ORDER
P.S. Bajaj, Member (J)
1. The following two issues have been referred to the Larger Bench :-
(1) whether the invoices issued by the unregistered dealers can be accepted as valid documents for claiming Modvat credit and
(2) whether the endorsed invoices can be considered as valid documents for claiming Modvat credit after 1-4-1994.
2. The first issue has arisen on account of conflicting views rendered by different Benches of the Tribunal as is evident from the reference order made in Appeal No. E/2138/97-NB. Injayana Time Industries v. C.C.E., Meerut, 1997 (93) E.L.T. 245, the Tribunal disallowed the Modvat credit on the strength of invoices issued by unregistered dealers while in Bengal Safety Industries v. C.C.E. [1997 (18) RLT 241] Sandish Combine Pvt. Ltd. v. C.C.E., 1999 (105) E.L.T. 468, C.C.E. v. Colour Coats, 1998 (26) RLT 403, Pearl Industries v. C.C.E., Raipur, 1998 (98) E.L.T. 745 (T) and Shiv Iron Brass Works v. C.C.E., New Delhi decided vide Final Order No. A/2095/96-NB, dated 22-8-1996 the Tribunal had taken the view that the invoices issued by the unregistered dealers were valid documents by holding that the Notification No. 32/94, dated 4th July, 1994 requiring registration of the dealer issuing the invoices, is only part of procedural law and not mandatory while contrary view has been taken in (1) Konark Cylinders & Containers Pvt. Ltd. v. Commissioner, (2) Poddar Udyog Ltd. v. Commissioner, 1997 (95) E.L.T. 438 (T) and (3) Jenny Plywood Industries Ltd. v. Commissioner, 1997 (96) E.L.T. 606 (T) wherein it has been held that the invoices issued by the unregistered dealer are valid documents for claiming Modvat credit even if he failed to get himself registered in terms of Notification No. 32/94, dated 4th July, 1994 and Board’s Circular No. 76/94-C.E. (N.T.), dated 18-11-1994, upto 31-12-1994.
3. The necessity for making reference of second issue had arisen on account of conflicting/inconsistent views expressed by various Benches of the Tribunal in different cases. In
(1) Tumkur Conductors Pvt. Ltd. v. Commissioner – 1997 (96) E.L.T. 595 (T) (DB)
(2) Superpax India Pvt. Ltd. v. Collector – 1997 (96) E.L.T. 144 (T) (DB)
(3) Maharaja International Ltd. v. C.C.E. – 1996 (86) E.L.T. 528 (T) (DB)
(4) Prakash Cotton Mills Ltd. v. Commissioner – 1996 (85) E.L.T. 149 (T) (DB)
(5) Maharaja International Ltd. v. Collector – 1996 (84) E.L.T. 466 (T) (DB)
(6) Krishna Insulation v. Collector – 1996 (84) E.L.T. 220 (T)
(7) Collector v. Bharat Wire Products – 1998 (99) E.L.T. 297
(8) Krishna Cold Rolled Sections Ltd. v. Commissioner 1996 (88) E.L.T. 98 (T) (SM)
(9) Commissioner v. Rajalakshmi Mills – 1999 (113) E.L.T. 276 (T) (DB)
the Tribunal had opined that the endorsed invoices are valid documents for claiming Modvat credit even after 1-4-1994 onwards. But contrary view has been expressed in –
(1) Konark Cylinders & Containers Pvt. Ltd. v. Commissioner [1998 (24) RLT 270 (T) (DB)].
(2) Poddar Udyog Ltd. v. Commissioner – 1997 (95) E.L.T. 438 (T) (SM)
(3) Jenny Plywood Industries Ltd. v. Commissioner – 1997 (96) E.L.T. 606 (T) (SM)
4. We proceed to deal with both the above referred questions one by one.
5. In respect of the first issue the Counsel for the assessee has contended that registration of a dealer issuing the invoice for claiming Modvat credit,.in terms of Notification No. 32/94.. dated 4th July, 1994 is only a procedural matter and deviation therefrom does not render the invoice issued by him as invalid document for the purpose of Modvat credit as all that the Revenue department is required to examine is that the goods covered by the invoice were duty paid and had been actually used or were intended to be used, in the final product by the claimant of the Modvat credit and if this condition stands satisfied, the non-registration of the dealer issuing the invoice subsequent to the issuance of the notification in question and even upto 31-12-1994 the date extended for registration by the Board vide Board Circular No. 76/94-C.E. (N.T.), 8-12-1994, become immaterial. In support of this contention the Counsel has tried to derive support from the law laid down earlier by the Tribunal in the cases referred to above.
6. On the other hand, the learned DRs have argued that the condition prescribed in the Notification 32/94-C.E., dated 4th July, 1994 regarding the registration of the dealer issuing the invoice under Rule 57G is mandatory as this condition had been prescribed only with a view to eliminate bogus, fictitous, benami traders from the commercial market and to bring more transparency in the trade and to avoid misuse of the Modvat credit schemes, therefore, the invoice issued by the unregistered trader cannot be accepted as valid documents for claiming Modvat credit under the Excise Law.
7. No doubt, prior to the issuance of the Notification No. 32/94, dated 4th July, 1994 the invoice/invoices could be issued under Rule 57G by a dealer of excisable goods irrespective of the fact whether he was registered or unregistered and Modvat credit on the basis of the same could be claimed under the Modvat Scheme on the inputs used or intended to be used in the manufacture of the final product, by the end user. But after the issuance of the above said Notification, substantive change had been brought in the earlier rule of law. The Notification No. 32/94 referred to above made it specific that the dealer of the excisable goods issuing the invoice, must be registered with the Central Excise Officer in order to make the invoice or invoices issued by him as valid document/documents for claiming Modvat credit in respect of the goods received under the cover of the same by the end user. Even specific Rule 57GG had been inserted in the Central Excise Rules of 1944 on the strength of this Notification. The Clause (1) of the said Rule enacts as under :-
“Every person who issues invoice or invoices under Rule 57G or as the case may be, under Rule 57T shall get registered under Rule 174.”
The other clauses of this rule enjoing duty on the dealer to maintain stock account in form RG 23D and to make correct entry in the same and also to keep his account registers all the times ready for the inspection by the officers and further requires him to give such details as may be specified by the Board, in the invoice or invoices issued by him.
8. Similarly, Rule 174 speaks of registration of certain persons. This rule mandates that every person who cures, produce, manufactures, carries on trade, deals as a broker or a commission agent holds private storeroom or warehouse or otherwise uses excisable goods or a person who issues invoice or invoices under Rule 57G or, Rule 57T shall get registered and shall not engage in the curing, production, manufacture, trade etc. or use excisable goods without having applied for such registration to the jurisdictional range officer or such officer in such forms as may be prescribed by the Board. The details to be furnished by him in the registration form had also been mentioned in Clause (2) of this Rule.
9. The language of Rule 57GG, which has been inserted in the statute on the strength of Notification 32/94, dated 4th July, 1994 and of Rule 174 is quite clear, unambiguous and leaves no doubt in ones mind that provisions of these rules are mandatory and do not simply relate to an area of procedure. From the conjoint reading of both these rules, it is quite evident that no one can deal with the excisable goods in any capacity such as trader, dealer, commission agent, broker without getting himself registered under the Central Excises Act. The invoice or invoices under Rule 57G, therefore, can be issued only by a registered dealer after the issuance of Notification No. 32/94 and only then the Modvat credit can be claimed on the strength of the same in respect of the goods mentioned, by the end user and not otherwise.
10. No doubt, the Revenue department, after issuance of the Notification No. 32/94 -C.E., dated 4th July, 1994 and insertion of Section 57GG on its basis in the statute issued instruction bearing No. 76/94-C.E. (N.T.), dated 8-11-1994, authorising the Assistant Collector to accept the invoices issued by those unregistered dealers who subsequently procured registration by 31st December, 1994. But this relaxation obviously was given in order to avoid any genuine difficulty to the end user of the inputs having purchased the same under the invoices issued immediately proceeding the issuance of the Notification No. 32/94-C.E. by an unregistered dealer in claiming the Modvat credit on the strength of those invoices as in the original Notification the last date of registration by the dealer, was not provided. But this relaxation given by the Revenue department, cannot by any logic be interpreted to mean, as contended by the counsel, that the condition of registration of a dealer issuing in voices under Rule 57GG, for claiming Modvat credit, was never intended to make compulsory or mandatory, but only fell within the area of procedure which could even be deviated or violated by the dealer if it was shown by the end user of the goods that the same were intended to be used or had been actually used, in relation to the manufacture of the final product and were duty paid. The words used in Rules 57GG and 174 referred to above are that the dealer of the excisable goods shall get himself registered. Both these rules are thus mandatory in nature, being based on consideration of Policy enacted with a view to eliminate bogus, fictitious, fraudulent, benami traders/dealers and the transactions conducted by them from the commercial market and to avoid misuse of the Modvat scheme not only by them but by the persons deriving title to the goods through them and further to bring transparency in the transactions. These rules being of substantive character and built in with certain objectives cannot, therefore, be called merely a procedural, the deviation of which can be permitted to be made by the dealer of the excisable goods with immunity. The very object of issuance of Notification No. 32/94 referred to above and insertion of Rules 57GG and 174 requiring the registration of the dealer dealing with the excisable goods, would stand defeated and nullified if these are taken to be only procedural and not mandatory/ imperative in character and enforcement.
11. Therefore, for claiming the Modvat credit the end user of the goods covered by the invoices has to satisfy the two conditions. Firstly, that the dealer who issued the invoice or invoices is a registered one, under Rule 174 of the Central Excise Rules and secondly that the goods covered by the invoice or invoices were intended to be used or had been actually used in the production of final product. If the very first condition regarding the registration of the dealer does not stand proved, the end user of the goods cannot claim Modvat credit on the basis of the invoices on the simple ground that the goods were intended to be used or had been actually used in the product of final product, as in the invoice proforma under Rule 57G or 57T appended by the Board as annexure ‘2E’ to the Central Excise Rules, the details regarding the Central Excise Registration No., Sales Tax Registration, Income Tax Registration numbers besides other details regarding the goods, had to be mentioned by the dealer issuing the invoice. It is for end user of the goods before making the purchase to satisfy himself that the dealer with whom he is dealing is registered under the Central Excise Act. If he purchases the goods from an unregistered dealer, then he has to blame himself and not the Revenue department, when he is disallowed Modvat credit in respect thereof. He cannot be legally permitted to take the benefit of Modvat credit scheme for having simply shown that the goods had been used by him in the manufacture of the final product. The Revenue Officer in that case has no discretion or power to allow the Modvat credit and to waive the mandatory condition regarding registration of the dealer who issued the invoice to the end user of the goods under Rule 57G.
12. In the light of what has been discussed above, invoice/invoices issued by a dealer who had failed to get himself registered upto 31-12-1994 cannot be legally treated as a valid document under Rules 57GG, 57T and 52A for claiming Modvat credit. Consequently, the law laid down in Sandish Combine Pvt. Ltd. v. C.C.E., Pune, C.C.E., Chandigarh v. Colour Coats, Pear Industries v. C.C.E., Raipur, Bengal Safety Industries v. C.C.E., Shiv Iron & Brass Works to the contrary, cannot be held to be correct.
13. This takes us to the second issue.
14. The controversy in this issue relates to the admissibility of the endorsed invoices as valid document for claiming Modvat credit after 1-4-1994. The facts and circumstances out of which this issue has sprung up may briefly be set out as the same would be convenient and beneficial for appreciating the respective contentions raised by the Counsel and the DR.
15. Prior to the issuance of Notification No. 15/94, dated 30-3-1994, gate passed besides Bill of Entry, AR-1 or any other document, as may be prescribed by the Central Board of Excise & Customs (CBEC), were accepted as valid documents under Rule 57G of the Central Excise Rules for claiming Modvat credit. Two endorsements on the gate pass were also made permissible by the CBEC vide dated 8-11-1994 but thereafter vide Notification No. 15/94, dated 30-3-1994 invoices in place of gate passes had been prescribed as valid documents along with AR-1 or Bill of Entry under Rule 57G by amending this Rule, for claiming Modvat credit. However, in order to avoid any inconvenience, difficulty to the genuine end user of the goods, it was made clear through Notification No. 16/94, dated 30-3-1994 that Modvat credit on the strength of gate passes issued before 1-4-1994 could be taken till or before 30-6-1994.
15. The contention raised by the learned Counsel for the appellants is that since endorsement of the gate passes before 1-4-1994 was permissible, the same should be deemed to be permissible of the invoices which had been substituted in their place after 1-4-1994 and if, not the Tribunal should allow endorsement of the invoices and permit of Modvat credit by the end user of the goods covered therein on the basis of those endorsed invoices. They have, further contended that by making endorsement on the invoices, the character of the invoices would not stand altered or changed as the goods covered by the invoices would remain duty paid and the use of those goods can be verified by the department before allowing Modvat credit to the concerned assessee.
16. On the other hand, the learned DR while reacting to the above referred arguments of the Counsel has contended that neither any deemed en dorsement of the invoices can be concluded from the wording of the Notification No. 15/94 and the amended provisions of Rule 57GG nor the Tribunal has power to allow by its order the endorsement of the invoices when the same had not been permitted by the Legislature. He has also contended that under the amended rules, the dealer has been permitted to issue fresh invoice if he wants to transfer the goods to a third party and specific proforma of the invoice had been prescribed for that purpose which is required to be filled in by him and as such no inconvenience can be said to had been caused by not permitting the endorsement of the invoices in the amended Rule 57G for claiming of the Modvat credit. Therefore, the endorsed invoice cannot be said to be valid document for claiming Modvat credit being not permissible under the Rules.
17. We have given our careful thought to the respective contentions and in our view the contention raised by the appellants cannot be accepted. No doubt, prior to 1-4-1994 and before the issuance of Notification No. 15/94, dated 30-3-1994 when gate passes were considered valid documents under which goods were cleared by the manufacture and also could be transferred by the dealer to a third party. But two endorsements of the gate passes were made permissible not on account of any provision to this fact in Rule 57G, as it stood at that time, but by virtue of F. No. 263/36/88-CX. 8, dated 23-1-1989, F.No. 263/19/89-CX. 8, dated 17-4-1989 and F, Bi, B. 22/88/86-TRU, dated 10-4-1986 trade notices on the strength of the instructions of the CBEC;. But when gate passes were omitted from Rule 57G, by issuance of Notification No. 15/94, dated 30-3-1994 and invoices were brought in their place as valid docu- ments under which the goods could be cleared from the factory by the manufacturer or could be further passed on by the dealer to the third party, the Board’s instructions automatically stood lapsed, exhausted and became inoperative. Undoubtedly no such instructions by the Government while issuing the Notification No. 15/94 replacing the gate passes with the invoices as valid document had been issued allowing endorsement of the invoices. The Central Government had vide Notification No. 16/94-C.E. (N.T.), dated 30-3-1994 only allowed that on the endorsed gate passes issued prior to 1-4-1994 Modvat credit could be taken on or before 30-6-1994, but not permitted the endorsement of the invoices. The Central Government had permitted the issuance of further invoices by the dealers, traders to the end user of the goods as is clear from the provisions of Rule 57GG but not endorsements of the same. This obviously has been done with a specific purpose in mind and as a policy matter with a view to put to an end the bogus, fictitious and benami transactions and passing on only of the documents by one dealer to another for claiming the Modvat credit. It has not been disputed before us by the Counsel that when endorsement on the gate passes was permissible before 1-4-1994, endorser was not required to make any entry regarding the receipt of the goods under those gate passes in any register or record whatsoever and he simply by sitting in the factory premises of the manufacturer, could make endorsement on the gate passes in favour of the interested party and it was not possible to the Revenue Department to ascertain if the goods had been actually changed hands and reached in the factory premises of the end user or not. To eliminate such transactions from the commercial scene, the endorsement of the invoices had not been made permissible by the Central Government after 1-4-1994. The traders or dealers had been only allowed to issue fresh invoice as and when they intend to transfer the goods to a third party. The proforma of the invoice to be issued has also been prescribed and that proforma is Annexure ‘2E’ appended to the Central Excise Rules. The bare perusal of the proforma shows that the person issuing the invoice has to disclose his Central Excise Registration No., Sales Tax Registration No., Permanent Income Tax Account No., description of the goods, identification or mark Nos., if any, quantity, invoice No., date and time of issue of the invoice, or of transportation, rate and amount of duty charged, name and address of the buyer, Including Central Excise Range and Registration No., Sales Tax Registration, Permanent Income Tax Registration Nos. of that buyer. He has also given the names and addresses of his supplier or suppliers, from whom he received the excisable goods. All this has been provided with a view to bring transparency in the transactions and to avoid fraudulent, fictitious, bogus claim of the Modvat credit by those who had never received the goods except endorsed documents. Filling of this invoices proforma has been made mandatory and only that person can claim the Modvat credit who is in possession of the same after 1-4-1994. The amendment made after this date in Rule 57G is also quite specific and mandatory in character. The amended portion of this Rule enacts as under :-
“No credit shall be taken unless the inputs are received in the factory under the cover of an invoice, issued under Rule 52A and AR-1 or Bill of Entry, a certificate issued by an appraiser of the Customs posted in Foreign Post Office, or any other document as prescribed by the Central Government by Notification in the Official Gazette in this behalf evidencing payment of duty on such inputs.”
Therefore, under these circumstances, it is neither permissible nor justiciable legally to infer the deemed facility of endorsement in respect of the invoices after 1-4-1994, as was available earlier on the gate passes, so as to make those invoices as valid documents for claiming Modvat credit. The Tribunal being not a law making body has no power to allow from its own side, any endorsement on the invoices and to declare that the invoice bearing endorsements would be accepted as valid documents for taking Modvat credit. Moreover, it is well settled that while construing a fiscal statute, plain meaning of the language has to be looked into and there is no room for any fiscal legislation. Unless there is ambiguity, it would not be open to the court to deviate from the rule of construction which is that the intention of the Legislature should be primarily gathered from the words which are used. It is only when the words used are ambiguous that they were sought to be examined and construed in the light of the surrounding circumstances and constitutional principles and practice. Even the Apex Court in Commissioner of Wealth Tax v. Smt. Hashmatunissa Begum [AIR 1989 SC 1024] has ruled as under :-
“The rule of construction that if the statutory provision is susceptible or admits of two reasonably possible views then the one which would promote its constitutionality should be preferred on the ground that the legislature is presumed not to have intended an excess of its own jurisdiction, is subject to the further rule that it applies only where two views are reasonably possible on the statutory language. If the words of the Statute, on a proper construction, can be read only in a particular way, then it cannot be read in another way by a Court of construction anxious to avoid the unconstitutionality.”
18. In the instant case there is no ambiguity in the language used in the Notification No. 15/94, dated 30-3-1994 and the amendment on its basis made in Rule 57G of the Central Excise Rules. Rather the language of the notification and the amended provisions of Rule 57G is quite clear and leaves no doubt in our mind that endorsement of the invoices had not been intended to be allowed by the legislature. Only the issuance of the fresh invoice by the dealer or trader after having received the goods from the manufacturer, had been made permissible under rule and that to on a prescribed proforma giving full details referred therein. If the intention of the legislative was to allow the endorsement of the invoices, as was earlier made permissible regarding the gate passes by the Board, such a provision must have been made in Rule 57G itself or by issuing a separate notification or circular by the Central Government. But having not so done it becomes quite clear that the endorsed invoices after 1-4-1994 cannot be legally considered to be valid document for claiming the Modvat credit.
19. The arguments of the learned counsel that by endorsement the invoice does not become invalid as it remains the invoice and that the duty paid character of the goods cleared under the invoice can be verified by the Excise department and as such endorsement of the invoice should be held to be permissible, cannot be accepted in the light of the facts and circumstances discussed above. The endorsement of the invoice cannot be made permissible, as it would be lacking in the particulars and details which are required to be given in the subsequent invoice to be issued by a dealer or a trader to a third party, the proforma of which prescribed by the Central Government and referred to above (Annexure 2E) stands appended to the Rules. He is also required to maintain stock account in the form RG 23D and to make entry regarding receipt and dispatch of the goods in the register and also to make available that register for inspection on demand by the Excise Officer, as is clear from the provisions of Rule 57GG which have been inserted by Notification 32/94, dated 4-7-1994. All this was not required to be done before 1-4-1994 when endorsed gate passes were accepted as valid documents. The verification of the duty paid character of the goods in the case of endorsed invoices would also be not possible by the Excise department as in the endorsement no particulars are recorded by the person making the endorsement.
20. The argument of the counsel that issuance of the invoice for clear-‘ ing the goods by the manufacturer from the factory or by the dealer while transferring the goods is only a procedural condition of a technical nature and as such its breach must be held to be condonable, under the law, cannot be attached any legal value. The provisions of Rule 57G after amendment on the issuance of Notification No. 15/94, dated 30-3-1994 are mandatory in nature as the words used therein are that no credit shall be taken unless the inputs are received in the factory under the cover of an invoice issued under Rule 52A. The endorsement of the invoice had not at all be provided in this Rule. Only the issuance of invoice or invoices had been made permissible as is further evident from the wording of Rule 57GG and even statutory obligation has been imposed on the person issuing the invoice or invoices to maintain stock account in form RG 23D and to make entry in that register at the end of the day on receipt of inputs of excisable goods. It is not only a procedural technical condition so as to hold that its violation by making endorsement on the invoice by not maintaining the relevant record as required under Rule 57G or Rule 57GG referred to above, is condonable under the law. A distinction has to be made between a procedural condition of a technical nature and a substantive condition. It is the non-observance only of former which is condonable while that of later is not condonable as the same is likely to facilitate commission of fraud and introduce administrative inconvenience and misuse of the Modvat credit.
21. No doubt, the modern Courts/Tribunal seek to cut down the technalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfillment of the purposes of the legislation. But in the instant case, no procedural technalities are involved which the Tribunal may allow to by-pass by the assessees. It is a substantive condition under Rule 57G that no Modvat credit shall be allowed unless the goods had been received under the cover of an invoice which does not include endorsed invoices as specific proforma of the invoice under which the goods have to be dispatched, has been introduced by the rule framers, on consideration of policy which is to avoid fictitious, bogus, fraudulent transactions simply for claiming Modvat credit on the basis of endorsed documents without the actual receipt of goods by the person claiming the Modvat credit, in the factory premises and that is why even the proforma of the invoice had also been introduced wherein all the details mentioned in the proforma had to be given by the person issuing the same. No relaxation in this regard has been provided by any separate notification or by inserting necessary provision in Rule 57G or 57GG by the Central Government. The C.B.E.C. Circular No. 44/7/99-CX, dated 23-2-1999 referred by the counsel, directing the Assistant Commissioners not to issue show cause notices for wrong availment of Modvat credit on any procedural ground, wzs issued simply to avoid unnecessary inconvenience or harassment to the genuine assessee. But from this circular no such inference can be drawn that the endorsement, if any, made on the invoice has to be treated as condonable procedural technicality. What has not been permissible under the statutory rules, cannot be allowed to be permissible by the Tribunal by stretching the wording of this circular of the Board. It is well settled that when the language is plain and unambiguous and admits of only one meaning, no question of construction of circular or statute arises for the act speaks for itself as observed by the Apex Court in State of Uttar Pradesh v. Dr .Vijay Anand Maharaj, AIR 1963 (S.C.) 946. Therefore, it is not legally permissible for us to add another meaning to the wording of Rule 57G and 57GG and the Notification No. 15/94, dated 30-3-1994 and to hold that endorsement of the invoices is permissible, when the language of these rules and the notification admits of only one meaning that no endorsement of the invoices is admissible under the law. Therefore, the endorsed invoice cannot be held to be a valid document after 1-4-1994 for the purpose of claiming Modvat credit.
22. In the light of the discussion made above, it must be held that the law laid down by the different Benches of the Tribunal in the aforesaid cases, namely, Tumkur Conductors Pvt. Ltd. v. Commissioner, Supprpax India Pvt. Ltd. v. Collector, Maharaja International Ltd. v. C.C.E., Prakash Cotton Mills Ltd. v. Commissioner, Maharaja International Ltd. v. Collector, Krishna Insulation v. Collector, Collector v. Bharat Wire Products, Krishna Cold Rolled Sections Ltd. v. Commissioner, Commissioner v. Rajalakshmi, supra is not a correct one. In Bengal Safety Industries v. C.C.E., Sandish Combine Pvt. Ltd. v. C.C.E., C.C.E. v. Colour Coats, Pearl Industries v. C.C.E. and Shiv Iron Brass Works v. C.C.E., supra, the correct principle of law that the endorsed invoice cannot be taken to be a valid document for claiming Modvat credit, has been laid down and the same is endorsed.
22. Consequently both the issues referred to the Larger Bench stands answered accordingly. The appeals be placed before the respective Benches for disposal on merits.