Customs, Excise and Gold Tribunal - Mumbai
Dura Magnets Pvt. Ltd. vs Collector Of Central Excise And Customs on 15 October, 1992
Equivalent citations: 1992(40)ECC461, 1993(64)ELT342(TRI-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. This is an appeal directed against the Order-in-Appeal No. P-34/92, dated 20-2-1992 passed by the Collector of Central Excise (Appeals), Pune, rejecting the appellant's appeal.
2. The facts of the case involved in this appeal are that the appellants are manufacturing cast alloy permanent magnets and they imported the input Nickel Squares for the manufacture of the aforesaid item. They had filed MODVAT declaration on 19-7-1988, including this item as an input. Accordingly they had availed MODVAT benefit in respect of one consignment cleared on 20-8-1988 paying countervailing duty at 15% ad valorem. However, in the case of another consignment of Nickel Squares, the Customs House charged the countervailing duty at nil rate and these goods were cleared on 24-11-1988. Hence MODVAT Credit was not taken, since no countervailing duty was paid on the consignment. However, after one year, a demand was made on 5-12-1989 by the Customs House, which was honoured by the appellants without raising the ground of time bar, since they were entitled to MODVAT Credit in respect of the CVD. Accordingly they took the Credit on the CVD on the basis of duty payment made on challan and also on the basis of the certificate issued by the Customs House on 17-1-1990. Thereafter, they took the Modvat credit, which was objected to by the Assistant Collector on the ground that since the inputs have been received without payment of CVD at the initial stage, MODVAT Credit on the basis of subsequent payment of CVD cannot be taken. When the matter was taken up in appeal before the Collector (Appeals), the Collector (Appeals) was of the view that time-barred demand need not have been honoured and there is no indication before the customs authorities that they are going to avail MODVAT benefit and also he is not sure of the fact that they might have applied for refund. Hence he did not consider to allow the appeal, and the Assistant Collector's order came to be confirmed demanding a sum of Rs. 37,528/-. Hence the present appeal before me.
3. After hearing both the sides, 1 find that the undisputed factual position is that the amount of Rs. 37,528/- has been paid as CVD in respect of Nickel Squares, which were imported in the month of November, 1988. Because of the mistake in assessment by the Customs House, no CVD was paid. The appellant honoured the demand subsequently notwithstanding the fact that it was time-barred, only because of the fact that MODVAT credit of the CVD subsequently paid is admissible to them under Rule 57E of the Central Excise Rules. I am not able to agree with the view of the Assistant Collector that if the inputs have been received initially without payment of duty and subsequently those goods were found to be liable to duty on a demand by the proper officer with regard to the duty payable on inputs, the manufacturers of those inputs have paid the duty subsequently. MODVAT benefit can be taken away in respect of those inputs. The object of the MODVAT scheme is to avert the cascading effect of the duty paid on the inputs. Hence when the inputs are subject to duty and it has been paid even subsequently, it would be available under Rule 57E. Otherwise the object of Rule 57E is frustrated. I am also unable to appreciate the stand taken by the Collector (Appeals). If the appellants have chosen to honour time-barred demand, that does not make the payment a donation. It is only a payment towards duty, in respect of which credit is available, even though payment is at a subsequent stage, under Rule 57E. The Ld. Chartered Accountant also confirms that the certificate has been issued by the Customs authorities only for the purpose of availment of Credit and they are not going to seek for refund of the customs duty. Hence the other objection taken by the Collector (Appeals) also does not appeal to me. In view of the aforesaid discussion, I allow the appeal and set aside the orders of the authorities below and grant consequential relief, where called for.