Customs, Excise and Gold Tribunal - Mumbai
The Liquidator (Govt. Of India) vs The Commissioner Of Central Excise on 17 May, 2005
ORDER Archana Wadhwa, Member (J)
1. The appellants are engaged in the manufacture of various excisable goods and during the relevant period they were availing the benefit of modvat credit after filing due declaration. One of the inputs DMT was received by them from M/s. Bombay Dyeing and Manufacturing Company Ltd, on which they availed the credit on the basis of the duty paying documents. Subsequently due to upward revision of price affected on the inputs manufacturer, they paid Differential duty of Rs. 8,40,000/- in their PLA on 08.06.95. Inasmuch as the appellants were entitled to take the modvat credit of the differential duty paid by Bombay Dyeing and Manufacturing Company Ltd, the Superintendent of Central Excise issued a certificate under the provisions of Rule 57E on 08.06.95. The said certificate was not received by the noticee company and as such, they requested for issuance of another certificate. Subsequently, concerned officer issued a certificate dated 20.07.96 under the provisions of Rule 57E in lieu of the earlier certificate, on the basis of which the appellants availed the credit thereafter. Revenue entertained a view that inasmuch as the credit was availed after a period of six months from the date of issuance first certificate, the credit was not available to the appellants. For the said purposes, proceedings were initiated against them which culminated into an order passed by the Deputy Commissioner disallowing the modvat credit as also imposing personal penalty of Rs. 5,000/-. Appeal against the above order did not succeed before the Commissioner (Appeals). Hence the present appeal.
2. I have heard Shri N K Joshi, Advisor (Finance) appearing on behalf of the Liquidator appointed in respect of the said appellants and Shri U H Jadhav, Ld JDR for the revenue.
3. The short issue involved in the present appeal is as to whether the bar of taking credit after a period of six months from the date of issuing the duty paying document introduced vide Notification No. 28/95-CE(NT) dated 29.06.95 vide which a proviso to Rule 57G was introduced would also apply to the credit available under Rule 57E. The proviso to Rule 57G(2) is to the effect - "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". First proviso to sub-rule 57G specify the documents on the basis of which modvat credit can be availed by an assessee. Certificate issued by the Superintendent under the provisions of Rule 57E is not one of the specified documents. As such, it becomes clear that the bar of six months does not apply to the certificate issued under Rule 57E. The reasoning of the Commissioner (Appeals) that Rule 57G is the core provision, which lays down the procedure for availment of credit as well as connected procedural matters and inasmuch as the documents forming basis of availment of credit as spelt out in the said rule prescribing a time limit within which the manufacturer must take credit in his books of accounts will also apply to rule 57E, does not appeal to me. The decision of the Larger Bench of the Tribunal in the case of Utkal Asbestos Ltd, v. Collector of Central Excise, Bhubaneshwar, reported in 2000(120) ELT 235 (Tri.) has observed in para 16 of its judgment as under:-
"Out of the 'succeeding rule's is Rule 57E which contains a provision for variation of credit on inputs consequent to variation of the duty paid on such inputs. The rule contemplates that such variation of the duty paid on inputs can occur by way of a refund of the duty or part thereof to, or a recovery of more duty from, the input manufacturer. It also visualizes that such refund or recovery may take place due to any reason and at any time subsequent to be original payment of duty on the inputs. The rule also lays down the manner in which the variation of credit shall be effected at the end of the input consuming/credit taking manufacturer. These provisions contained in rule 57E represent a particular aspect of the Modvat scheme, which cannot be said to be implicit in rule 57G or any other rule. For this reason, we hold the view that rule 57E is a substantive provision of law reflecting a particular aspect of the scheme and cannot be discounted as clarificatory to any other rule. The view taken in TELCO's case is not correct in our opinion".
As such, it is seen that Rule 57E being a "corrective" rule in essence allows an assessee to take the credit of duty which might have been paid by the inputs manufacturer at a subsequent stage. The said rule also provides for making adjustment in the credit account of inputs user if the duty originally paid by the inputs manufacturer gets refunded to it. As such, it is clear that the Rule 57E is basically for providing any adjustments in future in respect of the duty paid by the inputs manufacturer or refunded to him. It is by itself a complete Rule and is not dependent for its existence to other modvat rules. As such, I am of the view that the bar introduced in the provisions of Rule 57G for taking the credit within a period of six months from the date of issuance of duty paying documents cannot be lifted from the provisions of that Rule and apply to Rule 57E.
4. Further, the facts of the instant case are peculiar inasmuch as admittedly the original certificate issued by the Superintendent as regards the payment of differential duty was not received by the appellants and a new certificate was issued subsequently in lieu of the earlier, when the appellants brought the facts of non-receipt to the notice of the Superintendent.
5. The credit was then taken within a period of six months from the date of receipt subsequent certificate. It may be noted that there is no time limit for issuance of certificate under Rule 57E for the differential duty paid. As such, even the second certificate issue by the Superintendent was valid and the credit having been taken within a period of six months from the said certificate was absolutely in order. The object of issuance of such certificate under the provisions of rule 57E by a Central Excise Officer having jurisdiction over the victory of inputs manufacturer is to ensure that such differential duty has been in fact, paid by the input manufacturer. The duty having been admittedly paid by the input manufacturer in the present case, the inputs user becomes entitled to the credit of the same in terms of the provisions of Rule 57E. As such, I am of the view that the impugned orders have been passed on mis-interpretation of relevant provisions of modvat rules, the same are liable to be set aside. I order accordingly. The appeal is thus allowed with consequential relief to the appellants.