Customs, Excise and Gold Tribunal - Bangalore
Commissioner Of Central Excise vs Muffadel Timber And Allied Products (P) ... on 3 April, 1997
Equivalent citations: 1997(71)ECR320(TRI.-BANGALORE)
ORDER
V.P. Gulati, Vice-President
1. This reference application arises out of the order of the Tribunal bearing No. 624/96 wherein the Tribunal had followed its earlier order bearing No. 326/95 in A. No. E/621/91 in the case of CCE, Guntur v. Pinakini Beverages holding that in the event the assessee opting out of the Modvat credit and opting to the benefit of Notification 175/86, the Modvat taken in respect of the inputs lying in stock or which were contained in the inprocess materials when the assessee opted for the benefit of Notification 175/86, the Modvat credit attributable to these inputs are not required to be reversed. The Tribunal in its order has also taken note of the decision of the Larger Bench reported in 1996 (65) ECR 303 in the case of M.S.G. Industries v. CCE, Belgaum. In that case in para 2 we have held as under:
2. We have considered the pleas made by both the sides. The short issue that falls for determination is whether on the day when the appellants opted for benefit of Notification No. 175/86 the Modvat Credit attributable to the inputs lying in stock as well as those contained in the goods under manufacture and already manufactured and lying in stock with the appellants is required to be reversed. From the reading of the order of the Id. lower authority and also from the submissions of the appellants the impression we gather is that the appellants are deemed to have opted out of the Modvat Scheme the moment they opted for the benefit of Notification No. 175/86. We however find the Notification No. 175/86 place no such fetter in regard to availing of Modvat Credit nor there is any stipulation under Modvat Rules that those who avail of the benefit of Notification No. 175/86 cannot avail of the Modvat Credit. In fact in the opening para whereunder an exemption is provided under Notification No. 175/86 and the following is set out:
(a) in the case of the first clearances of the specified goods upto an aggregate value not exceeding rupees thirty lakhs,
(i) in a case where a manufacturer avails of the credit of duty paid on inputs used in the manufacture of the specified goods cleared for home consumption under Rule 57A of the said Rules, from so much of the duty of excise leviable thereon which is specified in the said Schedule [read with any relevant notification issued under Sub-rule (1) of Rule 8 of the said Rules or under Sub-section (i) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944) and in force for the time being] as is equivalent to an amount calculated at the rate of 10% ad valorem;
(ii) in any other case from the whole of duty of excise leviable thereon;
Provided that the aggregate value of clearances of the specified goods under Sub-clause (ii) of this clause in respect of any one Chapter of the said Schedule, shall not exceed rupees twenty lakhs (w.e.f. 1.4.1990).
It is clear from this that in case the appellants have availed of the benefit of Modvat Credit in respect of the inputs, the benefit of Notification is restricted to a lesser amount. In the present case therefore since the appellants had availed of the Modvat Credit in respect of the inputs which were lying in stock and also which were contained in the semi-finished goods and finished goods on the day the appellants opted for the benefit of Notification No. 175/86, all that was required to be done was to restrict the benefit of Notification No. 175/86 in terms of para 1(a)(i) rather than to ask the appellants to pay back the Modvat Credit as above. The wordings of the Notification makes it abundantly clear that where the benefit of Modvat Credit has been taken on the inputs, the benefit of Notification would be as per para 1 (a)(i). The authorities appear to have lost sight of this provision. In our view the authorities should have restricted the benefit to the extent as above rather than to have resorted to recovery in terms of Rule 57C of the Modvat Rules read with Rule 57-1. In our view, the appellants were allowed duty free clearance of goods falling under Notification No. 175/86 in which inputs in respect of which Modvat Credit has been taken was utilised on a wrong interpretation of law. Departmental authorities had no option but to have allowed the exemption in respect of the goods manufactured out of inputs on which Modvat Credit had been taken to the exlent as envisaged in the Notification No. 175/86 para 1(a)(i) as reproduced earlier. This is therefore a case of short levy rather than a case where Modvat Credit taken on the inputs is required to be reversed. However, in case of the inputs which were lying in stock which were subsequently utilised for the manufacture of finished goods in that case also the goods manufactured out of these inputs the benefit of Notification could have been limited in terms of para 1(a)(i) of the Notification No. 175/86 as above. The other course open in case the authorities felt that on the assessees opting out of Modvat they had to be allowed the benefit of free clearance under Notification No. 175/86, the authorities could have recovered the duty on the inputs which were lying in stock at the time when these are taken into use for manufacture of the finished goods for clearance, free of duty in terms of Notification No. 175/86. Under Rule 57F the inputs on which the Modvat Credit has been taken on clearance for home consumption when the unit would not be functioning under the Modvat Scheme the same could be allowed clearance on payment of duty. This we have held in a number of cases. In the case of M/s. Pinakini Beverages Ltd. in Appeal No. E/624/91 1995 (61) ECR 689 (T) we have held so taking note of our earlier decision in the case of Collector of Central Excise v. Becon Weir Ltd., and the ruling of the Larger Bench in the case of Kirloskar Oil Engines Ltd. reported in 1994 (73) ELT 835. A copy of this order is enclosed for ready reference. In the case of M/s. Beama Manufactures (P) Ltd., in Appeal No. E/445/91 the Larger Bench following the earlier decisions cited supra has taken the same view, a copy of which is also appended for ready reference. Following our earlier decisions, we hold that no case for reversal of Modvat Credit in respect of the inputs lying in stock as such has been made out.
2. The reference application filed in respect of the earlier orders of the Tribunal has already been dismissed. In view of the above. I hold, no question arises for reference. The reference application is dismissed.
(Pronounced and Dictated in Open Court).