IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Excise Reference No. 1 of 2001 & Excise Reference No. 8 of 2001 Reserved on: 1.09.2008 Date of decision: 4.09.2008 Commissioner, Central Excise, Chandigarh … Petitioner. Versus M/s Steel Strips Ltd., Paonta Sahib. … Respondent Coram The Hon’ble Mr.Justice Deepak Gupta, J. The Hon’ble Mr. Justice V.K.Ahuja, J. Whether approved for reporting?1 No. For the petitioner: Mr. Sandeep Sharma, Assistant Solicitor General of India. For the respondent. Mr. K.D.Sood, Advocate. Per Deepak Gupta, J. These reference petitions have been admitted on the following substantial question of law:- “Whether the Tribunal was right in allowing the Modvat Credit on the inputs which were never entered in the statutory records i.e. RG-23A(1) as prescribed under Rule 57G of Central Excise Rules, 1944”. To appreciate the dispute between the parties, it would be relevant to quote Rule 57G, which reads as follows:- “57G. Procedure to be observed by the manufacturer.- (1) Every manufacturer intending to take credit of the duty paid on inputs under rule 57A, shall file a declaration with the Assistant Collector of Central Excise having jurisdiction over his 1 Whether the reporters of the local papers may be allowed to see the Judgment? Yes. 2 factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the said Assistant Collector may require, and obtain a dated acknowledgement of the said declaration. (2) A manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgement aforesaid, take credit of the duty paid on the inputs received by him. [Provided that no credit shall be taken unless the inputs are received in the factory under the cover of a Gate Pass, an AR-1, a Bill of Entry or any other document as may be prescribed by the Central Board of Excise and Customs (constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) in this behalf evidencing the payment of duty on such inputs]: Provided further that having regard to the period that has elapsed since the duty of excise was imposed on any inputs, the position of demand and supply of the said inputs in the country and any other relevant considerations, the Central Government may direct that with effect from a specified ate, all stocks of the said inputs in the country, except such stocks lying in a factory, customs area (as defined in the Customs Act, 1962 (52 of 1962) or a warehouse as are clearly recognizable as being non-duty paid, may be deemed to be duty paid and credit of duty in respect of the said inputs may be allowed at such rate and subject to such conditions as the Central Government may direct, without production of documents evidencing the payment of duty: Provided also that the manufacturer shall take all reasonable steps to ensure that the inputs acquired by him are goods on which the appropriate duty as indicated in the documents accompanying the goods, has been paid. (3) A manufacturer of the final products shall maintain,- (a) an account in Form R.G. 23A, Parts I & II. (b) In respect of duty payable on final products, an account-current with adequate balance to 3 cover the duty of excise payable on the final products cleared at any time. (4) A manufacturer of the final products shall submit a monthly return to the Superintendent of Central Excise indicating the particulars of the inputs received during the month and the amount of duty taken as credit, alongwith extracts of Parts I and II of Form RG 23 A and shall also make available the documents evidencing the payment of duty on the inputs on demand by the proper officer. While answering the question, we may observe that question presumes that the inputs were never entered in the statutory records. This fact is not correct. In fact, the admitted facts are that entries of the inputs were made in the RG 23A but they were made in the wrong part of the Register. The only ground raised by the revenue is that the manufacturer in these cases have made entries in respect of the goods for which modvat credit is sought in Part II of the Registered of Goods No. 23 and not in Part 1, as required by the Form annexed with the rule. The learned Tribunal has held that this is only a procedural error and the manufacturer cannot be denied the benefit only on the ground that the entry has been made in the wrong part. We have heard Shri Sandeep Sharma, learned Assistant Solicitor General of India for the petitioner and Shri K.D.Sood, learned counsel for the respondent. 4 Shri Sandeep Sharma has placed reliance on the judgement of the apex Court in Indian Aluminium Company Limited vs. Thane Municial Corporation, 1992 Supp (1) SCC 480. In our opinion, this judgement does not have any relevance to the facts of the present case. In that case, the company had paid the octroi duty demanded from it. Much later it claimed refund of the octroi duty even though it had not filed any declaration in Form 14 as required by law. It was in these circumstances, that the apex Court held that the filing of Form-14 was mandatory and the assessee at a belated stage could not claim refund of the octroi. The other judgement relied upon by Shri Sandeep Sharma, learned Assistant Solicitor General for the petitioner is Mihir Textiles Ltd. vs. Collector of Customs, Bombay, 1997 (92) E.L.T. 9 (S.C.), wherein the apex Court held that even if conditions laid down for obtaining certain benefits are directory, their compliance is essential and without complying with the said conditions, the assessee cannot claim any benefit. Reliance has also been placed upon a judgement of a learned Division Bench of this Court in Ex.Reference No. 16 of 2000, Commissioner, Central Excise Chandigarh vs. M/s Chandra Laxmi Tempered Glass Co. Pvt. Ltd., Barotiwala, decided on 4.7.2008, wherein this Court observed as follows:- “Undoubtedly the requirement of the language is clear and unambiguous. The provisions of Statute and the Notification, keeping in view the object and the purpose, had to be fully complied with in letter and spirit. The requirements are 5 mandatory and are not procedural as is sought to be argued on behalf of the assessee. The Legislative intent, the object and purpose is to check the defrauding of the Government by the assesses resorting to similar double credits against single consignment by falsification of documents by various methods. The legislature only requires four particulars to be pre-printed, which in any event are within the prior knowledge of and pertains to the person issuing the invoice. Therefore, there is no justification for not complying with the same. The requirement of the law is that invoices were to be pre-printed and not hand written. The Legislative intent is evident from every word used in the Statute. The same has to be complied with. If the view taken by the Tribunal is accepted it would render the Statute redundant. Therefore, on the principle of Golden Rule of Interpretation, the view taken by the Tribunal is unacceptable.” In the present case a bare perusal of Rule 57G shows that this rule lays down the procedure to be observed by the manufacturer for obtaining the credit. Sub-rule (2) of this rule provides that no credit can be taken unless the conditions mentioned in the provisions are met with. These conditions relate to obtaining of gate pass, bill entries and other documents, evidencing the fact that the input of which credit is claimed were actually received in the factory after payment of duty on such input. Sub-rule (3) requires the manufacturer to maintain a Register of Goods No. 23A in parts I and II. No doubt, entry in respect of the goods should have been made in part II and not in part I. However, this is a mere procedural irregularity. The assessee will not gain anything by making the entry in part-I instead of part-II. The assessee can 6 claim credit only if the entry is in the register and he fulfills all other conditions laid down. Therefore, in our opinion, the judgements cited before us having no applicability to the present case. The learned Tribunal rightly held that in the facts of the present case the assessee had committed a mere irregularity. We, therefore, answer the question in favour of the assessee and against the revenue. The Excise References are disposed of accordingly. ( Deepak Gupta ), J. 4th September, 2008 ( V.K.Ahuja ), J. ™