Customs, Excise and Gold Tribunal - Mumbai
M/S. Balmer Lawrie Van Leer Ltd. vs Commissioner Of Central Excise, Mumbai on 27 March, 2001
ORDER
Gowri Shankar, Member(Technical)
1. When this stay application came up on the last occasion, it was adjourned to today after advising the parties that since the matter appeared covered, the appeal itself could be taken up for disposal.
2. Today after hearing both sides, the appeal is taken up for disposal after waiving deposit.
3. The appellant had exported several consignments of drum closures, manufactured by it order to fulfil the obligation required of it by advance licences which were issued to it permitting import of goods without payment of duty in terms of notification 203/92 and 204/
92.The appellant had taken modvat credit of the duty paid of inputs used in the manufacture of the exported product.It is a condition in the former notification in the form of a letter that modvat credit could not be availed of in the manufacture of the exported goods.
4. A large number of exporters had taken such credit on the representation, the Government came with a scheme by which this condition would not be applied it the credit were reverse within the specified time.The appellant wished to availed of the scheme reversing the credit taken in respect of the goods which it exported.It sought for and was given for the benefit of notification 203 and 204/92 for the goods imported by it.Subsequently the appellant realised that the modvat credit condition was not applicable to goods exported under advance licence which permitted imported under notification 204/92. It therefore wrote to the departmental authorities on 16.2.95 requesting them that is wished to restore the credit which it had reversed.There being no reply appellant thereafter proceeded to reverse the credit on 11.9.95.This was promptly followed by show cause notice. Adjudicating on the notice, the Dy.Commissioner ordered reversal of the credit and imposing penalty.On appeal from this order, the Commissioner(Appeals)confirmed this order and hence this appeal.
5. It is not disputed by department that the appellant was not take required to reverse the credit on the goods exported which resulted in the issue of quality based licences.The Dy.Commissioner's objection that credit has been taken without there being any duty paying document and on its own.The commissioner (Appeals)says that it was only on the authorisation of the Commissioner that the credit could have been taken.
6. I agree that there is no provision in law specifically permitting the manufacturer to take credit of the debit that he had made in the modvat account but, equally there is no provision in law permitting the manufacturer to the make the debit either. If in the absence of such a lawful provision, the department could direct such debit, and make available an exemption notification conditional upon such debit.It will follow that corresponding reversal of that debit is as much in accordance with law. The decision of a single member bench of this Tribunal in CCE vs. Kumar Auto Cast Ltd. 1996 (82) ELT 137 has held that a debit made by manufacturer to the RG23 part II account consequent upon his having paid duty under the personal ledger account which is not a case of refund, and the provision of section 11B of the Act therefore will not apply.The appellant before me had taken credit of the duty paid on inputs, nullified it in order to avail of the amnesty scheme and later restored it.The case would be covered by the ratio of this decision.
7. The departmental representative relies upon the Tribunal's decision in Elgi Equipments Ltd. vs. CCE 1996 (81) ELT 115.In this decision, the Tribunal had relying upon the decision of the Supreme Court in Citadel Fine vs. CCE 1989(42) 515 TO support the view that credit entry made within six months of an earlier debit entry was lawful. I do not see how the decision of the Supreme Court judgment applies to these facts. The observation of the Supreme Court judgment which has been reproduced by the Tribunal were made while dealing with an argument that rule 12 of the Central Excise Rules was unreasonable and violated Article 14 of the Constitution as it did not provide for any limitation for demand of duty.While setting forth the reasoning to reject this argument, the Court observed in the absence of any period of limitation in the statute, it is settled that every authority who exercises the power must do so within a reasonable period.What would be reasonable period would depend on the facts of each case.
8. The observation of the Court therefore related to exercise by an authority of a power granted to it under the law in the case before him to recover duty.I do not see how this observation have any bearing on the right of a tax payer to do something which is not prohibited expressly or by implication in law.
9. This entire argument of the departmental representative supports the alternative finding of the Commissioner (Appeals) on the on the assumption that credit should have been taken within six months.The letter dated 16.2.95 of the appellant was in fact written within six months of taking credit.The letter clearly contains a request for taking credit and therefore amounts to a claim having been made within six months.Further, if the manufacturer had waited, the only course would have been to allowing to take the credit.There is thus in reality no loss to the department.
10. I am of the view that credit could not be denied.
11. Appeal allowed.Impugned order set aside.