Customs, Excise and Gold Tribunal - Delhi
Aqueous Victuals Ltd. vs Collector Of Central Excise on 1 March, 1996
Equivalent citations: 1996(84)ELT366(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. The appellants are manufacturers of aerated water in the manufacture of which they use various inputs including glass bottles. After the Modvat Scheme was extended to aerated waters w.e.f. 1-3-1987 they had filed the required declaration under Rule 57G of the Central Excise Rules on 25-9-1987 in respect of such glass bottles. At the time of giving such a declaration they were having in their stock a certain quantity of glass bottles for which an application under Rule 57H of the Central Excise Rules had also been filed on the same day. They took the credit relating to such glass bottles on 26-9-1987 and utilised an amount of Rs. 2,17,901.48 before 30-9-1987 which represented part of the amount of credit which they had claimed under Rule 57H, as stated above. A show cause notice was issued by the Superintendent against their having taken the credit on the ground that they had not obtained the prior permission of the Assistant Collector. The case was adjudicated by the Assistant Collector and the order passed by him was upheld by the Collector of Central Excise (Appeals), Allahabad vide his order dated 15-11-1991. The present appeal is a sequel to that order.
2. Shri R. Nambirajan, learned advocate alongwith Shri Kapil Vaish, learned Chartered Accountant appeared for the appellants. It was submitted by Shri Nambirajan that the relevant Rule 57H as it stood at the material time did specifically provide for obtaining of prior permission from the Assistant Collector before the credit could be taken thereunder. It only provides that the Assistant Collector may allow credit of duty paid on the inputs received by the manufacturer immediately after obtaining the due acknowledgment of the declaration made under Rule 57G. Such a permission is to be given by him if he is satisfied that such inputs are lying in stock or received in the factory after filing the declaration made under Rule 57G or such inputs are used in the manufacture of final products which are cleared from the factory on or after 1-3-1987. This was subject to the condition that no credit had been taken by the manufacturers in respect of such inputs under any other rule or notification. On a plain reading of this provision it would be clear, argued Shri Nambirajan, that no prior permission is contemplated. He referred to the Tribunal decision in 1993 (44) ECR 250 Should be 1993 (44) ECR 215 (Tri.). In the said decision it had been clearly held that the credit taken without Assistant Collector's permission on inputs lying in stock or received before filing a declaration is admissible as the condition of prior permission is not prescribed in the Rule. In another decision reported in 1996 (12) RLT 91 in the case of Safe Fire Services v. Commissioner of Central Excise, Bombay -I the Tribunal had held that taking of Modvat credit under Rule 57H of Central Excise Rules, 1944 without the permission of the Assistant Collector may invite penal action but substantive benefit of the credit itself cannot be denied. He also referred to another such decision wherein it had also been held that taking of credit under the provisions of Rule 57H does not require the prior permission of the Assistant Collector. It only requires a permission and such permission could be granted by the authority subsequently also which would regularise the credit having taken. In the present case, the learned counsel submitted that the permission sought vide their application dated 25-9-1987 has still not been granted. It cannot be imagined that they should have waited of the stand for the Assistant Collector to grant the permission. In one of the decisions where the Tribunal had held that the availment of modvat credit Under Rule 57H was in order even without the prior permission of the Assistant Collector, even the application under Rule 57H had not been made, even then it was held that the availment of credit itself was not be discharged. He concluded his argument with the plea that the appeal be allowed and the impugned order set aside.
3. The arguments were resisted by Shri Mewa Singh, learned SDR, who supported the impugned order. He submitted that the Rule requires the permission and in the context of the Modvat Scheme such permission would be prior permission as the Assistant Collector had to be satisfied about the existence of the goods in stock as such or as contained in the final products which were to be cleared on payment of duty after the specified date. This would show that the prior permission is required.
4. Arguments have been duly taken note of by us. We are not inclined to accept the plea of the learned SDR that the language of Rule 57H, as it stood at the material time provided for the permission of the Assistant Collector. Such a view had been rejected by the Tribunal in several decisions. Though the language used in the said rule is that the Assistant Collector may allow credit as provided for therein, the expression "may allow" does not give that authority the power to either refuse the said permission without valid reasons or for not deciding the matter within a reasonable time. In fact, in the present case it has to be stated by the learned counsel that the permission applied for under Rule 57H vide their application dated 25-9-1987 has still not been granted. In the circumstances, if they avail the credit in anticipation of the grant of such permission that cannot be called into question particularly where no decision has been taken refusing the permission by the Assistant Collector. From the facts of the case as come out on record, there are no circumstances warranting the withholding of such permission or refusal. Accordingly and in line with the Tribunal decisions cited before us, we hold the view that the availment of credit in question which had been objected to by the authorities was in order and such denial in the impugned order calls for no interference by us. We order accordingly and set aside the impugned order and allow the appeal.