Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise, ... vs Dunlop India Limited on 12 September, 2001
Equivalent citations: 2002(79)ECC192, 2001(137)ELT966(TRI-CHENNAI)
JUDGMENT
Jeet Ram Kait
1. These four Revenue appeals are against the order No. 81,82,83/97(M) dated 2.6.97 passed by the Commissioner (Appeals) holding as under:
2. I have given my careful consideration to all the submissions of the two appellants. I have also seen the impugned orders. The short issue that arises for my consideration here is regarding the maintainability of the orders of the lower authority disallowing the modvat credit on the alleged ineligible documents. As I have already decided similar appeals earlier, I propose to dispose of these three appeals by this combined order-in-original, without grant of personal hearing to the appellants.
3. In appeal No. 449/96(M), the appellants are M/s. Indian Oil Corporation Limited, Lube Blending Plant engaged in the manufacture of lubricants. They received additives from Bombay under different invoices during the period January to May 95 but the duplicate copy of the invoice was not available. So the appellants claimed modvat on the basis of the originals. they pleaded with the AC in the adjudication proceedings that the supplier had tendered the documents to their jurisdictional AC alongwith their RT-12 returns. However, the AC has disallowed the same. In the grounds of appeal, the appellants have pleaded that the inputs received were duty paid, and utilised in the manner specified under modvat and so the credit could not be denied.
4. Appeal No. 82/97(M) has been filed by M/s. Dunlop India Limited, manufacturers of tyres and tubes falling under Chapter 40. They took modvat credit of duty paid on the basis of original/extra/Xerox copies of invoices instead of on the duplicate invoices which accompanied the goods. They also took credit on the invoices issued by dealers which did not contain the details of original consignment and some of the invoices did not bear the name of the appellants as the consignee. The credits have been denied on two grounds viz. that prior permission was not taken for availing credit on the original invoices, and that there was no provision in the Central Excise Rules to permit taking of credit on extra/xerox copies of the invoices and others.
5. In the third appeal, viz. 83/97(M), in respect of the same appellants i.e. M/s. Dunlop India Limited, the AC has disallowed credit for similar reasons. Hero also, the appellants have pleaded that the Government on consideration of the representations from the Trade permitted availing of credit on original copies of invoices. They cited the Bombay High Court decision in the case of Bombay Goods Transport Corporation that so long as the inputs are duty paid and there is no dispute on this fact and the same have been used in the manufacture of final product and this fact was also not in dispute the credit cannot be denied on procedural lapses. They also pointed out that the lorry driver tends to lose the duplicate copy if he is not alert and cautions.
6. I find force in the submissions of the two appellants herein. I find that the Board vide their Circular No. 68/68/94-CX dated 20.9.94 has clarified that both under Rule 52A/57GG the credit can be allowed on the strength of original invoice where the duplicate invoice is lost in transit. It is however, further clarified in the Board's circular that while permitting the credit, the AC should do proper scrutiny and the credit be permitted only after proper verification from the originating range. Therefore, the credit cannot be denied merely for the fact that prior permission was not taken or that the invoice did not contain details of original consignment and some of the invoices did not bear the appellants name as the consignee etc. since such lapses are only of technical nature which will not debar the appellants from getting the substantive benefit. The CEGAT orders in the case of Kay Poly Plant Ltd. - 1996(83) ELT 681(T) and Krishna Insulation - 1996(84) ELT 220 (T) are also relevant herein. In view of the above, the appellants herein can be extended the credit in these cases, subject to verification of the documents and that none has availed credit herein. I therefore vacate the AC's orders and direct the ACs concerned to extend the credit in all these cases after due verification and after taking such precaution as deemed necessary. Since the appeals are being allowed on merits there is no warrant for penalty. Hence the same is also vacated in full (SIC) (vide Appeal No. 449/96(M).
7. In the light of the above discussions, all the three appeals are allowed with consequential relief, wherever it is due.
2. Aggrieved by the above said order, the Revenue has come in appeal on the following grounds :
(a) The Commissioner (Appeals) ought to have seen that the wordings of the Board's Circular No. 68/68/94 CX, dated 20-09-94 were clearly in favour of department stand. The Board's circular clearly states that by inserting Sub-clause 2 A to the Rule 57 G as 2A "Notwithstanding anything contained in Sub-rule 2, a manufacturer can take credit on the invoices received in the factory on the basis of original invoice if the duplicate copy of invoice has been lost-in-transit subject to the satisfaction of Assistant commissioner"
(b) In the above said Board's Circular No. 68/68/94 CX, dated 20-09-94, it was clearly clarified by the Board that as per provisions of Rule 57G manufacturers are required to take MODVAT credit only on receipt of duplicate copy of invoice issued under Rule 52A and wherever such duplicate copies have been lost-in-transit, the MODVAT credit shall be taken only after receipt of written permission from the Assistant Commissioner.
(c) Why the Government clearly stipulate that MODVAT credit shall be availed on the basis of duplicate copy of invoice in case the original invoice lost-in-transit alter getting written permission from the Assistant Commissioner is to avoid the possibility of availingMODVAT credit on the basis of both the original copy, as also duplicate copy resulting in taking the credit twice or by resorting to similar double credit against single consignment by (SIC) of documents by various methods. The assessee availed MODVAT based on the original invoice without obtaining prior permission from Assistant Commissioner MODVAT credit can be denied for NOT having taken prior permission from Assistant Commissioner under Sub-rule 2 A of Rule 57G of Central Excise Rule, 1944. Prior permission is required for taking credit on the original copy of invoice in case of duplicate copy of invoice lost-in-transit. That is, what the Sub-rule 2A was instructed to Rule 57G of Central Excise Rules, 1944 vide Notification No. 23/94 CE(NT), dated 20.05.94. It is a mandatory rule not a procedural rule.
(d) There is no provision in Central Excise Act and Rules permitting the assessee to take MODVAT credit on the extra copy of invoices and xerox copy of invoices which are not prescribed proforma as per Central Excise Rules 52A and 57G of Central Excise Rules 1944. Taking credit on the extra copy of invoices and xerox copy of invoices is not a procedural lapse. The availment of MODVAT credit on the above document is construed as a gross violation of MODVAT rule. The assessee cannot take shelter under the Sub-rule 2A of 57G of Central Excise Rules, 1944. Further the case Law cited in determining the fact of present issue being the decision of Honourable Tribunal, New Delhi and Tribunal, Jaipur respectively in the case of Krishna Insulation v. Commissioner of Central Excise, 1996 (84) ELT 220 (T) Kay Poly Plant Limited v. Commissioner of Central Excise 1996(83) ELT 681 (T) sets out that facility of MODVAT credit is admissible on the strength of endorsed bill of entry. The issue decided by the tribunal is not applicable to the taking of credit on the basis of original copy of invoices in the case duplicate copy is lost in transit without obtaining prior permission from Assistant commissioner under Sub-rule 2A of Rule 57G of Central Excise Rules 1944. Therefore the case law cited is not considered relevant in the present context.
5. It is, therefore, prayed that the order of Commissioner (Appeals) No. 82,83/97(M), dated 02-06-97 may be set aside and the demand in the Show Cause Notice be confirmed.
3. The learned DR reiterated the grounds of appeal and submitted the Modvat Credit cannot be allowed on the strength of original copy of the invoice and he prays for allowing the appeals filed by the Revenue.
4. None appeared for the Respondents despite notice.
5. We have considered the submissions made by the learned DR and perused the order in appeal and the evidence available on record. We find that similar case had come up before this Tribunal and the Tribunal by final order No. 532/2001 dated 20.04.2001 while allowing the appeal filed by the Revenue had relied upon the larger bench judgment in the case of Balmer Lawrie & Co. Kanpur reported in 2000 (116) ELT 364 (T) wherein in para 20 it has held that a distinction h as to be made between procedural condition of technical nature and substantive condition. The relevant portion of the larger bench judgment is reproduced below:
"It is only a procedural technical condition so as to hold that its violation by making endorsement on the invoice by not maintaining the relevant records 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 substantive condition. It is the non observance only of former which is condonable while that of the later is not condonable as the same is likely to facilitate commission of fraud and introduce administrative inconvenience and mis use of the Modvat Credit"
This Bench also relied upon the larger bench decision presided over by Mr. Justice K. Sreedharan, Hon'ble President of the Tribunal, in the case of CCE, New Delhi AVIS Electronics Pvt. Ltd. reported in 2000 (117) ELT 571 (T) wherein it has been held that with regard to loss of duplicate copy of the invoice, during the period subsequent to 20.5.94 (date of insertion of Rule 57G (2A) of CE Rules, 1944), a combined reading of Rule 52A(3) and first proviso to Rule 57G(2) and Rule 57G(2A) makes it clear that a manufacturer could take credit only on the basis of duplicate copy of the invoice and where the duplicate copy has been lost in transit, he could take credit on the basis of the original copy of the invoice provided he satisfies the Assistant Commissioner about the loss of the duplicate copy. This was a mandatory requirement and not a mere technicality and the contrary view taken in the case reported 1998 (98) ELT 164 (T) was not approved by the larger Bench. The Tribunal also held that credit is not admissible in cases where the manufacture did not even care to inform the Assistant Commissioner about the loss of the duplicate copy. The respondent never informed the Assistant Commissioner about loss of duplicate copy and never sought condonation by filing copy of the FIR or other corroborative documentary evidence to support the plea of loss of original copy. The Tribunal had also interpreted the meaning of the term "in transit" and held that Transit is from Supplier of inputs to the office of the concerned Excise Officer and it cannot mean during transit only. The larger bench presided over by Mr. Justice K. Sreedharan, Hon'ble President in the case of Grasim Industries Ltd. v. CCE Indore reported in 2000 (117) ELT 551(T) has held that original invoice is not a valid document in the absence of any proof of loss of duplicate copy of the invoice in transit. We, are therefore of the considered view that if duplicate copy of the invoice which is modvatable has been lost in transit, the assessee should have placed all the particulars regarding loss of duplicate copy of the invoice and the fact of their taking Modvat Credit on the strength of the original copy before the Assistant Commissioner without suppression of any material fact. This is a very important document just like Cheque/DD on which the assessee can take credit to discharge the duty liability. In the present case, the respondents have not even cared to inform the Assistant Commissioner that duplicate copy has been lost in transit. The respondents have taken Modvat Credit of duty even on the basis of extra/Xerox copy of invoice issued by the dealers which did not contain details of the original consignment and some of the invoices did not bear their name as the consignee etc. The findings of the Commissioner (Appeals) that since these lapses are of technical nature which will not debar the appellants from getting the substantive benefit is not legal and proper and it has to be set aside in view of the larger bench in the case of Balmer Lawrie & co. v. CCE Kanpur and Grasim Industries Ltd. v. CCE Indore (supra). The Commissioner (Appeals) also referred to the judgment of the Hon'ble Bombay High Court in the case of Bombay Goods Transport Association reported in 1995 (77) ELT 521 (Bombay) wherein it has been held that Modvat Credit can be allowed where the original gate pass is lost, based on documents which will prove the duty paid nature of the goods. We observe that this judgment has not been considered by any of the Larger Bench. In view of the law laid down by the larger bench in the cited judgments, we are of the considered view that Modvat credit can only be taken on the basis of the duplicate copy and where the duplicate copy has been lost in transit, the assessee could take credit on the basis of the original copy of the invoice provided he satisfies the Assistant Commissioner/Dy Commissioner in charge of the Central Excise Division about the loss of the duplicate copy. In view of above, we set aside the impugned order and allow the appeals filed by the Revenue.
(Dictated and pronounced in open Court)