Customs, Excise and Gold Tribunal - Tamil Nadu
Union Carbide India Ltd. vs Collector Of C. Ex. on 18 October, 1989
Equivalent citations: 1990ECR538(TRI.-CHENNAI), 1990(46)ELT389(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This is an appeal against the order of the Collector of Central Excise (Appeals), Madras, dated 30-9-1987. Brief facts of the case are that the appellants filed a declaration under Rule 57G(1) of the Central Excise Rules, 1944 on 3-4-1986 for taking MODVAT credit in respect of the inputs lying in stock as on 1-3-1986 as also in respect of the inputs received between 1-3-1986 and 31-3-1986 in terms of Rule 57H of the Central Excise Rules. The Assistant Collector, while allowing the benefit partially, held that inputs in respect of which duty was paid prior to 31-1-1986 the credit could not be allowed in terms of Rule 57H(2) of the Central Excise Rules. On appeal, the learned Collector (Appeals) examined the issue in the light of the claim made in terms of Rule 57H(2) and held that the lower authority's order was maintainable. The issue that falls for consideration before us is whether the appellants are eligible for the benefit of MODVAT credit in respect of the products which had suffered duty prior to 31-1-1986.
2. The learned Advocate for the appellants submitted that the appellants obtained zinc ingots both indegenously manufactured as well as imported and manufactured zinc calots out of the same for the use in the appellants' other units for the manufacture of batteries. He pleaded that the appellants filed a declaration for availing of MODVAT credit under Rule 57G(1) and claimed the benefit in view of the transitional provisions incorporated in the Rule 57H in respect of the inputs zinc ingots lying with them as on 1-3-1986 as also those obtained from 1-3-1986 to 31-3-1986. He pleaded admittedly in respect of some of the ingots in respect of which the benefit of MODVAT credit was denied to the appellants, the clearances were made prior to 31-1-1986 on payment of duty. He pleaded that in view of the provisions of Rule 57H(2) the appellants were in fact eligible and the lower authorities had not appreciated the issue correctly. In this connection he drew our attention to Rule 57H, which for convenience of reference is reproduced below:
"RULE 57H. Transitional provisions. - (1) Notwithstanding anything contained in Rule 57G, the Assistant Collector of Central Excise may allow credit of the duty paid on inputs received by a manufacturer immediately before obtaining the dated acknowledgement of the declaration made under the said rule if he is satisfied that, -
(i) such inputs are lying in stock or are received in the factory after filing the declaration made under Rule 57G, or
(ii) such inputs are used in the manufacture of final products which are cleared from the factory on or after the first day of March, 1987, and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification:
Provided that such inputs are not used in the manufacture of final product which is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty.
(2) Notwithstanding anything contained in Rule 57A, no credit of duty paid on the inputs used in the manufacture of a final product (other than those inputs in respect of which credit of duty was allowable under any rule or notification prior to the 1st day of March, 1986, when used in the final products) shall be allowed if duty has been paid on the inputs on or before the 31st day of January, 1986.
(3) On an application from a manufacturer who had been immediately before filing a declaration under Rule 57G, availing of, -
(a) the special procedure under Rule 56A in respect of materials or components parts for use in the manufacture of finished excisable goods; or
(b) an exemption for giving credit with respect to the duty paid on the materials or component parts used in the manufacture of finished excisable goods, the Collector may permit such manufacturer to transfer the credit of duty paid on the said materials or component parts received by such manufacturer and lying unutilised immediately before obtaining the dated acknowledgement of the declaration made under Rule 57G in his account in RG 23 to his account in RG 23A:
Provided that the materials and component parts and the finished excisable goods have been specified as inputs and final products, respectively, in the notification issued under Rule 57A."
The learned Advocate pleaded that in terms of the Rule 57H(2) the appellants' goods were covered the exception as set out in the parenthesis as credit of duty in respect of the inputs was allowable under Rule 56A and the item falling under Item No. 26B are covered under Sl. No. 14A of the List of Goods Notified under Rule 56A. He pleaded in that view of the matter the condition of payment of duty for the purpose of availing of MODVAT credit after 31-1-1986 would not apply. In this connection he cited the decision of this Tribunal in the case of Poddar Projects Ltd. v. Collector of Central Excise, reported in 1988 (38) E.L.T. 482 (Tribunal) and drew our attention to para 5 of the said order, which for convenience of reference is reproduced below:
"5. A scrutiny of Rule 57H(2) extracted above would show that notwithstanding Rule 57A no credit of duty on the inputs used in the manufacture of final products shall be allowed, if such duty had been paid on or before 31-1-1986 other than those inputs in respect of which credit of duty was allowable under any Rule or Notification prior to 1-3-1986. In the instant case the inputs in question were allowed proforma credit under Rule 56A prior to 1-3-1986 and so the inputs would stand excluded from the time-bar of 31-1-1986 imposed under Rule 57H(2) in respect of credit availment. Since this matter has not been considered with reference to the inputs in question vis-a-vis their entitlement to proforma credit under Rule 56A, we set aside the impugned order and remit the issue for re-consideration by the original authority. The appeal is accordingly remanded."
3. The learned Senior D.R. for the Department adopted the reasoning of the lower authorities. He pleaded that the appellants were not availing of the benefit under Rule 56A and, therefore, it cannot be said that in respect of the appellants' goods the benefit of Rule 56A was not eligible and in that view of the matter the plea that the appellants' goods fell within the exception of Rule 57H(2) would fail.
4. We observe that there is no rebuttal of the appellants' plea that the appellants' products fall within the ambit of Rule 56A and all that has been pleaded by the Revenue is that since the appellants were not availing of this benefit and were in fact availing of the benefit under Notification 180/84 the question of benefit of Rule 56A credit being allowable to the appellants would not arise. We observe that all that the Rule talks about is that the time-bar regarding the payment of duty on or before 31-1-1986 for the purpose of availment of the MODVAT credit would not be applicable where the inputs in respect of which credit was allowable under any Rule or Notification prior to 1st March, 1986. Once it is ascertained that this credit was allowable irrespective of the fact whether the appellants actually availed of the credit or not the appellants' case would fall within the exception of Rule 57H(2). We observe that this aspect has not been examined in the impugned order. Notwithstanding that since it has been established and it is not contradicted by Revenue that the appellants products fall within the ambit of Rule 56A, we hold that the benefit as pleaded in terms of Rule 57H(2) would be available to the appellants. The appellants as it is have been allowed the benefit in respect of the inputs which were lying in stock as on 1-3-1986 and which were received till 31-3-1986 and the appellants' claim was turned down only in cases where duty had been paid before 31-1-1986. Since we have held that this cut off date will not vitiate the appellants' claim, we allow the appeal.