INVOICE SYSTEM UNDER CENTRAL EXCISE ACT, 1944

[Mr. M. GOVINDARAJAN]

PAYMENT OF EXCISE DUTY:

Rule 4 of Central Excise Rules, 2002 provides that every person who produces or manufactures any excisable goods, or who stores such goods in a warehouse shall pay the duty leviable on such goods in the manner provided in Rule 8 or under any other law, and no excisable goods, on which duty is payable, shall be removed without payment of duty from any place, where they are produced or manufactured, or from a warehouse, unless otherwise provided.

INVOICE:

Rule 11 provides that no excisable goods shall be removed from a factory or a warehouse except under an invoiced by signed by the owner of the factor or his authorized agent and in the case of cigarettes such invoice shall be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise before the cigarettes are removed from the factory.

CONTENTS:

The invoice shall be serially numbered and shall contain-

·        the registration number;

·        address of the concerned Central Excise Division;

·        name of the consignee;

·        description;

·        classification;

·        time and date of removal;

·        mode of transport and vehicle registration number;

·        rate of duty;

·        quantity and value of goods; and

·        duty payable thereon.

In case of a proprietary concern or a business owned by Hindu Undivided Family, the name of the proprietor or Hindu Undivided Family, as the case may be, shall also be mentioned in the invoice.

PREPARATION:     

The invoice shall be prepared in triplicate in the following manner, namely:-

·        the original copy being marked as ORIGINAL FOR BUYER;

·        the duplicate copy being marked as DUPLICATE FOR TRANSPORTER;

·        the triplicate copy being marked as TRIPLICATE FOR ASSESSEE.

USING OF INVOICE:

Only one copy of invoice book shall be in use at a time, unless otherwise allowed by the Assistant Commissioner of Central Excise, or the Deputy Commissioner of Central Excise, as the case may be, in the special facts and circumstances of the case.   The owner or working partner or the Managing Director or the Company Secretary or any person duly authorized for this purpose shall authenticate each foil of the invoice book before being brought into use. Before making use of the invoice book the serial numbers of the same shall be intimated to the Superintendent of Central Excise having jurisdiction.

PROFORMA INVOICE:

A manufacturer of yarns or fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58 or 60 or ready made garments falling under Chapter 61 or 62 of First Schedule to the Tariff Act may remove the said goods under a proforma invoice signed by him or his authorized agent. The provisions relating to invoice as discussed above shall apply to the proforma invoice except the said invoice shall not contain the details of the duty payable.

The manufacturer shall, within five working days from the issuance of the proforma invoice prepare the invoice in terms of the Rule after making adjustments in respect of goods rejected and returned by the buyer. The said period of five working may be extended up to a period not exceeding twenty one days inclusive of the said period of five working days by the Commissioner of Central Excise, on receipt of a request from the said manufacturer.

DEALER:

First stage dealer is not defined under Central Excise Act or Rules. Likewise 'second stage dealer' is not also defined. Rule 2(ii) of CENVAT Credit Rules, 2004 defines 'first stage dealer' as a dealer who purchases the goods directly from-

·        the manufacturer under the cover of an invoice issued in terms of the provisions of the Central Excise Rules, 2002 or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer; or from any other premises from where the goods are sold by or on behalf of the said manufacturer under cover of an invoice; or an importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice.

Rule 2(s) of CENVAT Credit Rules, 2004 defines 'second stage dealer' as a dealer who purchases the goods from a first stage dealer.

The provisions of Rule 11 shall apply mutatis mutandis to goods supplied by a first stage dealer or a second stage dealer.

In the case of the first stage dealer receiving imported goods under an invoice bearing an indication that the credit of additional duty of customs levied on the said goods under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 shall not be admissible, the said dealer on the resale of the said imported goods, indicate in the invoice issued by him that no credit of the additional duty levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible.

In the case of the second stage dealer receiving the imported goods  under an invoice bearing an indication that the credit of additional duty of customs levied on the said goods under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 shall not be admissible, the said dealer on the resale of the said imported goods, indicate in  the invoice issued by him that no credit of the additional duty levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible.

PENALTY:

Rule 26(2) provides that any person who issues-

·        an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or

·        any other document or abets in making such document, on the basis of which the user of the said invoice or document is likely to take or has taken any ineligible benefit under the Act or under rules made there under like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees whichever is greater.

CASE LAWS:

1. Steel Tubes of India Ltd., V. Commissioner of Central Excise, Indore  - 2009 -TMI - 35028 - CESTAT, NEW DELHI [LB]

It was held that supply of invoices without the actual supply of raw material would not invite penal action in terms of rule 209 A of Central Excise Rules (erstwhile) in as much as no excisable goods are dealt with.

2. Bhikkamal Chhotelal V. Commissioner of Central Excise, Bhavnagar - 2009 -TMI - 35029 - CESTAT, AHMEDABAD

The challenge in the present appeal is only to penalty imposed upon the appellant in terms of provisions of Rule 26 of Central Excise Rules on the findings that they have provided invoices to M/s India Power Steels Limited without actually supplying the inputs. The appellants relied on the judgment in 'Steel Tubes of India Ltd.,' (supra). The Tribunal held inasmuch as the provisions of Rule 26 are pari materia to the provisions of erstwhile Rule 209A the ratio of the above decision would apply to the facts of the instant case. The Tribunal set aside the penalty imposed upon the appellant and allowed the appeal.

3. Commissioner of Central Excise, Chandigarh V. Ashish Gupta - 2009 -TMI - 35030 - CESTAT, NEW DELHI

The respondent issued invoices without delivery of goods on the basis of which the manufacturer availed ineligible benefit of cenvat credit. The Adjudicating Authority imposed penalty of Rs. 1 lakh on the respondents under Rule 209A of the erstwhile Central Excise Rules, 1994. The Commissioner set aside the penalty. Hence Revenue filed this appeal. The main contention of the respondent is that the imposition of penalty under rule 209A of the erstwhile Act is not sustainable in the present situation.  The Tribunal did not find any infirmity in the order of the Commissioner (Appeals). The Tribunal rejected the appeal filed by the Revenue.

4. Ispat Profiles India Limited V. Commissioner of Central Excise, Pune - 2009 -TMI - 35031 - CESTAT, MUMBAI

The appellant has taken credit on the basis of invoices where 'duplicate for transporter' is not marked. It is settled law that credit on such invoice need not be denied and this is only technical error.

The appellant also has taken the credit of invoices where serial numbers were not marked. Sl. No. was typed on the invoices and in some invoices, Sl. No. was stamped by a rubber stamp. The Tribunal held that the issue is no more res integra and the appellant has made out a case for availment of credit.

5. EBG India Pvt. Ltd. V. Commissioner of Central Excise, Nasik - 2009 -TMI - 35032 - CESTAT, MUMBAI

Supplementary invoice evidencing payment of additional duty is not to be treated on a different footing vis-a-vis the original invoices evidencing original payment of duty on said goods inasmuch as both these documents were issued under the same provisions of law.