Commissioner, Central Excise vs Vandana Energy And Steel Pvt. Ltd.

on 21 August, 2007

Customs, Excise and Gold Tribunal - Delhi Customs, Excise and Gold Tribunal - Delhi Commissioner, Central Excise vs Vandana Energy And Steel Pvt. Ltd. on 21 August, 2007 Equivalent citations: 2008 (223) ELT 83 Tri Del Bench: R Abichandani ORDER R.K. Abichandani, J. (President) 1. The Revenue has challenged the order of the Commissioner (Appeals) by which, the order-in-original made by the Assistant Commissioner disallowing the modvat credit of Rs. 80,562/- was set-aside. 2. The assessee was manufacturing ferro alloys and availing cenvat credit under the Cenvat Credit Rules, 2000. It has availed credit of Rs. 80,562/- on the basis of the office copy of the extra copy of the invoices issued by the supplier of the goods. During the scrutiny of the ER-1 return for April 2004, it was detected that cenvat credit was availed on the basis of the photocopy of the office copy of extra copy of invoices. 3. The adjudicating authority on the basis of the material on record found that the assessee never received the invoices in question or that they may have been lost before the goods said to be covered by them were received in the factory. It was, therefore, held that cenvat credit was not allowable to the assessee. 4. The Appellate Commissioner held that the appellant had lost both copies of invoices i.e. 'original for the buyer' and 'duplicate for transporter' and it had filed the complaint about such loss with the Police. The learned Appellate Commissioner held that it would be unjust to deprive the assessee of its legitimate claim of credit only because it has lost the invoices which was merely an accident. Relying upon the decision of the Tribunal in the case of Dhaulagiree Polyolefins (Pvt.) Ltd., v. CCE reported in 2002 (147) ELT 843 (Tri.) and in Vikram Ispat v. CCE , it was held that since misuse of lost invoices for the purpose of availing credit by a third party, was not possible and there was no provision for taking credit on endorsed invoices under the Cenvat Credit Rules, the credit was required to be allowed on the certified copy of invoice because there was no other allegation against the assessee. He, therefore, set-aside the order of the adjudicating authority and allowed the credit on "certified copies of invoices". However, as a precautionary measure, it was directed that the adjudicating authority should obtain invoices from the appellant and send them to the jurisdictional Range Superintendent for certification about the genuineness and correctness of invoices, the transaction, and duty payment particulars on the invoices. 5. It appears that the learned Commissioner (Appeals) has not appreciated that modvat credit was sought only on the basis of photocopies of the extra copies of the invoices. He has erroneously observed that these were certified copies of the original invoices. 5.1 Certified copies may be produced in proof of the contents of the public documents or parts of public documents of which they purport to be copies, as provided under Section 77 of the Evidence Act. The certified copies of public document can be issued as provided by Section 76 of the Evidence Act. Every public officer having the custody of a public document, which any person has a right to inspect, shall give that person on demand, a copy of it on payment of the legal fees there for, together with a certificate written at the foot of such copy that it is a true copy of such document or part thereof, as the case may be, and such certificate shall be required to be dated and subscribed by such officer with his name and his official title, and is required to be sealed, whenever such officer is authorized by law to make use of a seal; and such copies so certified are called "certified copies", as provided in Section 76 of the Evidence Act. By relying upon certified copy of extra copy of an invoice, the Appellate Commissioner has obviously undermined the requirement to claim the credit on the basis of the copy of the duplicate copy of the invoice under which the goods are transported. Under the erstwhile Rules of 1944 where such duplicate copy of invoice under the cover of which
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Commissioner, Central Excise vs Vandana Energy And Steel Pvt. Ltd. on 21 August, 2007

the goods were transported and received in the factory of the buyer was lost, there was a provision permitting to claim the credit on the basis of the original document meant for the buyer. This was so because the transporter will carry the duplicate copy of the invoice which was recognized for taking modvat credit since the genuineness of the receipt of the goods through the transporter would have the cover of that duplicate copy of the invoice entrusted to such transporter. As per Sub-rule (5)(ii) of Rule 57GG, the duplicate copy to be marked as 'duplicate for transporter' was to be used for taking credit under Rule 57G. Therefore, the buyer would be entitled to take that 'duplicate for transporter' copy and get the credit. Should that be lost under Sub-rule (6) of Rule 57G, he could claim the credit on the basis of the original invoice. To rely upon a photocopy and that too of some extra copy of the invoice for allowing cenvat credit would open a door for unscrupulous passes to take wrong credit. Much emphasis has been laid under the rules about the nature and contents of the copies which are to be prepared. The transporter's copy has its own significance because the goods are carried under its cover and received in the factory through the transporter. 5.2 In this context, it will be noted that a full bench of this Tribunal in CCE, New Delhi v. Avis Electronics Pvt. Ltd., has, in terms, held in paragraph 11 of the judgment that, the manufacturer was not authorized to avail the credit on the basis of a photocopy, which was impermissible. In para 8 of the judgment, it was held that insistence on document evidencing payment of duty on the inputs as prescribed by Rules was not a mere technicality to be complied with for availing modvat credit. 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. It was held that 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. Therefore, under the scheme of the provisions of the cenvat credit, there is no scope for availing modvat credit under the cover of a photocopy of some extra copy of an invoice. 5.3 In fact, the CBEC had issued a circular on 30.2.1995, in paragraph 10(d) of which, it was stated, "in no circumstances photocopy shall be accepted". In A.C.C. Ltd., v. CCE, Chandigarh , it was observed, in paragraph 5 of the judgment, that there was no provision in the modvat rules for allowing credit on extra copy of the invoice. The modvat credit was, therefore, held to be correctly denied. In V.S.L. Alloys India (Pvt.) Limited v. CCE, Meerut , the Tribunal held, in para 7 of the judgment, that since credit could be taken on duplicate copy of invoice under the modvat scheme, the Assistant Collector had correctly held it to be inadmissible since it was taken on wrong documentation. In CCE, Pondicherry v. EID Parry (I) Ltd., , it was held that, it was settled law that, for availing modvat credit on the basis of original copy of invoice, prior permission of the Assistant Commissioner had to be obtained during the material period. Any credit taken without such permission would not be admissible as held by the Larger Bench in the case of Avis Electronics (supra). In Paranjape Metal Shapers (P) Ltd., v. CCE, Aurangabad reported in 2004 (175) ELT 543 (Tri. Mumbai), credit taken on the basis of zerox copy of invoice was held to be correctly denied. 6. In view of the decision of the Larger Bench in Avis Electronics Pvt. Ltd., (supra), that credit on the basis of the photocopy was clearly impermissible, and the circular of the Board dated 13.02.1995 stating that in no circumstances photocopy shall be accepted, there is no scope for allowing cenvat credit on the basis of a photocopy of the invoice. The impugned order of the Commissioner cannot, therefore, be sustained and is hereby set-aside. The order of the adjudicating authority stands restored. The appeal is accordingly, allowed. (Order dictated and pronounced in the open Court)

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