Customs, Excise and Gold Tribunal - Mumbai
Associated Flexible And Wires Pvt. Ltd. vs C.C.E. And Customs on 22 May, 1992
Equivalent citations: 1995(78)ELT292(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. The appeal is directed against the Order-in-Appeal No. P-94/91, dated 20-9-1991 of the Collector of Customs and Central Excise (Appeals) Pune, confirming the Order-in-Original No. CEX/12/P/IV/90, dated 14/15-4-1990 of the Assistant Collector, Central Excise, Pune IV Division, holding that the amount of Rs. 26,248.74 taken as a higher notional credit, was not admissible to the Appellants and directing them to repay the same either by crediting the same in the PL Account with them or by depositing the same in cash, and also imposing penalty of Rs. 1,000/- under Rule 173Q(1)(bb) of the Central Excise Rules, 1944.
2. The appellants here are engaged in manufacturing of excisable goods falling within Chapters 85 and 90 of the Central Excise Tariff, and though they are the small scale units, they did not avail the benefit of Notification 175/86 during the financial year 1989-90, but chose to avail of Modvat Credit. In the course of their manufacturing activity, during the said period, the appellants purchased certain inputs from a manufacturer who also being a small scale unit, availed the benefit of Notification No. 175/86 and though the appellants, by virtue of Notification No. 113/89, dated 1-4-1989, which restored the facility of availment of higher notional credit, did not avail of the same. However, pleading that they became aware of such restoration of the facility of higher notional credit, only in July, 1989, they took higher notional credit totalling to Rs. 26,249/- on the inputs received during the period from April to June from SSI Unit, which availed of the benefit of Notification No. 175/86. That was however, unilaterally done, and hence, show cause notice dated 10-10-1988 was served on the Appellants, to show cause why such credit availed of, should not be disallowed, and direction should not be given to repay the same. In the adjudication the Assistant Collector held that higher notional credit vide Rule 57B ought to have been taken immediately on receipt of the inputs and not at a subsequent stage and disallowed the same, and also imposed personal penalty of Rs. 1,000/- on the appellant. In the appeal before the Collector (Appeals) inter alia, it was pleaded that the appellants were unaware of restoration of the said facility and that the departmental authorities also did not advise them. They also referred to the decision of the South Regional Bench, of the Tribunal, in Mysore lac and Print Works Ltd. v. Collector of Central Excise, 1991 (17) E.T.R. 61 , where the Tribunal has held that rights conferred under Rules 57A and 57B, cannot be taken away merely on account of not availing such credit at the time of receipt of the inputs, unless the same, is barred by limitation, and has further observed that such a credit is taken within a reasonable time. The Collector (Appeals) however held that reasonable time was not defined in the said decision, and in his opinion, higher notional credit, is not taken at the time of receipt of input, or at the end of the month, or in any case before the 5th day of the next month, when RT-12 Returns have to be filed, the same was not available.
3. Mr. Rajhans, the Ld. Consultant has pleaded that Rule 57B does not specify as to at what point of time the credit should be taken, and that as soon as the appellants became aware of the restoration of availment of higher notional credit, they took the same without any further loss of time and with Credit taken in July for the period April to June, they have done so within the period of six months, which has to be construed as reasonable period. He has submitted that therefore, the orders passed by the authorities below, require to be set aside.
4. Mrs. Lipika Majumdar Roy Choudhari, the Ld. SDR however, while supporting the order, has pleaded that facility for higher notional credit was also available during the previous financial year, and vide Notification No. 113/89, dated 1-4-1989, the same was merely continued, and as such the appellant's plea of ignorance cannot be believed. In her submission in the set of circumstances prevailing, the approach of the authorities below was justified.
5. There is no dispute about the eligibility of the appellants to availment of higher notional credit under the Modvat Scheme, on the inputs received, and the only ground for rejecting thereof is that the same was availed of after a period of over three months, after the issue of Notification No. 113/89, dated 1-4-1989. There is nothing in Rule 57B of the Rules to indicate that the credit, if not availed of, ought not be allowed. The decision of the Tribunal SRB referred to by the Collector (Appeals) holds that credit ought to be taken within a reasonable time. The question that can then arise is what could be taken as a reasonable time. Though the said word carries with it the criteria of subjective satisfaction, and no specific time limit can be held as "Reasonable time", considering various other provisions of the Excise Act and Rules framed thereunder, as also allied Tax Legislation, period of six months, has been considered as reasonable. Here the credit is availed of within the period of six months from the date of eligibility for the same, and as such, the same cannot be denied merely because the same is not taken when the inputs were received, or at the time of filing of RT-12 Return.
6. The approach of the authorities below therefore, does not appear to be in conformity with the Rule position, and hence cannot be sustained. The appellants have to be permitted to avail of such higher notional credit, when otherwise, they are eligible for the same.
7. In the result, the appeal is allowed, the orders of the authority below are set aside, and appellants are held as eligible to avail of higher notional credit, and demand against them on that count are [sic] ordered to be dropped. Consequential relief to follow.