TMI Blog2005 (7) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... supplying dealer to apply for registration before the cut-off date; secondly, even if the assessee does so and the supplying dealer makes application for registration before the cut-off date, it would be beyond the assessee or the dealer to ensure that the registration is granted by the cut-off date. There could be various circumstances, on the basis of which the registering authority, may not issue the certificate by so called due date. A simple example would be, absence of the registering authority, being on leave and charge being available with some other officer, who because of more pressing work may not attend to the work for which he holds additional charge, and in such circumstances to expect that the dealer must obtain registration by due date would be asking almost for the impossible, especially from the assessee who is merely a purchaser. Therefore, the denial of modvat benefit only on this technical plea is not justified in law, especially when all other requirements have been fulfilled by the supplying dealer. In the result, in light of what is stated hereinbefore, it is apparent in the facts and circumstances of the case that the petitioner was entitled to Modvat cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause why the same should not be recovered and consequently penalty be not imposed. After considering the assessee's explanation the Adjudicating Authority passed an order on 27-2-1997 directing the recovery of Rs. 4,22,230/- under Rule 57-I of the Central Excise Rules, 1944 (the Rules). A personal penalty of Rs. 45,000/- also came to be imposed under Rule 173Q(1) of the Rules. The assessee carried the matter in appeal before Commissioner (Appeals) who for the reasons stated in his order dated 25-3-1998 held that the petitioner had purchased inputs from two different parties and in so far as modvatable credit of Rs. 64,233/- based on invoice issued by M/s. Garware Nylon Ltd. was concerned the same was a Modvatable invoice and the petitioner was entitled to the Modvat credit. 4.1 However, in relation to 14 invoices of one M/s. J.C.T. Limited it was observed that the invoices contained the details as required under Notification No. 15/94 but M/s. J.C.T. Limited had been registered on 6-1-1995 and not upto 31-12-1994. Therefore, the invoices issued by M/s. J.C.T. Ltd. were not valid duty paying documents. Accordingly, the petitioner was denied Modvat credit to the tune of Rs. 3,57, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transitional period. 8. The case of the petitioner is that the revenue authorities and the Tribunal have wrongly read the circular to mean that a dealer has to be registered by 31-12-1994 or else the invoice issued by such dealer, despite denoting duty paid status would not be accepted as valid document for permitting the purchaser of such goods to avail of Modvat credit. It is submitted that once a dealer has applied for registration on or before 31-12-1994 any registration which is granted subsequently would become effective from the date of the application and therefore in the present case, M/s. J.C.T. Limited having applied for registration on 29-12-1994, registration granted to the said dealer on 6-1-1995 would be operative from 29-12-1994, and in the circumstances, invoice issued during the period of July and August, 1994 by the said dealer would be valid document on the basis of which the petitioner would be entitled to Modvat credit. In support of the aforesaid proposition reliance was placed on the decision of Apex Court in the case of Commissioner of Central Excise v. M.P.V. Engg. Industries, 2003 (153) E.L.T. 485 (S.C.). 8.1. It was also submitted that even if the langua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various goods (inputs) from M/s. J.C.T. Limited in July and August, 1994. As recorded by the Commissioner (Appeals) the said invoices contain the necessary details as required under Notification No. 15/94. M/s. J.C.T. Limited had made an application before the Appropriate Authority seeking registration on 29-12-1994 and registration has been granted on 6-1-1995. Therefore, the invoices have been issued prior to 31-12-1994. Admittedly, when the invoices were issued M/s. J.C.T. Limited was unregistered dealer. The limited question therefore is, whether the aforesaid Circular No. 76/76/94-CX., dated 8-11-1994 could be invoked to deny the Modvat credit to the petitioner. 13. The Central Board of Excise and Customs issued Circular No. 76/76/94-CX., dated 8-11-1994 in connection with the earlier Notification No. 64-C.E. (N.T.), dated 7-11-1994. As the said circular and the effect thereof is the bone of contention between the parties the same is reproduced in entirety hereunder. Circular : 76/76/94-CX dated 08-Nov-1994 Modvat - Amendment to Rule 57H - Invoice is a valid document for taking credit. Circular No.76/76/94-CX, dated 8-11-1994 [From F.No.267/50/94-CX.8] Government of India Mini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.(N.T.). 7. In view of above the Board desires that an immediate exercise7. should be taken as per provisions of law so that the credit intended to be allowed, as above, is not denied. 8. Trade and field formations may be suitably informed. 13.1 Paragraph No. 3 of the said Circular states that amendment to Rule 57H has been made to remove the difficulties arising out of the budgetary changes in 1994-95 relating to acceptance of invoice as proper document for the purpose of Modvat credit. It is further stated that Assistant Collector is entitled to accept the invoice issued by the person referred to in Notification Nos. 15/94 and 21/94, at his discretion. 13.2 Paragraph No. 4 of the Circular lays down four categories of persons from whom, if any invoice or document emanates, it would be a valid document for the purpose of allowing Modvat credit. 13.3 Paragraph No. 5 states that such invoice should contain the details as referred to in Notification Nos. 15/94 21/94 and that the Assistant Collector shall recognize such document, if issued by the categories of persons mentioned in the Notification, and who have got themselves registered under Rule 57GG of the Rules. 13.4 Paragraph No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a view was the correct view, as laid down by the Apex Court in case of State of U.P. and Another v. Haji Ismail Noor Mohammad and Co. (supra) the efficacy of the certificate of registration becomes material and relevant at the time when the assessee concerned is required to be granted Modvat credit viz. at the time of assessment. In the case before the Apex Court while making assessment order under Sales Tax Act, it was held that a dealer would be entitled to concessional rate if he holds a recognition certificate when the assessment order is being drawn up. That it was not obligatory on the part of the purchasing dealer to produce the recognition certificate at the time of purchase. Even subsequent to the transaction of purchase, if the purchasing dealer furnishes to the selling dealer a recognition certificate, the requirement of the provision would be fully satisfied. Dealing with the language employed by the statute therein viz. dealer holds recognition certificate and the contention based thereon, to the effect that term holds would signify that the recognition certificate must be available at the time of purchase, the Apex Court held that statutory language does not insist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case. It is stated thus : 16. Be that as it may, the words 'has been registered and 16. possesses a registration certificate' used in sub-section (1) of Section 7 have to be construed in accord with the general tenor of the section as a whole, and in a manner which would avoid oppressive , unreasonable and anomalous results. As rightly pointed out in Chandra Industries v. The Punjab State, (1972) 29 STC 558 (Punj.) it could never be the intention of the Legislature that a dealer liable to pay tax who has in compliance with the requirements of sub-sections (2) and (3) of Section 7, done all which lay in his power to obtain the registration certificate, should pull down his shutters and keep his business closed under pain of being punished under Section 23(1) and await indefinitely the pleasure and leisure of the prescribed authority in issuing the registration certificate. Adoption of such a construction would be to make the applicant liable to punishment for the laches and delays of the authority and its office . 18. Last but not the least. As stated in the Affidavit-in-Reply underlying purpose of the provision, viz., amended Rules and the subsequent Notification a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Circular accompanied by various Notifications. In fact the Larger Bench of the Tribunal has failed to assign any reason for drawing any such inference except for stating the object with which the amendment has been brought about. The said decision therefore cannot assist the case of the revenue. 20. In the result, in light of what is stated hereinbefore, it is apparent in the facts and circumstances of the case that the petitioner was entitled to Modvat credit considering the fact that firstly, the supplier had issued invoices in July and August, 1994, namely when the Adjudicating Authority had discretion available to it; secondly, the supplier had applied for registration on 29-12-1994 and had been registered on 6-1-1995; and thirdly, the supplier had issued invoices which admittedly complied with the requirements prescribed by various Notifications. 21. Hence, the order No. C-II/1410/WZB/2003, dated 11-6-2003/17-6-2003 (Annexure-J), Order No. M-5/C-IV/WZB/2004, dated 12-3-2004 (Annexure-L), O-I-A No. COMMR (A)/386/VDR/98, dated 25-3-1998 (Annexure H) and O-I-O No. D/84/ANK/ADC/P V/96-97, dated 27-2-1997 (Annexure F) are hereby quashed and set aside. The respondent authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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