Customs, Excise and Gold Tribunal - Calcutta
Bharat Petroleum Corporation Ltd. vs Cce on 4 October, 2002
Equivalent citations: 2003(107)ECR381(TRI.-KOLKATA)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this Appeal. Filed by M/s. Bharat Petroleum Corporation Ltd. is whether they were eligible to take the MODVAT Credit under Rule 57H of the Central Excise Rules, 1944 without obtaining of permission from the Assistant Commissioner.
2. Shri R. Nambirajan, learned Advocate, submitted that the Appellants manufacture lubricating oils to which MODVAT Credit scheme was made available with effect from 1.3.1994; that they filed a declaration dated 3.3.1994 and 11.3.1994 under Rule 57H(1) of the Central Excise Rules for permission to avail of MODVAT Credit of the duaty in respect of inputs lying in stock and also the inputs contained in the finished goods lying in stock as on 1.3.1994; that on 15.3.1994. 21.3.94, 23.3.1994 and 6.4.1994 they took credit of Rs. 60 lakhs towards the inputs contained in the finished products; that the Commissioner, under the impugned Order, has disallowed the MODVAT Credit and imposed a penalty of Rs. 1 lakh only on the ground that they had taken the credit without permission of the Assistant Commissioner. The learned Advocate, further submitted that in terms of Rule 57H(1) read with Rule 57H(4) they were eligible to take credit of the duty paid on the inputs contained in the finished product; that in the case of Aqueous Victuals Ltd. v. CCE, Kanpur the Appellate Tribunal has held as under:
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 is 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.
3. The learned Advocate, also relied upon the decision in the case of Bajaj Sevashram Ltd. v. CCE Jaipur and contended that in view of these decisions, the credit taken by the Appellant is allowable. He also submitted that the Commissioner has proceeded on the basis that Rule 57H(4) has been amended by Notification No. 18/94-C.E., dated 6.4.1994 and prior permission is not required only in respect of the claim made under Sub-rule (IB) of Rule 57-H; that said Sub-rule deals with the cases where credit is claimed in respect of inputs lying in stock as on the date of declaration filed under Rule 57G; that in the present case, they have filed the declaration under Rule 57G on 2.3.1994 and even if the provisions of Rule 57H(1B) apply, credit of duty on the inputs lying in stock is to be allowed. The learned Advocate finally mentioned that initially when the matter was decided by the Assistant Commissioner, he had imposed a penalty of Rs. 10,000/- only which now in remand proceedings has been enhanced to Rs. One lakh without assigning any specific reasons: that no penalty is imposable as the Appellants, being a Government of India Undertaking, are not guilty of conduct contumacious or dishonest.
4. Shri T.K. Kar, learned SDR, reiterated the findings as contained in the impugned Order.
5. We have considered the submissions of both the sides. Rule 57 H at the relevant times reads as under :
57 H Transitional Provisions (1) Notwithstanding anything contained in Rule 57G, the Assistant Collector of Central Excise may allow credit of the duty on inputs received by a manufacturer immediately before obtaining the dated acknowledgement of the declaration made under the said rule if he is satisfied that
(a) such inputs are lying in stock, or are received in the factory, on or after the 1st day of March, 1994, or
(b) such inputs are used in the manufacture of final products which are cleared from the factory on or after the 1st day of March, 1994, and that no credit has been taken by the manufacture in respect of such inputs under any other rule or notification:
Provided that no credit under this Sub-rule shall be allowed in respect of inputs received, or declaration made under Rule 57G. on or after the 1st day of April, 1994:
Provided further that such inputs are not used in the manufacture of final product which is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty.
(1A)XXXXXXX (1B) Notwithstanding anything contained in Rule 57G, every manufacturer who intends to avail of credit of duty paid on inputs received by a manufacturer immediately before obtaining the date acknowledgement of the declaration made under said rule, shall file a declaration under this Sub-rule with the Assistant Collector or Central Excise having jurisdiction over his factory slating that
(a) such inputs are lying in stock or are received in the factory after filing the declaration made under Rule 57G, or
(b) such inputs are used in the manufacture of final products which are cleared from the factory after filing the declaration made under Rule 57G.
and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification:
Provided that such inputs arc not used in the manufacturer of final product which is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty.
(2) XXXXXXX (3) XXXXXXX (4) A manufacturer who has filed a declaration under Sub-rule (1) or Sub-rule(3) may, after obtaining the dated acknowledgement of aforesaid, take credit of the duty paid on the inputs received by him:
Provided that no credit shall be taken unless the inputs were received in the factory under the cover of a Gate Pass, an A.R.I., a Bill of Entry or any other document as may be prescribed by the Central Board of Excise & Customs [constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)] in this behalf evidencing the payment of duty on such inputs and such evidence is made available by the assessee to the department.
6. A reading of all these Sub-rules of Rule 57H of the Central Excise Rules, 1944 reveals that a manufacturer is eligible to fake MODVAT credit of the duty in respect of inputs lying in factory as on 1.3.1994 and inputs used in the manufacture of Products which are cleared from the factory on or after 1.3.94. The MODVAT credit was also available in respect of inputs received by a manufacturer immediately before filing a declaration under Rule 57G of the Central Excise Rules, 1944. No doubt Sub-rule mentions that the Assistant Collector "may allow" credit. However, Sub-rule (4) before its amendment by Notification No. 18/94-C.E. (NT) dated 6.4.1994 provided that a manufacturer who has filed a declaration under Sub-rule (1) may. after obtaining the dated acknowledgement of the same, take credit of the duty paid on the inputs received by him. It is not disputed by the Revenue that the Appellants had filed the declarations under Rule 57H(1) on 3.3.1994 and 11.3.1994 and submitted a calculation sheet of duty available as MODVAT Credit. The Appellants had taken the credit in their books of account on different dates after filing the said declarations and without the express permission of the Assistant Commissioner. The decision in the case of Aqueous Victuals Ltd., supra, is in their favour wherein the Tribunal allowed the Appeal though the Appellants, therein had also taken the MODVAT Credit without the prior permission of the Assistant Commissioner, by holding that if the credit is availed in anticipation of the grant of permission, the same "cannot be called into question particularly where no decision has been taken refusing the permission by the Assistant Collector." In the present matter also nothing has been mentioned in the impugned Order nor any material has been brought on record to show that there was any circumstances warranting the refusal of permission for taking the credit. It has been mentioned in the impugned Order that whenever any permission is being given under any Rule, a verification is being done regarding veracity of the claim. Certainly the verification is to be made. We do not find findings of the Adjudicating Authority tenable that the process of verification has been made redundate by taking the credit unilaterally. It was open to the Department to verify the claim made by the Appellants even if they had taken the credit in their books of account as Rule 571 empowers the Department to recover the credit taken on account of an error, omission or misconstruction. Thus following the ratio of the decisions relied upon by the learned Advocate for the Appellants, we set aside the impugned Order and allow the Appeal.
(Pronounced)