Madhya Pradesh High Court
Commissioner Central Excise vs M/S Raymond Ltd on 2 May, 2013
C.E.R. No.59/2000
[Commissioner of Central Excise, Bhopal vs. M/s Raymonds Ltd. Sausar]
02.05.2013
Shri Anoop Nair, learned counsel for the a applicant.
Shri Prasad Paranjape and Shri Satish Agrawal, learned
counsel for the respondent.
This is an application filed by the Commissioner, Central Excise, Bhopal under Section 35(H) of the Central Excise Act, 1944 for issuance of a direction to the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi for referring the matter to the High Court on the question raised in the application for its opinion. The question of law that has been raised in the application by the Revenue reads thus:
"Whether in the facts and circumstances of the case, the Tribunal is correct in holding that provisions of Rule 57G cannot be applied to the case covered by Rule 57H of the Central Excise Rules, 1944 ?
Before considering the aforesaid prayer it would be appropriate to illustrate the factual position in the present case. The respondent, M/s Raymonds Ltd. Sausar was engaged in the manufacturing of Man Made Yarn, falling under sub-heading No.5513.29 of the Schedule to the Central Excise Tariff Act, 1985. On 4-9-1996 the respondent had filed an application, to claim modvat credit of Rs.61277641.00, under Rule 57H of the Central Excise Rules, 1944 [hereinafter referred to as `the Rules'] in respect of raw materials, i.e., Gray Fabrics & Finished goods lying on the stock as on 4-09-1996, which was subsequently revised by the party to Rs.61208600.00 vide its letter dated 9-01-1997. The respondent had filed declaration under Rule 57H of the Rules claiming modvat credit on the basis of documents which were issued beyond six months from the date of filing of the application. The Assistant Commissioner adjudicated the matter by holding that the provision of Rule 57G of the Rules shall be applicable in the matter and since the respondent had applied for modvat credit on the basis of the documents which were issued more than six months back, relying on the second proviso of Rule 57G of the Rules, which came into force from 9-6-1995, he had rejected the claim of the respondent by holding that after six months from the date of issuance of documents, such modvat credit could not have been claimed.
Against the order passed by the Assessing Officer the respondent had filed an appeal before the Commissioner (Appeals), Customs & Central Excise, Bhopal who after considering the provision of Rules 57G and 57H of the Rules recorded the finding that there was no provision in Rule 57H of the Rules, which debars the assessee to take modvat credit on the strength of the documents which were issued beyond six months before the date of claiming the modvat credit and allowed the claim of respondent. Against the order passed by the Commissioner (Appeals) the applicant herein, had filed a Second Appeal before the Customs Excise & Gold (Control) Appellate Tribunal, New Delhi [hereinafter referred to as `the Tribunal'] raising the aforesaid question of law. The Tribunal had considered the provisions of the Rules 57G and 57H of the Rules and recorded a finding that the Rule 57H starts with the opening non obstante clause "notwithstanding anything contained in Rule 57G". So the matter is covered by Rule 57H and modvat credit can be allowed in spite of bar under Rule 57G and the Tribunal had dismissed the appeal by holding that under Rule 57H of the Rules there was no such provision debarring the assessee from claiming modvat credit beyond the period of six month from the date of issuance of documents.
Being aggrieved by the aforesaid order the Revenue has filed this application before this Court with the prayer that the question of law is involved in this case and the Appellate Tribunal may be directed to refer the matter to the High Court for deciding the aforesaid question.
Shri Anoop Nair, learned counsel appearing for the Revenue submitted that in the case second proviso of Rule 57G of the Rules is applicable, which provides that such modvat credit could have been claimed within the period of six months from the date of issuance of the documents on which the modvat credit was claimed and if the claim was made beyond the period of six months, the Assessing Officer was right in rejecting the claim of the respondent for modvat credit.
Shri Prasad Paranjape, learned counsel appearing for the respondents supported the order passed by the Tribunal and submitted that from a bare reading of both the provisions of Rules 57G and 57H of the Rules, it is clear that Rule 57G of the Rules provides the situation in which an assessee had already claimed modvat credit. The second proviso was inserted with effect from 29-6-1995, which provides the situation where such modvat credit could not have been claimed within the period of six months from the date of issuance of the documents. The provisions of Rule 57H of the Rules were applicable for taking care of the situation which was transitional. The respondent had claimed for modvat credit and applied for the same for the first time on 4-9-1996 when the Unit had commenced its business. Looking to the transitional provision as contained in Rule 57H of the Rules, the respondent was entitled to claim modvat credit even beyond the period of six months from the date when documents were issued. It is also submitted by the learned counsel for the respondent that Rule 57H of the Rules provides special circumstance to the assessee for claiming such modvat credit even if the documents were more than six months old from the date when such modvat credit was applied.
To appreciate the aforesaid contention it would be appropriate to refer to the provisions of Rules 57G and H of the Rules which are relevant for the purpose of this application. The relevant part of the same reads as under:
"57G (1) Every manufacturer intending to take credit of the duty paid on inputs under rule 57A, shall file a declaration with the [Assistant Commissioner of Central Excise] having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the said [Assistant Commissioner] may required, and obtain a dated acknowledgment of the siad declaration.
(2) A manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgment aforesaid, take credit of the duty paid on the inputs received by him.
xxx xxx xx xx xxx xxx xxx xxx xxx Provided further that the manufacturer shall not take credit after six months of the date of issue of any of the documents specified in first proviso to this sub-rule.
Provided also that having regard to the period that has elapsed that since the duty of excise was imposed on any inputs, the position of demand and supply of the said inputs in the country and any other relevant considerations the Central Government may direct that with effect from specified date, all stocks of the said inputs in the country, except such stocks laying in a factory, customs area (as defined in the Customs Act, 1962 (52 of 1962)] or a warehouse as or clearly recognizable as being non-duty- paid, may be deemed to be duty-paid and credit of duty in respect of the said inputs may be allowed at such rate and subject to such conditions as the Central Government may direct, without production of documents evidencing the payment of duty.
Provided also that the manufacturer shall take all reasonable steps to ensure that the inputs acquired by him are goods on which the appropriate duty as indicated in the documents accompanying the goods, has been paid.
(2A) Notwithstanding anything contained in sub-rule (2), a manufacturer can take credit of the inputs received in the factory on the basis of the original invoice, if the duplicate copy of the invoice has been lost in transit, subject to the satisfaction of the [Assistant Commissioner].
xxx xxxx xxxx
xx xx xxx
Provided further that in respect of a
manufacturer availing of any exemption based upon the value or quantity of clearances in a financial year, the provisions of this sub-rule shall have effect in that financial year as if for the expression "month", the expression "quarter" were substituted.
(5) Where a manufacturer was not in a position to make a declaration under sub-rule (1) and makes the declaration subsequently, the Assistant Commissioner may, for reasons to be recorded in writing, condone the delay in filing of such declarations and allow the manufacturer to take credit of the duty already paid on the inputs even though the procedural requirements laid down under this Rule have not been complied with.
57H. Transitional provisions- (1) Notwithstanding anything contained in Rule 57G, the Assistant Commissioner of Central Excise may allow credit of the duty paid on inputs-
(i) falling within Chapter 24 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);
(ii) used in or in relation to the manufacture of fabrics by a composite mill, received by a manufacturer, under any invoice or any document as may be prescribed by the Central Board of Excise and Customs, immediately before or after obtaining the dated acknowledgement of the declaration made under the said rule if he is satisfied that -
(a) such inputs at (i) above are lying in stock, or are received in the factory, on or after the 23rd day of July, 1996, or such inputs are used in the manufacture of final products which are cleared from the factory on or after the 23rd day of July, 1996, and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification;
(b) such inputs at (ii) above are lying in stock, or are received in the factory, on or before the 4th day of September, 1996, or such inputs are contained in the intermediate goods which are lying in stock on 4th day of September, 1996, or such inputs are used in the manufacture or packing of final products which are cleared from the factory on or after the 4th day of September, 1996, and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification:] Provided that no credit under this sub-rule shall be allowed in respect of inputs at (i) or (ii) above received, or declaration made under rule 57G, on or after the 22nd day of August, 1996 or 31st August, 1996, as the case may be:
Provided further that such inputs are not used in the manufacture of final products which is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty.] [Explanation.- For the purpose of this sub- rule,"composite mill" means a manufacturer, who is engaged in the processing of fabrics, with the aid of power alongwith spinning of yarn from fibres and weaving or knitting or crocheting of fabrics within the same factory].
xxx xxx xxx
xxx xxx xxx
(5) Where a manufacturer who ops for
exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and whole has been availing of the credit of the duty paid on inputs before such option is exercised, he shall be required to pay an amount equivalent to the credit, if any, allowed to him in respect of inputs lying in stock or used in any finished excisable goods lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any,lying in his credit, the balance if any, still remains shall lapse and shall not be allowed to be utilised for payment of duty on any excisable goods, whether cleared for home consumption or for export.]"
The second proviso of Rule 57G of the Rules specifically provides that the manufacture shall not take credit after six months of the date of issue of any of the documents specified in the first proviso to this sub-rule. This provision specifically provides that no modvat credit shall be made available to the assessee, if such modvat credit was claimed after a period of six months from the date of issuance of the documents. But in the present case, as has been stated hereinabove, the respondent had applied modvat credit for the first time in its notification on 4-9-1996 i.e., during the year in which modvat credit was claimed under the provision contained in Rule 57H. Under Rule 57H of the Rules, there is no provision for claiming such modvat credit beyond the period of six months from the date of issuance of documents. The aforesaid rule begins with the non obstante clause `Notwithstanding anything contained in Rule 57G', meaning thereby that the provision of Rule 57G of the Rules were specifically excluded from the provision of Rule 57H and nothing contained in Rule 57G of the Rules was applicable for the applicability of Rule 57H. In the present case, as indicated hereinabove, the modvat credit which was claimed by the respondent for the first time on 4-9-1996, the Commissioner (Appeals) as well as the Tribunal after considering the provisions as contained in Rule 57H of the Rules have rightly recorded the finding that the provision of Rules 57H being a transitional provision and begins with the non obstante clause, as have been quoted hereinabove, and excludes the provision which are contained in Rule 57G of the Rules. Thus, the denial by the Assessing Officer of modvat credit to the respondent merely on the ground that the same was claimed beyond the period of six months was not justified. A clause beginning with non obstante clause, is something appended to a provision with a view to give overriding effect to the provision, in case there is some conflict of the provision with over provision. [See: Union of India vs. G.N. Kokil, AIR 1984 SC 1022, T.R. Thandur vs. Union of India, AIR 1996 SC 1643.] We do not find any error in the impugned order and involvement of any question of law to be referred to this Court.
Resultantly, the application preferred by the applicant under Section 35(H) of the Central Excise Act, 1944 being without merit, is dismissed. There shall be no order as to costs.
(Krishn Kumar Lahoti) (Smt. Vimla Jain)
Acting Chief Justice Judge
ac.