Joseph Prabakar on difficulties faced by assessees when invoices are computer generated
According to the rule, no excisable goods shall be removed from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorised agent. Rule 11(2) prescribes that invoice shall be serially numbered, and Rule 11(5) says that each foil of the invoice book should be authenticated by a specified person before the book is brought into use.
Chapter 4 of the Central Excise Manual, which deals with invoice, states that invoices should be serially numbered. The relevant portion reads thus:
"3.2 The serial number can be given at the time of printing or by using franking machine.
But when the invoice book is authenticated in the manner specified in sub-rule (5) of rule 11, each leaf should contain serial number..."
However, the manual recognises the difference between a pre-printed invoice book and computer generated invoices. While Para 3.2 of Chapter 4 of the manual deals with invoice book, Para 3.3 relates to invoices generated through computers:
"3.3 In case of computer-generated invoice, the serial number may be allowed to be generated and printed by computer at the time of preparation of invoice only if the software is such that computer automatically generates the number and same number cannot be generated more than once.
For this purpose, the Central Excise Officers may check the system/software from time to time."
Further, Para 5.4 provides as follows: "5.4 In case of running stationary used in computers, the bound book shall not be insisted upon provided the stationary is pre-printed with distinctive names and marks of the assessee."
Thus it may be noted that the Central Excise Manual provides for two different procedures, one where the invoices are pre-printed in the form of a book and the other where the invoices are generated through computers.
Rule 11(5) of Central Excise Rules, 2002 provides that the owner, working partner, managing director or company secretary shall authenticate each foil of the invoice book before being brought into use. Further, before making use of the invoice book, the serial numbers of the same shall be intimated to the Superintendent of Central Excise having jurisdiction over the factory of the assessee.
The provisions prescribed in Rule 11 relating to pre-authentication of invoices and for intimation of the serial numbers to the department are with reference to pre-printed invoice book only.
In other words, these provisions would hold good where the manufacturer of excisable gods uses pre-printed invoices in the form of invoice book.
This position is supported by other provisions contained in the Central Excise Manual.
In this regard, Para 1 of Part III of Chapter 6 of the manual, which deals with electronic maintenance of records and documents, reads thus:
"Any person may electronically maintain or generate all or any of the records, returns, invoices and other documents prescribed under the rules made under Central Excise Act, 1944, using a computer, in electronically readable format. No specific permission from the Central Excise Department is required for this purpose.
Such person is also not required to give any intimation to the Department...
"The printouts (hard copies) of records and documents must be taken out at the end of each month and kept in bound folders, separately for each type of record, return, documents etc."
Thus it may be noted that when invoices are generated through computers, the `invoice book' itself would come into being only after the end of the month.
Hence, the question of pre-authentication of the invoices/invoice book and intimation of invoice serial numbers to the Department would not arise when invoices are generated through computers.
However, the Department takes a stand that pre-authentication of invoices is mandatory even where the invoices are computer generated.
The above interpretation is incorrect in view of the provisions contained in the Central Excise Manual.
This has resulted in the practice of manufacturers (who use computerised invoices) authenticating the invoice after taking the computer printout.
This exercise of authenticating the invoice after preparation is, therefore, meaningless and serves no useful purpose, as invariably the person who otherwise signs the invoice also authenticates the same.
In this regard, it is pertinent to note that Rule 52A of the erstwhile Central Excise Rules, 1944 dealt with provisions relating to excise invoices.
It may be interesting to note that Sub Rule (7) was inserted to Rule 52A of the erstwhile Central Excise Rules in 1998, which prescribed that Commissioners may, by general or special order, exempt an assessee or class of assessees from pre-authenticating each foil of invoice book and from intimating serial number of the invoices.
Later, the Board issued a circular clarifying that those manufacturers who pay duty of Rs 5 crore and above in PLA could be allowed the above exemption.
Consequent to the above amendment (insertion of Sub Rule (7) to Rule 52A), many commissionerates provided for the exemption for those who paid duty of Rs 5 crore or more.
However, this exemption did not find a place in Central Excise Rules, 2001 which substituted the erstwhile Central Excise Rules.
As per the Central Excise Manual, provisions relating to pre-authentication of invoices and intimation of invoice serial numbers to the Department do not apply to manufacturers who use computer-generated invoices.
All the same, it is time the Government amended the Central Excise Rules 2002 to bring make things clearer in this regard.
(The author is a Chennai-based advocate.)