2008 (9) TMI 323 - HC - Central Excise

Modvat / Cenvat Credit Colours of Invoices Duty paying documents tribunal allowed modvat credit on the basis of an invoice which was not duplicate for transporter copy of the invoice as prescribed under provision of Rule 52A read with Rule 57G of the Central Excise Rules, 1944 for taking modvat credit held that the rule specifically provides that the invoices should be in different colours and each invoice should be marked separately for the buyer, transporter, Excise and assessee. The purpose behind this is to ensure that for the same transaction the assessee does not claim credit more than once. Therefore, the Assessing Officer in both the cases was absolutely right in holding that if the assessee does not comply with the provisions of the Act and Rules, he cannot take the benefit of the same.

Summary

Issues:
Claiming modvat credit on non-compliant invoices.

Analysis:
The judgment by the High Court of Himachal Pradesh dealt with two reference petitions regarding the correctness of allowing modvat credit based on invoices not meeting the prescribed requirements. In the first case (Excise Reference No. 14 of 2000), the assessee claimed modvat credit without the necessary marking of "duplicate for transporter" on the invoice, which is a mandatory rule. The original, duplicate, triplicate, and quadruplicate copies of the invoice are meant for different parties and should be printed in distinct colors. However, in this case, all copies were printed in the same color with common markings, leading to non-compliance. The Assessing Officer rightly denied the credit and imposed a penalty, a decision overturned by the Tribunal in a vague manner. The second case (Excise Reference No. 2 of 2001) involved a similar scenario where the invoice did not appear to be the transporter's copy due to a misprint. The Assessing Officer directed credit recovery and imposed a penalty, but the Appellate Authority allowed the appeal without proper justification.

The court emphasized the importance of compliance with conditions to avail of any rebate or benefit, citing the Mihir Textiles Ltd. case where it was held that conditions for rebates must be satisfied. Referring to a previous case, the court reiterated that the requirements regarding invoices in different colors and marked for specific parties are mandatory, not procedural. This is crucial to prevent fraudulent claims and ensure accurate credit allocation for each transaction. The legislative intent behind these rules is clear, aiming to prevent misuse and double claiming of credits. Therefore, the court upheld the Assessing Officer's decisions in both cases, emphasizing that non-compliance with statutory provisions disqualifies an assessee from availing benefits.

In conclusion, the High Court ruled in favor of the revenue and against the assessee in both cases, setting aside the Tribunal's orders and restoring the Assessing Officer's decisions. The judgment underscores the significance of adhering to statutory requirements for claiming modvat credit, ensuring transparency and preventing fraudulent practices in excise matters.