ORDER
Shri Jeet Ram Kait (Oral)
1. This is a departmental appeal filed by Commissioner of Central Excise, Coimbatore against the order in Appeal No. 189/98-(CBE) dated 24.12.98 on the ground that during the month of 2/97 the assessee availed credit of Rs 3,22,491/- on two Generating sets after filing necessary declaration but the assessee was not in possession of the duplicate copy of the invoice which was the proper document for the purpose of availing Modvat Credit. During the verification of the duty paid documents, it was noticed by the department that the assessee was not in possession of the duplicate copy of the invoices which were the proper documents for availing the credit. It was also noticed that credit was utilized towards payment of duty at the time of clearance of the goods manufactured by the assessee. It is the contention of the Revenue that as the duplicate copy of the invoices were not produced for verification, the total credit of Rs. 3,22,491/- availed was liable to be expunged. In the grounds of appeal, the appellant-Commissioner has pointed out that since duplicate copy of the invoice is lost and since no written intimation has been given by the manufacturer to the jurisdictional Supdt with a copy to the Jurisdictional AC, within 24 hours of the receipt of the goods, covered by such invoice, the assessee is not entitled to the benefit of Modvat Credit. The Commissioner (Appeals) in his order has allowed the Modvat Credit on the ground that substantive provisions of law have been compiled with. Revenue is aggrieved by this finding of the CCE(A) and hence this appeal.
2. Shri S. Kannan, learned DR pointed out that the larger bench in the case of Balmer Lawrie & Co. vs. CCE, Kanpur, reported in 2000 (116) ELT 364 (T) in para 20 has held that a distinction has to be made between a procedural condition of a technical nature and a substantive condition. The relevant portion of this para is reproduced below:
“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 records 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”
3. He pointed out that since the lapses are of substantive nature, the said lapse cannot be condoned. He also relied upon the decision of bench, presided over by Hon’ble Mr. Justice K. Sreedhharan, in the case of CCE, New Delhi vs. AVIS Electronics Pvt. Ltd. reported in 2000 (117) ELT 571 (T) wherein it has been held that in regard to loss of duplicate copy of the invoice during the period subsequent to 20.5.1994 (date of insertion of Rule 57G (2A) of CE Rules, 1944), a combined reading of Rule 52A (3) and first proviso to Rule 57G (2) and Rule 57G(2A) makes it clear that a manufacturer could take credit only on the basis of duplicate copy has been lost in transit, he could take credit on the basis of the original copy of the invoice provided he satisfies the Assistant Commissioner about the loss of the duplicate copy. This was a mandatory requirement and not a mere technicality and the contrary view taken in the case reported in 1998 (98) ELT 164 (T) was not approved by the larger bench. The Tribunal also held that credit is not admissible in cases where the manufacturer did not even care to inform the Assistant Commissioner about the loss of the duplicate copy. In the present case, the learned DR pointed out that the respondents never informed the Assistant Commissioner about the loss of duplicate copy and never sought condonation by filing copy of the FIR or other corroborative documents to support the plea of loss of duplicate copy of invoice. The Tribunal also interpreted the meaning of the term “in transit” and held that Transit is from supplier of inputs to the office of the concerned excise officer it cannot mean during transportation only. The learned DR further relied upon the judgement of the larger bench presided over by the Hon’ble Mr Justice K. Sreedharan, President in the case of Grasim Industries Ltd. Vs. CCE, Indore reported in 2000 (117) ELT 551 (T) wherein it has been held that original invoice is not a valid document for taking credit in the absence of any proof of loss of duplicate copy of the invoice in transit.
4. Shri J. Sankararaman, learned Counsel appearing for the respondents on the other hand submitted that by virtue of Notification No, 14/96 CE (NT) dated 23.7.96 sub rule 3A was inserted under Rule 57S and the sub rule 3A states that notwithstanding anything contained in sub rule (3), a manufacturer can take credit of the capital goods received in the factory on the basis of original invoice if duplicate copy has been lost in transit, subject to satisfaction of the Assistant Commissioner. In support of his contention , he relied upon the judgement in the case of RP David & Ohters vs. Agricultural Income Tax Officer & Another reported in 1972 (86) ITR 699. By this judgement it was held that wherever a statute invests a discretionary power in a public officer, it is normally for exercise in favour of the person concerned unless there is some sound and relevant reason for denying the benefit of discretionary power. He submits that in the ligh of this judgement, the impugned order is required to be upheld and the appeal dismissed. He also relied upon the judgement of the Bombay High Court in the case of Bombay Goods Transport Association reported in 1995 (77) ELT 521 (Bombay) wherein it has been held that Modvat Credit can be allowed where the original gate pass is lost, based on documents which will prove the duty paid nature of the goods. He also submits that this judgement has not been considered by any of the Larger Bench throughout the country. He submits that therefore, the order or the CCE (A) is correct and should be confirmed and the departmental appeal dismissed. He also drew my attention to the Guide lines to be followed in respect of Notification No. 7/99 CE (NT) dated 9.2.99 for amendment to Rule 57G and 57T (Circular No 441/7/99-CX. Dated 23.2.1999) by which credit shall not be denied under sub-rule (6) of Rule 57T on the ground that documents specified under rule 57G not contain certain particulars and the Assistant Commissioner should satisfy himself that the duty due on the goods have been paid and the inputs have actually been used in the manufacture of the final products. He also relied upon the judgement of a Single Member Bench in the case of CCE, Kanpur vs. Standard Surfactants Ltd. Reported in 2001 (129) ELT 76 (Tri-Delhi) wherein it has been held that credit can be allowed on the basis of original copy of the invoice when duplicate copy has been lost and prior permission of the AC is not mandatory before availing Modvat Credit on original copy of the invoice. He further relied upon the Single Member judgement of the East Regional Bench, in the case of Bansal Mechanical Works Ltd. Vs. CCE, Calcutta-II reported in 1999 (35) RLT 839 (CEGAT) wherein it has been held that where duplicate copy has been lost in transit by employee of the appellants and not by transporter and credit taken on the basis of the original copy, before permission by Assistant Commissioner, credit is not deniable on both the grounds as the Rule does not provide for loss by transporter only and prior permission by Assistant Commissioner. He also relied upon the Single Member judgement of the North Regional Bench in the case of Sharanpur Engg Works vs., Meerut reported in 1998 (102) ELT 380 wherein it has been held that in terms of Rule 57G(2) Assistant Commissioner ought to have examined whether or not duplicate invoices had been lost in transit. Merely delay on the part of the appellants, in seeking relaxation if invoices otherwise were lost in transit cannot deprive the appellants to avail the benefit of Modvat credit. In the face of these case laws cited by him, he submits that the impugned order needs to be upheld.
5. In counter, the learned DR submits that in none of the judgements cited by the learned Counsel, the larger bench decisions have been considered and therefore, the larger bench decisions have to be followed in preference to the judgements rendered by Single Member. He also submitted that the facts in the case laws cited by the learned Counsel are distinguishable from the facts in the present case.
6. I have considered the submissions made by both the sides. I am of the considered view that if the duplicate copy of the invoice, which is a modvatable invoice, has been lost in transit, the assessee should have placed all the materials regarding loss of duplicate copy of the invoice and the fact of their taking the credit on the strength of the original copy before the Assistant Commissioner, without suppression of any material facts. This is a very important document just like a Cheque/DD on which the assessee can take credit, to discharge the duty liability. In this case, as rightly contended by the learned DR, the respondents have not even cared to inform the Assistant Commissioner that the duplicate copy meant for transport has been lost in transit. On the contrary they took the modvat credit and utilized the same for payment of duty without getting the permission of the learned Counsel for the respondent that discretionary power should have been exercised in favour of the assessee as held in the case of RP David & Others vs. Agricultural Income Tax Officer & Another (1972 (86) ITR 699, I am of the view that this plea could be appreciated if the respondents had applied to the Assistant Commissioner to exercise the discretionary power vested in him in favour of the assessee and also satisfied him by producing the various supporting documents. This has not been done. Therefore, I find that the facts in that case are distinguishable from the facts of the present case. The learned Counsel for the respondents also relied upon the judgement of the Hon’ble Bombay High Court in the case of Bombay Goods Transportation Association (supra) wherein it has been held by the Hon’ble High Court that Modvat Credit can be allowed where the original gate pass is lost, based on documents which will prove the duty paid nature of the goods. He, therefore urged that this judgement would apply to the facts of the present case. However, it was conceded by the learned Counsel that none of the larger bench has taken into consideration this judgement of the Bombay High Court. I also observe that in accordance with Sub rule 3A as inserted by Notification No. 14/96-CE (NT) dated 23.7.96 for the purpose of taking credit on original copy, in the event of loss of duplicate copy, satisfaction of the Assistant Commissioner is sine qua non. As already noted above, it is not the case of the assessee that they have satisfied the Assistant Commissioner in this regard by producing necessary supporting documents regarding loss of duplicate copy of the invoice and instead they chose to take credit suo motu on the strength of original copy. In this view of the matter, respectfully following the three larger bench judgements in the case of Balmer Lawarie & Co. vs. CCE, Kanpur reported in 2000 (116) ELT 364 (T), CCE vs. AVIS Electronics Pvt. Ltd reported in 2000 (117) ELT 571 (T) and Grasim Industries Ltd. Vs. CCE reported in 2000 (117) ELT 551 (T), the impugned order is set aside and the Revenue appeal is allowed.
(Dictated and pronounced in open Court)