GCR No. 15 of 2001 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. GCR No. 15 of 2001 Date of decision 22.1.2009 M/s S.K.Foils Ltd. Bhiwani applicant Versus The Commissioner of Central Excise, New Delhi III ... Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE H.S. BHALLA Present: Mr.Akshay Bhan,Advocate for the applicant Mr.Sanjeev Kaushik, Central Government Standing Counsel for the respondents 1. Whether Reporters of local papers may be allowed to see the judgement ? 2. To be referred to the Reporter or not ? 3. Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. At the instance of the assessee, this Court had directed the then Custom Excise and Gold (Control) Tribunal, Northern Division Bench, New Delhi to draw the statement of the case and refer the question of law for determination of this Court. Accordingly statement of facts have been drawn and the following question of law has been referred: “ Whether on the facts and circumstances of the case, the Tribunal is right in disallowing the credit for Modvat on the carbon copy of the challans furnished by the petitioner evidencing payment of duty”? In order to appreciate the controversy few facts as stated in the statement of facts may first be noticed. The assessee-applicant was engaged in the manufacture of cold GCR No. 15 of 2001 2 rolled steel strips falling under chapter sub Heading 7211.51 of the Schedule to the Central Excise Tariff Act,1985 and the assessee was availing Modvat credit facility in respect of duty paid on the inputs namely H.R.Strips/ H.R.Coils/ Skelp in terms of Rule 57A of the Central Excise Rules, 1944 (for brevity 'the Rules'). On scrutiny of record pertaining to the period January, 1994 to March, 1994, the revenue authorities found that assessee had taken Modvat credit of Rs. 669304/- on the strength of the carbon copy of challans issued by Tata Iron and Steel Co. Ltd. (for brevity 'the TISCO'). The revenue alleged that under Rule 57 G of the Rules, Modvat credit was permissible only when the inputs were accompanied by original duty payment documents and therefore observed that credit of the this amount of duty was not admissible to the assessee. A show cause notice was issued to the assessee on 28.7.1994 asking them to show cause as to why the amount of Rs. 669304/- be not disallowed and the amount should not be recovered from them under Rule 57 I read with Section 11 A of the Central Excise Act,1944 and why penalty be not imposed upon them. In reply to the notice, the assessee contended that Rule 57 G of the Rules does not impose any such condition to deny Modvat credit in case input were received under the cover of carbon copy of the invoice. The assessee referred to Sub Rule 4 of Rule 57G of the Rules by stating that this sub rule prescribes that a manufacturer of final product shall submit to the revenue original documents evidencing the payment of duty every month. It was further stated that inputs received in the factory under the cover of duty paying documents and the receipt of inputs was not before six months of filing Modvat declaration so the duty liability has been discharged on the inputs which have been actually used in the manufacture of final products. GCR No. 15 of 2001 3 After considering the reply, Addl. Collector ordered recovery/ reversal of Modvat credit of Rs. 669304/- and also imposed penalty of Rs,. 5000/-. The assessee preferred an appeal against the above order before the Commissioner ( Appeals) which was rejected. The assessee went up in appeal before the Tribunal. The Tribunal vide its order dated 16.1.1998 upheld the order of the Commissioner (Appeals) and dismissed the appeal. We have heard the learned counsel for the parties at a considerable length and do not feel persuaded to accept that carbon copy could be used for claiming Modvat credit. The case of the assessee is that TISCO does not supply original challans but only give the carbon copies and the same must be regarded as original within the meaning of Rule 57(G) of the Rules. The Appellate Authority after considering various pieces of evidence has recorded a categorical finding in its order dated 28.3.1995 that it is incorrect to claim by the assessee that TISCO only issues carbon copies. Under the heading 'findings' the Tribunal has observed as under: “ I observe that the party has taken the plea that M/s Tata Iron and Steel Co. do not provide original copies of challans in respect of materials supplied by them through their stockyards and as only the carbon copy is given that is the original document for purposes of proviso to Rule 57G of Central Excise Rules, 1944. I observe that the party has given a certificate dt. 6th May, 94 issued by the Tata Iron and Steel Co. Ltd. New Delhi (TISCO) in order to substantiate their above plea. However, I find that there are other manufacturers who are receiving original challans issued by the stockyards of M/s TISCO. The GCR No. 15 of 2001 4 following are few details of original challans issued by M/s Lauls Ltd 33 B NIT Faridabad to ( and ?) M/s Omex Fusion Ltd., Bahrampur Road, Gurgaon: S.No. No. of challan and assessee 1. TD/FBD/ERW/047 dt. 12.1.94 2. .do. 048 dt. 12.1.94 3. .do. 054 dt. 29.1.94 4. .do. 059 dt.18.2.94 5. .do. 060 dt.19.2.94 6. .do. 066 dt.15.3.94 7. .do. 064 dt.11.3.94 In view of this find that the certificate dt. 6th May, 94 issued by M/s TISCO , New Delhi is not correct as there are cases where original copies of the challans are given to the parties. I observe that had the party's contention that the stockyards of M/s TISCO only issue carbon challans to the customers was correct, the carbon copy would have been treated as the original duty paying document and Modvat credit would have been admissible in respect of the same. However, this plea of the party is not correct and as such the Modvat credit taken by them on the basis of carbon copies of the challans is not admissible.” In the wake of the aforesaid findings it is not possible to conclude that carbon copy is required to be regarded as original copy as per the claim made by the assessee. Relevant provisions of Rule 57 G of the rules which are relevant for determination of issue reads thus: “Rule 57 G. Procedure to be observed by the manufacturer.- (1) Every manufacturer intending to take credit of the duty paid on inputs under Rule 57 A or Rule 57 B shall file a declaration with the Assistant Commissioner of Central Excise having GCR No. 15 of 2001 5 jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in the said final products and such other information as the said Assistant commissioner may require, and obtain a dated acknowledgment of the said declaration. xx xx xx xx xx (8) A manufacturer of final products shall submit within five days after the close of each month to the Superintendent of Central Excise, a monthly return indicating the particulars of inputs received during the month and the amount of credit taken. The manufacturer shall also submit original duty paying documents and extracts of Part I and Part II of Form RG 23A maintained alongwith the monthly return to the Superintendent of Central Excise, who shall after verifying their genuineness, deface such documents and return the same to the manufacturer.” A perusal of the above provisions of the rules shows that in order to claim Modvat credit the original copy of the invoice is required to be produced. There is no provision for granting Modvat credit on the basis of a carbon copy. If we presume that carbon copy in a case like the one in hand could be treated as original then the finding of fact by the appellate authority or Tribunal have to be on the record. In the present case the finding of fact is against the dealer that TISCO does not issue invoice on a carbon copy so as to be treated as original for the purpose of rule 57 G of the Rules. The contention of the counsel for the assessee that carbon copy has been properly verified and defaced does not impress us as in the GCR No. 15 of 2001 6 present case adjudication has to be only on the question of law. We find no merit in the contention raised by the learned counsel for the assessee. Moreover, laying down a blanket principle permitting Modvat credit on carbon copy may result into setting up of false claims. On such a principle the possibility of availing Modvat credit by many persons against one transaction would not be ruled out which will be highly damaging to the revenue. In our considered opinion the answer to the question has to be returned in the affirmative and the view taken by the Tribunal is affirmed. The reference is accordingly answered. (M.M.Kumar) Judge (H.S. Bhalla ) 22 .1.2009 Judge okg