Customs, Excise and Gold Tribunal - Delhi
M/S. Jindal Polymer vs Cce, Meerut on 24 January, 2001
ORDER
V.K. Agrawal:
1. In this appeal, filed by M/s. Jindal Polymer, the issue involved is whether the Modvat Credit of the duty paid on Furnace Oil is to be restricted to 10% adv. In view of notification No. 5/94/-CE(N.T.), dated 1.3.1994, as amended.
2. Shri Narshimhan, learned Advocate, mentioned that the appellants manufacture polysterchip and avail of Modvat credit of the duty paid on inputs: that during the period from August, 1997 to January, 1998, they took Modvat Credit of the entire duty paid on the furnace oil used by them as fuel; that the Additional Commissioner, under Adjudication Order No.8/98 dated 30.4.1998 disallowed the Modvat Credit amounting to Rs.9,30,566.66 paise and imposed a penalty of equivalent amount, holding that the modvat credit in respect of furnace oil was restricted to 10% adv. and that in view of the amendment to Explanation to Rule 57B made on 2.3.1994 which was clarificatory in nature the restriction of 10% adv would be applicable to Credit taken under Rule 57B of the Central Excise Rules also; that the Commissioner (Appeals), under the impugned Order rejected their appeal holding that amendment made by Notification No. 5/98-CE(NT) dated 2.3.98 was clarificatory in nature having retrospective effect. He submitted that prior to 1.3.1997, Rule 57A alone allowed Modvat Credit of the duty paid on the inputs; that Rule 57B was introduced on 1.3.97 which allowed Modvat Credit in respect of specified classes of goods; that it allowed, Modvat Credit, interalia, 'in respect of inputs used as fuel' and 'inputs used for generation of electricity or steam used for manufacture of final products or for any other purpose, with the factory of production; that Rule 57B starts with a non-obstante clause and it seeks to override the provisions of Rule 57A in so far as they are inconsistent with what is stated in Rule 57B; that they had taken Modvat credit only under Rule 57B and not under Rule 57A, since the same has been used as fuel in their factory; that, therefore, restriction imposed under Notification No. 5/94 (ND)S issued Rule 57A cannot have application to credit taken under Rule 57B; that the Explanation introduced on 2.3.1998 can not have retrospective effect whatsoever. He, further, mentioned that i t was held by the tribunal in the case of Ester Industries vs. CCE, Meerut, 1999 (83)s ECR 625 (T) that Notification No. 5/98 is not retrospective in effect as the Notification itself specifically provides that it will come into force on the date of its publication in the official Gazette. Reliance was also placed on the decision in the case of BPL Display Devices Ltd. vs. CCE, Meerut, 1999 (34) RLT 546 (CEGAT) wherein it was held that Modvat credit was available in respect of HSD Oil under Rule 57B prior to its amendments by Notification No. 5/98 (NT) dated 2.3.98. He also refereed to the decision of the Larger Bench in the case of L & T Ltd. vs. CCE Mumbai, 2000 (39) RLT 132 (CEGAT-LB) wherein it was held that amendment made in Rule 57C by Notification No.4/92-CE(NT) dated 1.3.92 will not have retrospective effect.
3. Countering the arguments, Shri A.K. Jain, learned D.R., submitted that the Explanation was inserted in Rule 57B by Notification No. 5/98 (NT) by way of clarification only and a Notification which is clarificatory in nature will have retrospective effect; that the Larger Bench in L & T case, supra, held that the amendment of substantive nature will not have retrospective effect; that the said decision was not in respect of an amendment which is of clarificatory nature. In reply the learned Advocate, relied upon the decision in the case of C.I.T. vs. Patel Brothers & Co. Ltd., (1995) 4 Supreme Court Cases 485. He mentioned that in that case the Supreme Court held that Explanation 2 inserted by Finance Act, 1983 was snot of clarificatory nature though it was issued' for removal of doubts.'
4. I have considered the submissions of both the sides. The issue involved in the present appeal has been decided by a Division Bench of this Tribunal vide final Order Nos. A/1047/-48/2000-NB dated 8.12.2000 in the case of Jindal Polymers vs. CCE, Meerut, as under:-
"We find that under Rule 57B no notification has been issued to specify the duty. Rule 57B speaks of credit of specified duty paid. Since the duty has been specified only under Rule 57A, therefore, for the purpose of harmonious construction we have to read the provisions of Rule 57A in Rule 57B wherever it facilitated the understanding o the provisions. Rule 57B speaks of credit of specified duty paid. Sub-Rule (3) of Rule 57A speaks of credit of specified duty though the word 'paid' is not there yet it is to be read. Since the credit of the specified duty paid has been restricted by issue of notification No. 5/94 as amended by Notification No. 14/97, therefore, we have to read for the harmonics construction of the words "Credit of the specified duty paid" as those set out in sub-rule (3) of Rule 57A. This clearly show that sub-rule (3) of Rule 57A is an aid for interpreting the words "credit of the specified duty paid "under Rule 57B. Since the Government is authorised to restrict the credit of specified duty paid, thereof, we have to read this in Rule 57B. We find that similar view was taken by this Tribunal in the case of appellants themselves. we do not see any reason to refer the matter to the Larger Bench or to disagree with the findings in that order. We, therefore, follow the ratio of the decision of that order and held that Modvat credit of the specified duty paid shall be restricted to 10% in the instant case."
Similar views were expressed by the Tribunal in M/s. Jindal Polyster vs. CCE, Meerut, Final Order No. A/684-89/2000-NB dated 18.8.2001.
5. Following the ratio of the said decision, I hold that Modvat Credit of the specified duty paid on Furnace Oil shall be restricted to 10% adv. However, as the issue involved was one of the interpretation of the provisions of Rule, it is not a fit case for imposing any penalty. I accordingly, set aside the penalty. The appeal is thus partly allowed.