TMI Blog2012 (4) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... y materials is allowed as these items are used for lining of the furnace used for producing the final products - This position has also been clarified by the Central Board of Excise and Customs by issuing a circular in exercise of its power under Section 37B of the Act and made it applicable to all pending cases – in favour of assessee. - Central Excise Appeal No. 170 of 2004 - - - Dated:- 6-2-2012 - R K Agrawal and B Amit Sthalekar, JJ For Appellant: Surya Prakash Akesarwani, A K Nigam, A K Rai, K C Sinha JUDGEMENT The present appeal has been filed under Section 35G of the Central Excise Act, 1944, hereinafter referred to as the Act , against the order dated 3rd December, 2003 passed by the Customs, Excise Service Tax Appellate Tribunal, New Delhi and has been admitted vide order dated 11th April, 2007 on the following two substantial questions of law: (a) Whether Modvat Credit can be allowed on Invoices other than duplicate copies which, at the relevant time (November and December, 1995), was a mandatory requirement for availing Modvat Credit in terms of Rule 57G of the Central Excise Rules, 1944? (b) Whether the Appellate Tribunal being a creature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not otherwise. The Commissioner (Appeals) has also upheld the disallowance of Modvat credit on this ground. However, the Tribunal had held that after the amendment of Rule 57G of the Rules vide Notification No.7/99-CE(NT) dated 9th February, 1999 the amended Rules would apply in all pending cases and the credit cannot be denied on minor procedural lapses in case the inputs were duty paid. The Tribunal, accordingly, held that the respondent-assessee is entitled for the benefit of Modvat credit in respect of Fabricated heaters/Fabricated tubes/Crab Assembly. So far as the Modvat credit on Refractory and Refractory materials is concerned, it was denied by the Assistant Commissioner and the Commissioner(Appeals)only on the ground that at the relevant period it was not covered under the definition of 'capital goods'. The Tribunal has held that these items are used for lining of the furnace. The furnace is used for producing the final products, being parts of furnace, the Refractory and Refractory materials are entitled for the benefit of Modvat credit. We have heard Sri R.C. Shukla, learned Senior Standing Counsel, appearing for the Revenue and Sri Manoj Kumar Singh holding brief o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein under these rules, if such document contains details of payment of duty, description of the goods, assessable value, name and address of the factory or warehouse or the manufacturer failed to complete in other requirements under sub-rule (1). The only requirement is that the Assistant Commissioner, Central Excise having jurisdiction over the factory has to record his reasons for it. According to him, it is not in dispute that the duty has been paid on the inputs and they have been used in the manufacture of final products. He, thus, submitted that the view taken by the Tribunal that Modvat credit cannot be denied for procedural lapses does not require any interference. In support of his aforesaid plea he has relied upon the following decisions: 1. Kamakhya Steels (P) Ltd. vs. Commissioner of Central Excise, Meerut, 2000 (121) E.L.T. 247 (Tribunal-LB) . 2. Commissioner of C.Ex. Delhi-III vs. A.B. Card Clothing (Pvt.) Ltd., 2008 (222) E.L.T. 359 (P H). 3. Commr. Of C.Ex. , Jalandhar vs. JCT Ltd., 2009 (247) E.L.T. 28 (P. H) We have given our thoughtful consideration to the various plea raised by the learned counsel for the parties and find that it is not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for counter-signature at least one hour before the actual removal of goods from the factory. After countersignature the proper officer shall return all the copies of the invoice to the manufacturer except the triplicate required for his record. (3) The copies of the invoices shall be marked at the top in bold capital letters in the following manner, namely:- (i) the original copy shall be marked as ORIGINAL FOR BUYER; (ii)the duplicate copy shall be marked as DUPLICATE FOR TRANSPORTER (to be used for taking credit under Rule 57G and Rule 57T); (iii) the triplicate copy shall be marked as TRIPLICATE FOR ASSESSEE. (4) If all the packages comprising a consignment are despatched in one lot at any one time, only one invoice shall be made out in respect of the consignment. If, however, a consignment is split up into two or more lots each of which is despatched separately either on the same day or on different days, a separate invoice shall be made out in respect of each such lot. In case a consignment is loaded on more than one vehicle, vessel, pack animal or other means of conveyance which do not travel together but separately or at intervals, a separate invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgement aforesaid, take credit of the duty on the inputs received by him. (3) No credit under sub-rule(2), shall be taken by the manufacturer unless the inputs are received in the factory under the cover of any of the following documents, namely:- (a) an invoice issued by a manufacturer of inputs under Rule 52A or 100E of the said rules; (b) an invoice issued by the manufacturer of inputs from his depot or from the 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 provided the depot or the premises, as the case may be, is registered under Rule 174; (c) triplicate copy of a bill of entry; (d) a certificate issued by an Appraiser of Customs posted in foreign post office; (e) an invoice issued by a first stage dealer of excisable goods, registered under Rule 174; (f) an invoice issued by a second stage dealer of excisable goods, registered under Rule 174 and duly authenticated by the proper officer; (g) an invoice issued by a dealer on or before the 31st day of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of-- (a) original invoice, if duplicate copy of the invoice has been lost in transit; or (b) a certificate issued by the proper officer of Customs at the port/airport of the importation of such goods, if triplicate copy of bill of entry or duplicate copy of bill of entry generated on Electronic Data Interchange System installed in any Customs or Central Excise Commissionerate, as the case may be, has been lost in transit, subject to the satisfaction of the Assistant Commissioner of Central Excise that the inputs have been received in the factory of the said manufacturer or, as the case may be, the said person registered under Rule 174, and the duty was paid on such inputs: Provided that no credit or receipt entry, shall be allowed under this sub-rule after six months of the date of issue of the said invoice or bill of entry, as the case may be, and where the intermediate products manufactured by the user of inputs specified under Rule 57J are received by the manufacturer, after nine months. (7) A manufacturer of the final products shall maintain,-- (a) an account in Form R.G.23A, Parts I and II; (b) in respect of duty payable on final products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quadruplicate. Clause (3) provides as to how the various copies of the invoice are to be dealt with. The original copy of the invoice should be marked as original for buyer . Duplicate copy should be marked as 'duplicate for transporter'. The third sub-clause of clause (3) states that the triplicate copy of the invoice should be marked as triplicate for Central Excise . Lastly, it provides that the quadruplicate copy shall be marked as quadruplicate for the assessee . Here the assessee is the person who issues the invoice. Procedure to be observed by the manufacturer who wants to avail Modvat credit is provided by Rule 57G. The manufacturer who intends to take credit of the duty paid on inputs should file a declaration with the Assistant Commissioner having jurisdiction over his factory indicating the inputs intended to be used in the final product. Such a manufacture who has filed a declaration is allowed to take credit of the duty paid on the inputs received by him. Clause (2)states that no credit shall be taken unless the inputs are received in his factory or any other document as may be prescribed by the Central Government by notification in the Official Gazette in this beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l goods ignoring minor procedural lapses in falling the declaration or the invoice/document based on which credit is to be taken. However, the Assistant Commissioner should ensure that inputs/capital goods have suffered duty and are being used/are to be used in the process of manufacture. The Assistant Commissioner is also required to record the reasons in file for allowing Modvat credit in each case. 2. The Assistant Commissioner, before issuing Show Cause Notice for wrong availment of Modvat Credit by the assessee on any procedural grounds, shall conduct enquiries with regard to duty paid nature of the goods at the suppliers end, ensure that necessary information as mentioned in the Notification are available on the invoice and satisfies himself whether the goods have been used or are intended to be used as contemplated in the Modvat Rules. In case the assessee's invoice contains the details viz. description of the goods, assessable value, name and address of the factory or warehouse where the goods are to be received, and if the assessee has filed a declaration as contemplated in the Modvat Rules, the Assistant Commissioner having jurisdiction over the factory would allow th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the quantification of the charge and the levying and collection of the tax in respect of the charge so imposed. Machinery provisions do not impose a charge or extend or restrict a charge elsewhere clearly imposed. The distinction between substantive law and procedural provisions has been indicated in Black's Law Dictionary (Sixth Edn., p.1203) as follows: As a general rule, laws which fix duties, establish rights and responsibilities among and for persons, natural or otherwise, are 'substantive laws' in character, while those which merely prescribe the manner in which such rights and responsibilities may be exercised and enforced in a court are 'procedural laws'. In Salmond's Jurisprudence (Twelfth Edn., p.462), the distinction between substantive law and law of procedure is indicated in the following words: What, then, is the true nature of the distinction? The law of procedure may be defined as that branch of the law which governs the process of litigation. It is the law of actions-jus quot ad actiones pertinetusing the term action in a wide sense to include all legal proceedings, civil or criminal. All the residue is substantive law, and relates, not to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch prescribes the machinery for the computation of tax and not with a charging provision of the Sales Tax Acts. In Associated Cement Co.Ltd. v. CTO, (1981) 4 SCC 578 , the Apex Court laid down:(SCC p.602, para 27) It is settled law that a distinction has to be made by court while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly , machinery sections are not generally subject to a rigorous construction. The courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated. Bennion's Statutory Interpretation (First Edn., p.446, para 191) lays down as follows: Because a change made by the legislator in procedural provisions is expected to be for the general benefit of litigants and others, it is presumed that it applies to pending as well as future proceedings. At page 447 it is stated: Procedure and practice is the mere machinery of law enforcement. As Ormrod, LJ. said: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of a house which is wholly or mainly used for residential purposes shall be aggregate of the following amounts, namely: (a) the amount arrived at by multiplying the net maintainable rent in respect of the part of the house used for residential purposes by the fraction 100/8; and (b) the amount arrived at by multiplying the net maintainable rent in respect of the remaining part of the house, if any, by the fraction 100/9: Provided that in relation to a house which is built on leasehold land, this sub-rule shall have effect as if for the fraction 100/8 in clause (a) or as the case may be, the fraction of 100/9 in clause (b), the fractions 100/9 and 100/10, respectively, had been substituted. The Apex Court, in paragraphs 18, 23 to 25 of the judgment, which are reproduced below, has held as follows: 18. Procedural law, generally speaking, is applicable to pending cases. No suitor can be said to have a vested right in procedure. It must, however, be noted that a provision can be partly substantive and partly procedural. 23.We may not turn to the scope and content of Rule 1-BB. The said rule merely provides a choice amongst well-known and well-settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing actions unless a provision is made in it for change over of proceedings or there is some other clear indication that pending actions are affected. Moreover by the time the amendment came into force, the proceedings before the Munsif had already stood concluded and the case was pending at the stage of revision before the Additional District Judge... In the case of Spice Telecom, Bangalore (supra) the Apex Court has held that the subsequent notification defining the scope of ancillary equipment is effective only from 1st March, 2002 and does not have retrospective effect and in the absence of any express provision contained in the notification ordinarily it cannot be presumed that the same is retrospective in nature and the Revenue has failed to show that the subsequent notification is clarificatory in nature. In the case of Mysore Electricals Industries Ltd.(supra) the Apex Court has held that an approved classification list when it is proposed to be revised, the re-classification can take effect only prospectively from the date of communication of show cause notice proposing re-classification. In the case of Suchitra Components Ltd.(supra), the Apex Court has followed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, we do not perceive any error in the order passed by the CESTAT. Accordingly, we do not find that the case involves any substantial question of law, much less the question formulated by the appellant. The appeal is dismissed summarily. In the case of Union of India vs. Bharat Aluminium Co.Ltd., 2011 (263) E.L.T.48 (Chhattisgarh) , the Chhattisgarh High Court has held that non-observance of a procedural condition of a technical nature is condonable whereas non-observance of a substantive condition would disentitle the assessee any exemption and refund. The paragraph 13 of the judgment of the Chhatishgarh High Court is reproduced below: 13. Modvat credit was denied to the assessee by the Joint Commissioner and confirmed by the Commissioner (Appeals) only on the basis of information furnished by the Superintendent, Central Office, Vishakhapatna, on 9-8-1999 to the effect that the supplier did not submit the subject invoices along with their monthly return and details of the goods received and sold were not entered in RG 23D Register. The above procedural lapse, if any, is attributable to the supplier. The ratio of law laid down by the Hon'ble Supreme Court in Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the factory or warehouse etc. This position has also been clarified by the Central Board of Excise and Customs by issuing a circular in exercise of its power under Section 37B of the Act and made it applicable to all pending cases. The submission of Sri Shukla that the Notification No.7/99 dated 9th February, 1999 would come into effect on the date of its publication i.e. 9th February, 1999 only, may be correct but the benefit of that Notification as directed by the Central Board of Excise and Customs has been extended to all the pending cases. As already mentioned hereinbefore the provision of sub-rule (2) is procedural for availing Modvat credit, we are of the considered opinion that the benefit of sub-rule (11) is available to the respondent-assessee. So far as the second question is concerned we may mention here that the learned counsels did not advance any argument on the same. Hence we are not called upon to decide it. We, therefore, hold that the Tribunal had rightly given benefit of Modvat credit to the respondent-assessee and the order of the Tribunal does not suffer from any legal infirmity. In view of the foregoing discussion we do not find any merit in this a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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