Customs, Excise and Gold Tribunal - Delhi
M/S. Oswal Vanaspati & General Indus. vs C.C.E. Chandigarh on 10 October, 2000
ORDER K.K. Bhatia, Member (T)
1. The appellants manufacture vegetable oil products falling under Chapter Heading 15.04 of the Central Excise Tariff Act, 1985. They were availing modvat credit on inputs/packing material under Rule 57A. On verification of their records, it was found that on 22.7.96, they were having certain stocks of inputs and packing material in respect of which the party had availed the modvat credit totally amounting to Rs.2,34,157/-. The proceedings were drawn against them which culminated in Asst. Commissioner of Central Excise, Division I, Ludhiana passing Order-in-Original dt. 11.8.99, in which he observed that the vegitable oil products falling under Chapter Heading 15.04 were exempted from payment of excise duty vide Notfn. No.16/96-CE dt. 23.7.96. It is stated that as per Rule 57C, modvat credit cannot be availed if the final product is exempted from duty, as such modvat credit availed by the party in respect of the inputs lying in stock as on 22.7.96 was in admissible and the same was liable for recovered under Rule 57 I. The Asst. Commissioner relying on the decision of the Larger Bench in the case of M/s. Khanbhai Esoobhai vs. Collector reported in 1999 (107n) ELT 557(T) wherein it is held that when the final product was fully exempted, the manufacturer is required to reverse the credit on inputs lying in stock, used in process goods and on inputs contained is final products in stock, confirmed a demand of Rs.2,34,157/- under Rule 57-I and directed them to deposit this amount within ninety days.
2. On appeal, the Commissioner (Appeals), Chandigarh vide his order dt. 22.3.2000 dismissed the appeal of the party on further relying on the decision of the Hon'ble Allahabad High Court in M/s. Super Cassettes vs. Union of India - 1997 (94) ELT 302 (Allahabad). In this judgement, it is held that modvat credit taken in respect of vegetable products which are in stock as well as in respect of inputs used in the manufacture of final products which have become exempt, would be inadmissible and will have to be revered.
3. The present appeal is filed against the above order of Commissioner (Appeals). The matter is listed today for hearing the Stay Petition filed by the appellants. I have heard Shri Kulvinder Singh, Advocate for the appellants and Shri M.D. Singh, SDR for the Revenue. I have considered the submissions made before me. The appellants are relying on the proviso (iv) to Rule 57F(4) in which it is provided that the specified duty allowed in respect of inputs may be utilised towards payment of duty of excise on any other final product, whether or not such inputs have actually been used in the manufacture of other final product, if the said input had been received and used in the factory of production on or a after 16.3.95. It is contended that the appellants are manufacturing other products. The appellants apart from vegetable oil products are also manufacturing other products viz, oxygen, spent earth, spent catalyst, acid oil and soap stock in their factory. All these products are being cleared on payment of duty and therefore, the modvat credit availed on the inputs is being utilised for payment of duty on the clearance of the said goods under the provisions of proviso (iv) of Rule 57-A (4). It prima facie appears that the facts of the present case are fully covered by the judgement of the Allahabad High Court in the case of Super Cassettes and that of the Larger Bench of the CEGAT in the case of Khanbhai Esoobhai (supra). The question whether the modvat credit of duty paid on the inputs used in the manufacture of the exempted goods can be utilised for payment of duty on the other products produced by the same manufacturer under the aforesaid provisions of Rule 57-A(4) can be gone into only at the time of final hearing of the appeal. In view of these facts it appears that the balance of convenience is not in favour of the appellants. They are therefore directed to make the deposit of entire amount of Rs.2,34,157/- on or before 21.12.2000. The matter will be called for reporting compliance on 27.12.2000.
(Pronounced in the Court)