INVOICE SYSTEM - CBEC Manual (OLD) - Central Excise

CHAPTER 4 INVOICE SYSTEM 1. Introduction 1.1 A invoice is the document under cover of which the excisable goods are to be cleared by the manufacturer. This is also the document which indicates the assessment of the goods to duty. No excisable goods can be cleared except under an invoice. The invoice is the manufacturer's own document. As per rule 11(2) of the Central Excise Rules, 2002, an invoice should necessarily contain the registration number, name of the consignee, description, classification, time and date of removal, mode of transport, vehicle number (if any), rate of duty, quantity and value of goods and the duty payable thereon. 2. Removals only on invoice 2.1 Rule 11 of the Central Excise Rules, 2002 (hereinafter referred to as the said Rules) provides that no excisable goods shall be removed from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorised agent. 2.2 In respect of cigarettes, each invoice shall also be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise before the cigarettes are removed from the factory. If the factory is in operation for all 24 hours, the officers are rotated/posted for 24 hours. They check the operations of the assessee as per instructions, mutatis mutandis, contained in the Commodity Manual for Cigarettes. 12.3 A manufacturer of yams or fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58 or 60 or readymade 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 authorised agent. The provisions of sub-rules (2) to (5) of Rule 11 shall apply to the proforma invoice except that 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 this rule after making adjustments in respect of the goods rejected and returned by the buyer. The proforma invoice and the invoice issued in terms of this sub-rule shall have cross reference to each other by way of their serial numbers. 22.4 The said period of five working days, may be extended upto 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. 3. Serially numbering of invoice 3.1 The invoice shall be serially numbered and shall contain the registration number, name of consignee, mode of transport and vehicle number (if any) description, classification, time and date of removal, mode of transport, Vehicle number, if any, rate of duty, quantity and value of goods and the duty payable thereon. The serial number shall commence from 1st April every year [beginning of a financial year]. 3.2 .The serial number can be given at the time of printing or by using franking machine. But when the invoice book is authenticated in the manner specified in sub-rule (5) of rule 11, each foil of the invoice book should contain serial number before being brought into use. Hand written serial number shall not be accepted. 3.3 In case of computer-generated invoice, the serial number may be allowed to be generated and printed by computer at the time of preparation of invoice ONLY IF the software is such that computer automatically generates the number and same number cannot be generated more than once. For this purpose, the Central Excise Officers may check the system/software from time to time. 4. Number of Invoice copies 4.1 The invoice shall be prepared in triplicate in the following manner, namely:- (i) The original copy being marked as ORIGINAL FOR BUYER; (ii) The duplicate copy being marked as DUPLICATE FOR TRANSPORTER; (iii) The triplicate copy being marked as TRIPLICATE FOR ASSESSEE. 4.2 The above requirement is mainly for Central Excise purposes. However, the assessee may make extra copies of invoice for his other requirements. But such copies shall be prominently marked " NOT FOR CENVAT PURPOSES" 5. Number of Invoice book 5.1 The sub-rule (4) of rule 11 of the said Rules provides that only one invoice book shall be in use at a time, unless otherwise allowed by the Deputy/Assistant Commissioner of Central Excise in the special facts and circumstances of each case. 5.2 The Board has decided that where assessee requires two different invoice books for the purposes of removals for home-consumption, and removals for export, they may do so by intimating the jurisdictional Deputy/Assistant Commissioner of Central Excise. 5.3 Wherever an assessee is allowed to maintain more than one invoice book, he should be asked to maintain different numerical serial numbers for the different sets. 5.4 In case of running stationary used in computers, the bound book shall not be insisted upon provided the stationary is pre-printed with distinctive names and marks of the assessee. After the invoices are prepared, the triplicate copy shall be retained in bound-book form. Where invoices are to be type written, the leaves have to be first taken out from the book for typing. In such cases also, the triplicate copy shall be retained in bound-book form. 6. Authentication of Invoices 6.1 The Sub rule (5) of rule 11 of the said Rules provides that the owner or working partner or Managing Director or Company Secretary or any person duly authorised for this purpose shall authenticate each foil of the invoice book. before being brought into use. Copy of the letter of authority should be submitted to the Range office. 7. Intimation of serial numbers 7.1 Sub rule (6) of rule 11 of the said Rule provides that before making use of the invoice book, the serial numbers of the same shall be intimated to the Superintendent of Central Excise having jurisdiction over the factory of the assessee. This can be done in writing by post/e-mail/fax/hand delivery or any other similar means. 8. First stage dealer or second stage dealer 8.1 The provisions of the rule 11 of the said Rules shall apply mutatis mutandis to goods supplied by a first stage dealer or a second stage dealer. The term First Stage dealer and Second Stage dealer shall have the meaning assigned to them in the Cenvat Credit Rules, 2002. (a ) "First stage dealer" means a dealer who purchases the goods directly from, - (i) the manufacturer under the cover of an invoice issued in terms of the provisions of 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 (ii) 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; (b) "Second stage dealer" means a dealer who purchases the goods from a first stage dealer; 8.2 Sub rule (3) of rule 7 of the Cenvat Credit Rules, 2002 provides that the credit of the duty on inputs and capital goods purchased from a first stage or second stage dealer shall be allowed only if the said dealer has maintained records indicating the fact that the inputs or capital goods were supplied from the stock on which the duty was paid by the manufacturer of such goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him.. 8.3 While the maintenance of proper records by the first stage or second stage dealers has been the requirement of the Central Excise Law, the pre authentication of invoices issued by second stage dealers/ dealers of imported goods by Central Excise officers has not been provided for. 9. Rounding off of duty in invoice 9.1 The amount of duty being shown in invoices issued under rule 11 of the said Rules should be rounded off to the nearest rupee as provided under Section 37D of the Central Excise Act, 1944 and the duty amount so rounded off should be indicated in words as well as in figures. 10. Preparation of invoices when goods are des patched because of their size thorugh more than one vehicle Considering the difficulties faced by the manufacturers in documentation where a consignment of capital goods like heavy machinery, etc. which are first assembled by the manufacturer and are later disassembled only for the convenience of transport is loaded in more than one vehicle and carried separately or at intervals, the following procedure should be followed :- (i) The manufacturer will intimate, on case to case basis, his option to avail this special procedure in writing for the complete machinery sought to be cleared in a number of individual part consignments after first being assembled, to the jurisdictional Deputy/Assistant Commissioner of Central Excise with a copy to the jurisdictional Superintendent of Central Excise along with the description of such machinery/equipment giving its tariff classification and list of components of such machinery/equipment in dis-assembled form and its value and an undertaking in the following format :- I / We _____________________ hereby undertake that only those components of a 'complete machinery' in terms of rule 2(a) of the interpretative rules to CETA which have first been assembled and constitute complete machinery falling under a single heading or sub heading, and which are later dis-assembled only for the convenience of transport shall be cleared under this procedure on payment of entire duty as per the classification of such machinery / equipment and no 'parts' not satisfying this criterion shall be transported with such components unless appropriate Central Excise duty as prescribed for 'parts' under the Central Excise Tariff Act, 1985 is paid. Date: Place: (Authorised Signatory) These intimations shall be given at least 48 hours prior to the removal on any working day. (ii) Though separate verification need not necessarily be made for each and every consignment, before the removal of the first consignment, the Deputy/Assistant Commissioner should verify that the various part consignments are indeed constituents of the complete machinery which has been first assembled. (iii) A separate invoice shall be made out in respect of each conveyance on which the part consignment is loaded. (iv) The manufacturer will pay the entire duty on the first such invoice (hereinafter referred to as "Parent invoice") on the basis of entire value of the machinery unit/equipment. This parent invoice shall be prepared quoting all vehicle numbers, total value/duty of the consignment. An inventory shall be annexed to the invoice giving detailed item-wise description as loaded in different vehicles. (v) The details of removals and duty payment shall be entered in Daily StockAccount. (vi) Photocopy of the duplicate copy of the parent invoice duly attested by the authorised signatory of the Company shall accompany each conveyance. (vii) CENVAT credit, if any, shall be taken only on receipt of parent invoice and the entire consignment. (viii) Where the part consignments travelling in a convoy or separately do not constitute" complete machinery" falling under a single heading or sub-heading, each such consignment will be classified on merits, say, as 'parts' and also a separate invoice showing the separate value arrived at under Section 4 of Central Excise Act, 1944 and the duty amount, must accompany each such consignment. II. Weighment of goods outside factory before preparing invoices 11.1 In certain cases, due to non-availability of weighbridges inside the factory, goods have to be loaded in vehicle and weighed outside the factory. The permission may be granted by Deputy/Assistant Commissioner, considering the exceptional nature of goods, for a period of one year at a time. A pre-printed serially numbered Challan may be prescribed, which will be authenticated in advance by the Superintendent or Inspector of the jurisdictional Range Office. The assessee will also maintain a record of such outward and inward movements, indicating date and time. Weighment should be done at the weighbridge nearest to the factory. The challan numbers shall be quoted on invoice. The Superintendent or inspector of the jurisdictional Range office will verify the challans and weighment slips randomly, at least once every month. If nothing adverse comes to notice, the permission may be renewed. Assessee should, however, be advised to install their own weighbridge inside the factory. 12. Cancellation of invoices 12.1 When an assessee is compelled to cancel an invoice, the following actions should be taken :- (i) Intimation of a cancelled invoice should be sent to the range Superintendent on the same date, whenever possible. However, in case of exceptional circumstances beyond the control of assessee should this not be possible, the intimation should be sent on the next working day; (ii) Along with the intimation of the cancelled invoice sent to the range Superintendent the original copy of the cancelled invoice should also be sent. (iii) Triplicate copy of the cancelled invoice may be retained by the assesseè in the invoice book so that the same can be produced whenever required by audit parties, preventive parties and other visiting officers. PART II TRANSHIPMENT 1. Procedure of Transhipment of goods en route final destination 1.1 The transhipment of goods from one vehicle to other vehicle(s) en route the destination(s) can be of two categories :- (a) Where the entire quantity is transshipped from one vehicle to another vehicle, which may be on account of — (i) Breakdowns; (ii) Non-availability of inter-state transport permit. (b) Where the consignment originally cleared on an invoice issued under Rule 11, is required to be split up en route for transport by different vehicle on account of — (i) Breakdown of the original vehicle and non-availability of the substitute vehicle of the appropriate capacity, or (ii) Requirement of splitting up of the consignment and loading in vehicle other than the vehicle on which goods were cleared from the factory, or (iii) Part consignment/package(s) misplaced during transshipment, but recovered later on. 1.2 Regarding category (a) and (b), the owner of goods or his agent or the person in charge of the vehicle, at the material time, acting as his agent, shall make a suitable endorsement at the back of the transport's copy of the invoice accompanying the consignment indicating the date and time of breakdown of the vehicle and the registration number of the new vehicle in which the consignment is re-loaded, 1.3 In cases of splitting up and transhipment on account of any other reason, including pre-determined distribution of goods from an intermediate point, the assessee should prepare separate invoice for each lot. At the intermediate point, the owner of goods or his agent or the person in charge of the original vehicle shall endorse the registration number of new vehicle. Upon receipt of goods in the factory, the assessee shall confirm by endorsing on the invoice that the goods were received in the factory in the specified vehicle. PART-Ill SPECIAL PROCEDURE FOR REMOVAL OF LIQUID GASES PASS-OUT SYSTEM 1. Special procedure 1.1 Removal of liquid gases will be permitted in a tanker from the factory of the manufacturer on provisional determination of Central Excise duty liability and provisional entry in Daily Stock Account maintained under rule 10 of the Central Excise Rules, 2002 (hereinafter referred to as the said Rules), at the time of clearance from the factory. The invoice under rule 11 of the said Rules will be allowed to be prepared afterwards and the duty will be discharged under the provisions of rule 8 of the said Rules, subject to the observance of the following procedure (a) The assessee shall submit a written request to the Assistant! Deputy Commissioner of Central Excise having jurisdiction over the factory along with an undertaking that he shall abide by all conditions and restrictions as may be specified, for permitting the Pass-Out System for removal of Liquid Gases. (b) The liquid gases shall be removed in the tanker under the Pass-out document as per duly filled in proforma (See Annexure-9 in Part 7). (c) The pass-out document shall indicate, inter alia, the description, net quantity of goods being despatched (gross weight minus tare weight of tanker), and duty liability on such net quantity. (d) This net quantity and duty leviable thereon (provisional) shall be provisionally entered/recorded in the Daily Stock Account at the time of clearance from the factory. For the sake of clarity it is mentioned that such "provisional calculation of duty and provisional entry should not be construed as "Provisional assessment under rule 7 of the Rules". (e) The pass out document shall be made out in triplicate by using double-side carbon paper. (f) All pass-out documents shall bear printed serial numbers and shall be pre-authenticated by the Inspector of Central Excise having jurisdiction over the factory before they are put to use. (g) The original and duplicate copy of the aforesaid document will accompany the goods to the destination. The assessees shall retain the Triplicate copy. 2.1 The quantity delivered to or received by each customer shall be recorded on original and duplicate copies of each pass-out document under the customer's signature. 2.2 On completion of deliveries, the quantity actually delivered, the quantity actually returned in tanker and the quantum of loss, if any, shall be duly recorded in the Daily Stock Account. The provisional entry relating to quantity of removal and the duty liability shall be converted into final entry in Daily Stock Account immediately after the return of the tanker (after a single trip / transportation) or latest by next morning. 2.3 After return of the tanker, customer-wise invoice/Application for Removal may be prepared based on the quantity actually delivered. Central Excise duty where payable shall be determined and paid by the assessee in terms of rule 8 on the total quantity of the non-exempted liquid gases delivered to the customer and on the quantity of transit loss and other losses, if any. 2.4 In case both non-exempted and exempted deliveries are effected from the same tanker, the respective invoice/clearance document raised subsequently must indicate the nature of each delivery very distinctly. 2.5 In case of transit and/or other losses, the assessee shall be liable to pay Central Excise duty on the quantity of such losses as determined at the highest effective rate prevailing on the date of the consignment. The assessee shall give a written undertaking in this regard, on each copy of Pass-out document covering the goods. 2.6 All invoices! clearance documents shall be dated as per the date of despatch of the consignment and cross-reference shall be maintained in the pass- out document. 2.7. The original copy of the Pass-out document showing particulars of the quantity despatched, quantity delivered to the individual consignees/customers. Final entry No./date in Daily Stock Account including quantity returned and accounted for therein, shall be handed over to the Sector Officer immediately after the return of the lorry tanker and the final accountal. The consignor factory should obtain an acknowledgement for the submission of the original Pass-out document. The assessee shall retain the duplicate copy of the completed Pass-out document for his record. 2.8 Before filling the tanker for the next supply/clearance, the quantity of the goods already contained therein (left over undelivered goods of the previous supply) should be re-ascertained and any difference between the quantity returned from the previous clearance and the quantity re-ascertained as above shall be treated as storage loss within the factory on which the assessee shall be liable to pay duty. Such differential quantity and the particular duty thereon should be recorded in the appropriate column of Daily Stock Account. PART IV PROCEDURE FOR ACCOUNTAL OF PETROLEUM PRODUCTS MOVEMENT THROUGH PIPELINES WITHOUT PAYMENT OF DUTY The procedure of Accountal of Petroleum Products movements through pipelines without payment of duty is governed by instructions of Board vide letter 20/1/66-CX III dated 12.5.66 as amended by letter F.No. 11A/14/70-CX8 dated 7.6.71. 2. As per these instructions, the consignment wise ARE-3 is generated at the refinery end and the re conciliation is carried out annually. At the end of the year, the quantities of 'line fill' and 'intermix' are determined and the account of dispatch through the pipeline and receipts at various installations is submitted. The gain and/or loss are determined after considering the quantities of 'line fill' and 'intermix'. 3. The system of consignment wise generation of ARE-3 is causing disputes in getting the warehousing certificates within the prescribed period of 90 days as it is not possible in the pipe line movement to identify the destination at the time of dispatch of petroleum products from refinery due to the pumping of the product continuously to multiple tap off points. 4. The Board in consultation with the oil companies prescribed the following procedure effective from 1.10.2002: (a) The refineries can generate one ARE-3 on quarterly basis for one product for one destination at the end of each quarter within fifteen days of the end of the quarter. In other words, if 'N' no. of the petroleum products are sent to 'N' no. of destinations, in each quarter there shall be N x N ARE-3 at the refinery end in each quarter. (It is felt that at the end of the quarter, the refinery should be able to know the destination product-wise). (b) The receiving Commissionerate at the tapping off points can issue the re-warehousing certificate ARE-3 wise as per the receipt at their end. These re-warehousing certificates should be acceptable to jurisdictional Central Excise Officer at refinery end in the first instance, though provisionally. (c) At the end of the year, when annual pipeline accountal takes place in the oil companies, the reconciliation can be carried out by way of a statement to be submitted by oil companies having refineries showing the actual quantity dispatched, the quantity re-warehoused and the gain and loss in respect of each product and each destination. (d) The annual account should be submitted by the oil companies within 60 days from the end of the financial year which should be certified by a firm of practicing Chartered Accountants. The necessary assessment order may be issued within 60 days of the receipt of the annual account. (e) The requirement of D-3 intimation and consignment-wise AR 3A/Annexure-A/ARE-3 (See Annexures 25 59 in Part 7) may be dispensed with. (f) The limit of transit loss to be condoned shall be 0.25 percent as per the existing guidelines. (g) Wherever the imported and indigenous products are involved, the annual reconciliation statement should give the details separately for the purpose of reconciliation. (h) Wherever shortages occur, the assessment may ordinarily be carried out on the basis of highest value and highest rate of duty applicable for the particular product during the quarter! period under consideration unless the assessee establishes that the shortages relate to a particular batch for which the value and rate of duty is not in dispute. 5. The above procedure shall be applicable to new as well as existing pipelines. It may be seen that for the purpose of filing ER-i, the quantity cleared without payment of duty is required to be mentioned which should be available with the refineries in terms of total quantity dispatched without payment of duty. 6. The duty demand for the shortage assignable to a particular quarter can be raised at the end of the quarter. For all other shortages not assignable to a particular period, demands may be raised if necessary, at the end of the year when the annual reconciliation statement is available. Regarding the limit of condonation of losses, it may be emphasized that this is the maximum limit to which the losses can be condoned. If it is felt that there is improper accountal of the goods or the condonation which is claimed by the assessee is not supported by the documents, action to safeguard the interest of the revenue should be taken. it[may be seen that some of these instructions may not hold good in view of withdrawal of warehousing provisions to specified petroleum products w.e.f 6.9.2004.1