Customs, Excise and Gold Tribunal - Tamil Nadu
Chemidye Trading Co. (P) Ltd. vs Collector Of C. Ex. on 4 June, 1990
Equivalent citations: 1990(50)ELT320(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This appeal is against the order of Collector of Central Excise (Appeals), Madras. Brief facts are that the appellants who are availing of MODVAT facility took MODVAT credit on 27-7-1986 for an amount of Rs. 1,51,075.66 in respect of specified inputs received by them earlier against gate pass showing Nil payment of duty. Their suppliers however, paid duty later in respect of the inputs received by them, after they discovered that the clearance made by them at nil rate of duty was not in order inasmuch as the Notification which exempted the goods had since been rescinded. The appellants have been denied the benefit of MODVAT credit by the learned lower authority for the reason that at the relevant time when they received the goods since no duty was paid on the goods, and that the provisions of Rule 57E would not apply to a case where the payment of duty on the goods is made subsequent to the receipt of the same in the factory functioning under the MODVAT Scheme. The learned Advocate pleaded that the appellants received the goods covered by gate pass showing nil rate of duty and were not aware that duty was required to be paid on the goods as the Notification under which the same were exempted had since been rescinded. He has pleaded that as soon as the supplier learnt about the rescinding of the Notification, they paid the duty and informed the appellants and based on their intimation, they (appellants) took credit which has been ordered to be reversed by the lower authority for the reason that they were not covered by the provisions of Rule 57E. He pleaded that the goods brought into the factory by the appellants were between the period 14-4-1986 and 17-4-1986 and the duty was paid on 30-4-1986 and 15-5-1986. He pleaded that their case would be covered by the provisions of Rule 57H. For the purpose of appreciating his plea for the benefit of Rule 57H, he was asked as to when the appellants filed the declaration. He, however, could not give the date of the same. He has pleaded that the concession under Rule 57H could not be denied to them for no fault of theirs for technical reasons so long as the goods in respect of which MODVAT credit had been taken had suffered duty burden and the necessary proof in regard to the same had been produced before the authorities.
2. The learned SDR adopted the reasoning of the learned lower authority.
3. We observe that it is not in dispute that duty has been paid on the goods in respect of which the credit was taken by them. Therefore, the point that falls for consideration is whether the appellants can take MODVAT credit subsequent to the date on which goods have been received under gate pass showing nil payment of duty in terms of Rule 57E. Rule 57E at the relevant time reads as under:
"Rule 57E - Adjustments in duty credit. - If duty paid on any inputs in respect of which credit has been allowed under Rule 57A, is varied subsequently, due to any reason resulting in payment of refund to, the manufacturer or importer, of the inputs, the credit allowed shall be varied accordingly by adjustment in the credit account maintained under sub-rule (3) of Rule 57G or in the accounts maintained under Rule 9 or sub-rule (1) of Rule 173G, or if such adjustment is not possible for any reason, by cash recovery from the manufacturer availing of the credit under Rule 57A".
4. It is observed that under Rule 57E as it was worded at the relevant time variation of credit could be made where refund had been allowed of the duty paid on the inputs for which MODVAT credit had been taken, by reversing the credit to the extent of the refund allowed. There was however, no specific provision covering the contingency where the duty was paid later by the supplier on the goods received as inputs which suffered lower duty or were cleared at Nil rate of duty earlier. In the absence of any provision in this regard, the point that falls for consideration is whether the additional credit could be allowed for the duty paid later. Now, Rule 57A envisages taking of MODVAT credit equivalent to duty paid on the inputs subject to the provisions of Chapter on MODVAT Scheme and the conditions and the restrictions that may be specified in the Notification to be issued under Rule 57A. Operative portion of Rule 57A is reproduced below for convenience of reference:
"RULE 57A. Applicability. - (1) The provisions of this section shall apply to such finished excisable goods (hereinafter referred to as the 'final products'), as the Central Government, may by notification in the Official Gazette, specify in this behalf, for the purpose of allowing credit of any duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereinafter referred to as the "specified duty") paid on the goods used in or in relation to the manufacture of the said final products (hereinafter referred to as the inputs) and for utilising the credit so allowed towards payment of duty of excise leviable on the final products. Whether under the Act or under any other Act, as may be specified in the said notification, subject to the provisions of this Section and the conditions and restrictions that may be specified in the Notification".
5. We observe that the appellants for the purpose of availing of MODVAT Scheme have to comply with the other requirements of the Rules namely filing of the declaration under Rule 57G. There is nothing on record to show that the appellants had complied with this requirement. The appellants have made a plea that even if the declaration was filed by them later than the receipt of the inputs under Rule 57G, they would be eligible for the relief under Rule 57H. The factual information regarding the date of filing the decalaration could not be furnished by the learned Advocate when he was specifically asked about this. In view of this the order that can be passed in the proceedings is only with reference to the availability of the MODVAT credit when the duty paid on the goods is after the goods had been reveived as inputs in the appellants' factory and not whether the appellants can take the credit in terms of Rule 57H as claimed. We observe that Rule 57A provides for input duty relief and it does not fix the point of time for payment of duty on the goods for the purpose of the relief provided. There is no plea from the Revenue that in terms of any specific rule, such a point of time has been fixed. In the absence of that we have to hold that the benefit of credit in terms of Rule 57A can be allowed irrespective of the fact whether the duty on the goods was paid before the receipt of the same in the appellants' Unit or afterwards. We, however, as mentioned earlier in the absence of the fact as to when the appellants filed the declaration under Rule 57G and whether they satisfy other requirements of the rules for MODVAT credit, cannot give our findings as to whether the appellants are otherwise eligible to take the credit in respect of the inputs in question.
6. In view of the above, we while holding that the payment of duty after receipt of the goods in the appellants' Unit is no bar for consideration of the MODVAT relief, we remand the matter to the learned original authority for de novo consideration of the appellants' plea in the light of our findings above.