 & 10 from that decision are extracted below -
9. The language of Rule 57GG, which has been inserted in the statute on the strength of Notification 32/94, dated 4th July, 1994 and of Rule 174 is quite clear, unambiguous and leaves no doubt in ones mind that provisions of these rules are mandatory and do not simply relate to an area of procedure. From the conjoint reading of both these rules, it is quite evident that no one can deal with the excisable goods in any capacity such as trader, dealer, commission agent, broker without getting himself registered under the Central Excise Act. The invoice or invoices under Rule 57G, therefore, can be issued only by a registered dealer after the issuance of Notification No. 32/94 and only then the Modvat credit can be claimed on the strength of the same in respect of the goods mentioned, by the end user and not otherwise.
10. No doubt, the Revenue department, after issuance of the Notification No.32/94-C.E., dated 4th July, 1994 and insertion of Section 57GG on its basis in the statute issued instruction bearing No. 76/94-C.E. (N.T.), dated 8-11-1994, authorising the Assistant Collector to accept the invoices issued by those unregistered dealers who subsequently procured registration by 31st December, 1994. But this relaxation obviously was given in order to avoid any genuine difficulty to the end user of the inputs having purchased the same under the invoices issued immediately proceeding the issuance of the Notification No. 32/94-C.E. by an unregistered dealer in claiming the Modvat credit on the strength of those invoices as in the original Notification the last date of registration by the dealer, was not provided. But this relaxation given by the Revenue department, cannot by any logic be interpreted to mean, as contended by the counsel, that the condition of registration of a dealer issuing invoices under Rule 57GG, for claiming Modvat credit, was never intended to make compulsory or mandatory, but only fell within the area of procedure which could even be deviated or violated by the dealer if it was shown by the end user of the goods that the same were intended to be used or had been actually used, in relation to the manufacture of the final product and were duty paid. The words used in Rules 57GG and 174 referred to above are that the dealer of the excisable goods shall get himself registered. Both these rules are thus mandatory in nature, being based on consideration of Policy enacted with a view to eliminate bogus, fictitious, fraudulent, benami traders/dealers and the transactions conducted by them from the commercial market and to avoid misuse of the Modvat scheme not only by them but by the persons deriving title to the goods through them and further to bring transparency in the transactions. These rules being of substantive character and built in which certain objectives cannot, therefore, be called merely a procedural, the deviation of which can be permitted to be made by the dealer of the excisable goods with immunity. The very object of issuance of Notification No. 32/94 referred to above and insertion of Rules 57GG 174 requiring the registration of the dealer dealing with the excisable goods, would stand defeated and nullified if these are taken to be only procedural and not mandatory/imperative in character and enforcement.
6. In the show cause notice, the allegation has been given that the appellants had wrongly availed modvat credit in contravention of the provisions of Rules 57-A and 57-G of the Rules. Annexure 'A' of the show cause notice summarises the reasons for alleging wrong availment of modvat credit. It could not be said that the impugned order was beyond the show cause notice.
7. The Additional Commissioner of Central Excise who had adjudicated the matter had already allowed the credit of Rs 1,24,463.86. She has also not imposed any penalty.
8. I may again refer to the Tribunal's Larger Bench decision in the case of Balmer Lawrie & Co. Ltd. vs CCE, Kanpur, 2000 (116) ELT 364 (T-LB). In this decision the Tribunal had held that the provisions of Rule 57-G after amendment on the issuance of notification no. 15/94-CE dated 30.3.1994 were mandatory in nature. Para 20 from that decision is extracted below-
20. The argument of the counsel that issuance of the invoice for clearing the goods by the manufacturer from the factory or by the dealer while transferring the goods is only a procedural condition of a technical nature and as such its breach must be held to be condonable, under the law, cannot be attached any legal value. The provisions of Rule 57G after amendment of the issuance of Notification No. 15/94, dated 30-3-1994 are mandatory in nature as the words used therein are that no credit shall be taken unless the inputs are received in the factory under the cover of an invoice issued under Rule 52A. The endorsement of the invoice had not at all be provided in this Rule. Only the issuance of invoice or invoices had been made permissible as is further evident from the wording of Rule 57GG and even statutory obligation has been imposed on the person issuing the invoice or invoices to maintain stock account in form RG 23D and to make entry in that register at the end of the day on receipt of inputs of excisable goods. It is not only a procedural technical condition so as to hold that its violation by making endorsement on the invoice by not maintaining the relevant record as required under Rule 57G or Rule 57GG referred to above, is condonable under the law. A distinction has to be made between a procedural condition of a technical nature and a substantive condition. It is the non-observance only of former which is condonable while that of later is not condonable as the same is likely to facilitate commission of fraud and introduce administrative inconvenience and misuse of the Modvat credit.
9. I may also refer to the Tribunal's Larger Bench decision in the case of CCE, New Delhi vs Avis Electronics Pvt. Ltd., 2000 (117) ELT 571 (T-LB). Para 8 from that decision is extracted below:
8. In the light of the above finding arrived at by us on the question referred to us, we hold that insistence on documents evidencing payment of duty on the inputs as prescribed by Rules is not a technicality to be complied with for availing Modvat credit. Observation made by the appellate authority that insistence on duplicate copy of invoice is purely a procedural requirement is against Rule so cannot be sustained. When a particular thing is directed to be performed in a manner prescribed by Rules, it should be performed in that manner itself and not otherwise. A combined reading of the provisions contained in the Rules makes it clear that a manufacturer who wants to take credit of the duty paid on inputs must base his claim on the duplicate copy of the invoice. In case the duplicate copy has been lost in transit, he can take credit on the basis of the original. This can be done if he satisfies the concerned Asstt. Collector about the loss of the duplicate copy in transit.
10. In view of the above, I do not find any merit in this appeal and the same is rejected. Ordered accordingly.