Customs, Excise and Gold Tribunal - Tamil Nadu
Indo National Ltd. vs Collector Of C. Ex. on 15 December, 1988
Equivalent citations: 1989(20)ECC110, 1989(41)ELT422(TRI-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Madras, dated 29-4-1988 con firming the order of the Assistant Collector of Central Excise, Nellore, dated 8-10-1987 directing the appellant to pay a sum of Rs. 69,120/- under Rule 57-I of the Central Ex cise Rules, 1944 hereinafter referred to as the 'Rules'.
2. The appellants herein are manufacturers of Electric Dry Batteries and one of the inputs for the same is Electro Carbon rods supplied to the appellants by M/s I.M.C.C. Ltd., Tada, A.P. The appellants received three consignments of the inputs viz. Electro Carbon Rods from their suppliers in March 1986 and took credit of a sum of Rs. 69,120 on the duty suffered by the inputs, in their R.G. 23 Pt. II account on 29-3-1986. Originally in respect of the same inputs, the appellants had taken a credit of Rs. 1,03,680 and the sum of Rs. 69,120/- was again availed as credit on the ground that the supplier though had initially cleared the inputs on payment of duty at the rate of 12% by mistake later paid the differential duty since the duty on the said inputs under law is 20% and not 10%. The supplier having paid the dfferential duty at the instance of the Department collected the same from the appellant herein and the appellants consequently took credit of the differential amount of Rs. 69,120/-. Proceedings were instituted against the appel lants by Issue of a show cause notice dated 30-6-1987 directing the appellants to show cause as to why the credit in respect of Rs. 69,120/- referred to supra should not be reversed under Rule 57-I of the Rules and the proceedings eventually resulted in the im pugned order now appealed against.
3. Shri Shivakumar, the learned counsel for the appellants, submits that MOD VAT credit taken in respect of the input is sought to be reversed by application of Rule 57-E of the Rules and contended that Rule 57-E has absolutely no application whatever to the circumstances of the case. The learned counsel urged that consequent on a mis take committed by the supplier, duty was wrongly paid at 12% initially and after the mis take was pointed out by the Department duty at the correct rate of 20% was paid by the supplier and the same was collected from the appellants and such a situation is not covered by Rule 57-E. The learned counsel further submitted that the input admittedly being an input entitled to MODVAT credit under the scheme and admittedly having suffered duty at the rate of 20%, the appellants are right in having taken credit for the entire duty suffered by the input in terms of Rule 57-A and reversal of the same by in voking Rule 57-E in the circumstances of the case is not legally correct.
4. Shri K.K. Bhatia, the learned S.D.R., submitted that Rule 57-E only deals with the situation where a credit allowed under Rule 57-A is varied subsequently and this Rule came into force on 15-4-1987. The learned S.D.R. urged that in the present case there does not appear to have been a variation in the rate of duty as such and there fore the issue may be remitted for consideration in the light of the applicability of Rule 57-A.
5. We have carefully considered the submissions made before us. Rule 57-E as it then stood in the relevant date is as follows:-
"ADJUSTMENTS IN DUTY CREDIT - If duty paid on any inputs in respect of which credit has been allowed under Rule in respect of which credit has been allowed under Rule 57-A, is varied subsequently due to any reason resulting in payment of refund to the manufacturer or the importer of the inputs, the credit allowed shall be varied accordingly by adjustment in the credit-account maintained under Sub-rule (3) of Rule 57-G or in the accounts maintained under Rule 9 or Sub-rule (1) of Rule 173-G or, if such adjustment is not possible for any reason, by cash recovery from the manufacturer availing of credit under Rule 57 A."
On consideration of the above Rule, we are of the view that there should be a variation in the rate of duty payable in respect of the input either by operation of law or by other wise and in the present case it cannot be disputed that there was no variation in regard to the duty payable for the input in question and the same continued to be at 20% right through. Merely because the supplier committed a mistake in not clearing the input by paying 20% duty and paid only 12% duty and subsequently paid the differential duty of 8%, it would not amount to variation of the rate of duty within the meaning of Rule 57 E extracted above. Since the authorities below have sought to reverse the credit by ap plication of Rule 57-E, we hold that 57-E in the facts and circumstances of the case has no application and therefore, reversal of credit by invoking Rule 57-E is not sustainable in law. In this view of the matter, we set aside the impugned order appealed against and allow the appeal, and remit the issue to the original authority for verification of the fact as to whether the input in question has suffered the correct duty as per law and whether the same amount has also been taken credit by the appellants herein and consider the case by application of Rule 57-A of the MODVAT Rules. Inasmuch as we have held that Rule 57-E is not applicable we do not feel called upon to pronounce upon the question of limitation.