Customs, Excise and Gold Tribunal - Delhi
Kusum Ingots And Alloys Ltd. vs Commissioner Of C. Ex. on 11 July, 2000
Equivalent citations: 2000(120)ELT214(TRI-DEL)
ORDER S.S. Kang, Member (T)
1. The facts before us as narrated by both sides are that appellants are engaged in the manufacture of excisable goods and were working under the Modvat Scheme. Rule 57 A of the Central Excise Rules allowed the credit of duty of excise or the additional duty paid on the goods used in or in relation to the manufacture of final product. The credit so allowed is to be utilised towards payment of duty of excise leviable on the final product. Rule 57G of the Central Excise Rules provides that the manufacturer can take credit in respect of the inputs received under the duty paying documents. Prior to 29-6-1995 the manufacturer who receives the inputs under the cover of valid duty paying documents had the freedom to take the credit without any limitation of time under Rule 57G. Rule 57G was amended by Notification No. 8/95-C.E.(N.T.), dated 25-6-1995 and a proviso was introduced in the rule to the effect that no credit is to be taken after six months from the date of issue of any duty paying documents.
2. The issue before the Bench is whether in cases where credit has been taken after the amendment to Rule 57G of Central Excise Rules on the strength of duty paying documents issued prior to the amendment the Revenue can deny the credit in respect of such documents on the ground that credit has been taken after six months from the date of issue of duty paying document in view of the amendment to Rule 57G of Central Excise Rules.
3. The Tribunal in the case of National Steel Industries Ltd. v. CCE, In-dare reported in 1999 (31) RLT 191 held that credit cannot be denied after the amendment of Rule 57G on 29-6-1995 in respect of duty paying documents issued prior to the amendment on the ground that credit was taken after six months from the issue of the duty paying doucments. Contrary view was taken in the case of Osram Surya Pvt. Ltd. v. Commissioner of Central Excise, In-dore, reported in 1998 (29) RLT 684 (CEGAT). Therefore, the matter has come before this Larger Bench on reference.
4. The contention of the appellant is that the amendment to Rule 57G of the Central Excise Rules, 1944 by Notification No. 28/96-C.E. (N.T.), dated 29-6-1995 is prospective in nature and denying the benefit of Modvat credit on the documents issued prior to 29-6-1995 makes the amendment retrospective and any amendment cannot be made retrospective unless and until it is specifically provided in the amending notification and no such provision is contained in the present notification. Therefore, the credit cannot be denied on the documents issued prior to 29-6-1995 on the ground that credit is taken after six months.
5. The contention of the Revenue is that the notification is prospective in nature as the Revenue is not denying the benefit of credit taken before 29-6-1995 on the ground that the credit was taken after six months from the issue of the documents. In this situation, we are of the view that amendment introduced by the Notification No. 28/95-C.E.(N.T.), dated 29-5-1995 is prospective in nature as Revenue is not denying the credit taken on the condition imposed by notification prior to the date of amendment.
6. It is also the contention of the appellant that on the introduction of the time limit from 29-5-1995, the assessees who were enjoying an unfettered right till 28-6-1995 to take credit and who had not done so, for whatever reasons, have to be given reasonable time to take such credit and the reasonable time would depend on the facts of each case. For this he relies on the decision of the Supreme Court reported in JT 1993 (3) S.C. 711 in the case of Union of India v. Harnam Singh.
7. It is further contended by the appellants that the crucial event determining the admissibility of credit is the receipt of the inputs and not the act of taking credit. Therefore, the amendment made on 29-6-1995 would not be applicable to the credits that had crystallised before 29-6-1995. For this they have relied upon Larger Bench decision of the Tribunal in the case of Tata Engg. Locomotive Company v. Collector of Central Excise, Bombay, reported in 1996 (87) E.L.T. 157 (Tribunal) and in the case of Hindustan Motors Ltd. v. C.C.E., reported in 1994 (73) E.L.T. 597.
8. The appellants have finally contended that Section 37 of Central Excise Act, 1944 gives powers to Central Government to make rules to carry into effect the purposes of Central Excise Act and enables the Government to make Rules which provide credit of duty paid or deemed to have bean paid on the goods used in or in relation to the manufacture of excisable goods and there is no Rule under Section 37 which enables the Government to take away the Modvat credit that accrues in the form of vested right to a manufacturer. For this, appellant relies upon the observation made by the Honble Supreme Court in the case of Eicher Motors Ltd. v. Union of India, reported in 1999 (30) RLT 829 (S.C.).
9. Opposing the arguments on behalf of the appellants, the contention of the Revenue is that amendment to Rule 57G of Central Excise Rules clearly provides that manufacturer shall not take credit after six months of the date of issue of any document. The contention of the Revenue is that the vested right for Modvat credit crystallise in favour of the manufacturer only when he takes the credit in his RG 23A Part-II Account and produces the documents for defacement in terms of Rule 57G of the Central Excise Rules. The contention of the Revenue is that if it is accepted that credit crystillised in favour of the manufacturer as soon as he receives the inputs, it will run contrary to the language of Rule 57G and Rule 57-I of the Central Excise Rules. There can be no assessment prior to the stage of presentation for assessment which stage would have commenced only after the credit was taken in RG-23A Part II Account. Revenue supported the view taken in the case of Osram Surya Pvt. Ltd. v. Commissioner of Central Excise, Indore, reported in 1998 (29) RLT 684 (CEGAT).
10. The Notification No. 28/95-C.E.(N.T.), dated 25-6-1995 came into force from 25-6-1995 and provieds that credit should be taken within six months from the issue of duty paying documents. The following new proviso has been incorporated in Rule 57G (2):
"Provided further that the manufacturer shall not take credit after six months from the date of issue of any of the documents specified in the First proviso to this Sub-Rule."
11. The contention of the appellant is that some reasonable period should have been given to the manufacturer who were having duty paying documents which were more than six months old on the date of amendment and no credit was taken on them, to take credit on such documents, the appellant replied upon the Hon'ble Supreme Court case Union of India v. Harnam Singh (Supra). We find that Hon'ble Supreme Court in the case of Miles India Limited v. Assistant Collector of Customs, reported in 1987 (30) E.L.T. 641 (S.C.) and in the case of Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills, reported in 1988 (37) E.L.T. 478 (S.C.) held that authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation, prescribed in the Act will prevail. We find no such provisions under the Central Excise Act or under the Rules where the Tribunal can issue such directions as given by the Hon'ble Supreme Court in the case of Union of India v. Harnam Singh (Supra). Therefore there is no merit in this plea of the appellants. The appellants also relied upon the decision of the Hon'ble Supreme Court in the case of Eicher Motors Ltd. v. Union of India, reported in 1999 (30) RLT 829 (S.C.) to say that Section 37 of Central Excise Act does not empower the Revenue to make such rule, as the Clause XVI (a) of Sub-Section 2 of Section 37, only enable the Government to make rules which provides for credit of duty paid on the goods in or in relation to the Excise Rules.
12. We find that after the decision of the Hon'ble Supreme Court in the case of Eicher Motors Ltd. v. Union of India (Supra), Sub-Section XXVIII is introduced in Section 37 to provide for Rules which empower the Government to make rules for not allowing credit to be utilised for payment of duty on excisable goods, by Section 131 of Finance Act, 1999. Therefore, after this amendment reliance by the appellants on the decision in the case of Eicher Motors Ltd. v. Union of India will not help them. If a manufacturer wants to avail the benefit of Modvat credit in respect of inputs used in or in relation to the manufacture of final product on payment of duty on such final products under Rule 57A of the Central Excise Rules, he should follow the procedure laid down under the Modvat Scheme. The contention of the appellants is that if on the inputs the manufacturer had already paid the duty on the basis that when the goods are utilised in the manufacture of final product then tax on these goods are to be adjusted and this right accrued to the manufacturer on the date when they paid the tax on the inputs. The right will continue till the facility is available. A manufacturer who is working under the Modvat Scheme can certainly utilise the credit of the duty paid on the inputs used in or in relation to the manufacture of final product for payment of duty on such final product; but he has to take credit on such inputs within six months from the date of issue of the duty paying documents. After the amendment credit cannot be taken on duty paying documents which are more than 6 months old.
13. In view of the above discussions, we answer the question referred to Larger Bench in the favour of Revenue. Therefore, the view taken in case of Osram Surya Pvt. Ltd. v. Commissioner of Central Excise, Indore, reported in 1998 (29) RLT 684 is the correct view and the contrary view taken in correct.
14. No other issue is involved in the appeals. Therefore, the appeals are being taken up for disposal. The appellants availed the benefit of Modvat credit on documents after six months from the date of their issue. After amendment to Rule 57G of Central Excise Act, the appellants are not entitled to such credit. The appeals are accordingly dismissed.