2008 (8) TMI 224 - HC - Central Excise

Credit availed against invoice on which serial number was hand written - Tribunal was not right in allowing the Modvat credit on the strength of the invoices which did not specify the provisions/criteria laid down under Rules 52A and 57GG of the Rules and also the Notification No. 23/05-C.E. (N.T.) and Trade notice No. 58-CE/95 - held that in order to avail Credit invoices should be pre-printed/numbered and not hand written such requirement is not procedural but mandatory

Summary

Issues Involved:
1. Whether the requirement of printing the serial number on the invoice as provided under Rule 52A(6) of the Central Excise Rules, 1944, is a statutory requirement for availing benefit under the Modvat Scheme.

Issue-wise Detailed Analysis:

1. Statutory Requirement of Pre-printed Serial Number on Invoice:
The core issue revolves around whether the serial number on the invoice must be pre-printed to avail Modvat credit under Rule 52A(6) of the Central Excise Rules, 1944. The assessee, engaged in manufacturing computer monitors, availed Modvat credit based on an invoice where the serial number was handwritten. This was deemed a contravention of Rules 52A and 57A, leading to a show-cause notice and subsequent recovery order by the Deputy Commissioner, which included a penalty and interest.

2. Tribunal's Findings:
The Customs, Excise, and Gold (Control) Appellate Tribunal, New Delhi, dismissed the Revenue's appeal, holding that the substantive benefit of Modvat credit could not be denied merely because the serial number was handwritten. The Tribunal viewed this as a technical lapse, not a serious offense, and consistent with its previous decisions.

3. Legal Provisions and Notifications:
Rule 52A(6) and Notification dated 16-11-1995 mandate that the invoice details, including the serial number, must be pre-printed. The notification explicitly prohibits rubber stamping and any deviation from this procedure is considered a violation. Rule 57GG also requires specific details to be pre-printed on the invoice, emphasizing the importance of pre-printed information to prevent fraud and double credits.

4. Purpose of the Notification:
The notification aims to curb fraudulent practices such as taking double credits against a single consignment by falsifying documents. The stringent requirement for pre-printed details is a measure to detect and prevent such frauds, as highlighted by Circular No. 68/68/94-CX.

5. Interpretation of "Pre-print":
The term "pre-print" means to print in advance. The statutory requirement is clear and unambiguous, necessitating that certain particulars, including the serial number, must be pre-printed to comply with Rule 57G and Rule 52A.

6. Compliance with Statutory Provisions:
The court emphasized that compliance with the statutory provisions is mandatory and not merely procedural. The legislative intent behind these provisions is to ensure strict adherence to prevent fraud. The requirement for pre-printed invoices is fundamental and non-compliance renders the invoice invalid for availing Modvat credit.

7. Relevant Case Law:
The court referred to the Supreme Court decision in Indian Aluminium Company Limited v. Thane Municipal Corporation, which underscores the necessity of fulfilling procedural requirements of law. The court also distinguished the present case from Shree Hari Chemicals Export Ltd. v. Union of India, where procedural lapses were deemed non-fatal, asserting that the current statutory requirements are mandatory.

8. Disagreement with Other Judgments:
The court respectfully disagreed with the Rajasthan High Court's decision in J.K. Industries Ltd. v. Union of India, which suggested that lapses by the dealer should not disqualify the assessee from credit. The court reiterated that even procedural requirements must be strictly complied with, as held in Shree Hari Chemicals Export Ltd.

Conclusion:
The court concluded that the Tribunal erred in allowing Modvat credit based on handwritten serial numbers. The statutory and notification requirements are mandatory, and non-compliance invalidates the claim for Modvat credit. Consequently, the orders of the Commissioner (Appeals) and the Tribunal were set aside, and the question of law was answered affirmatively, reinforcing the necessity of pre-printed serial numbers on invoices for availing Modvat credit.