Customs, Excise and Gold Tribunal - Tamil Nadu
Collector Of Central Excise vs Union Carbide India Ltd. on 14 March, 1995
Equivalent citations: 1995ECR506(TRI.-CHENNAI), 1995(78)ELT486(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This Reference Application arises out of the order of the Tribunal bearing No. 807/1990. The Tribunal in the order following the ratio of the decision of this Bench in Order No. 416/90, has held that the appellants were entitled to take Modvat credit in respect of the duty paid subsequent to the receipt of the inputs in the appellants' unit in terms of substantive provision of Rule 57A. The plea of the Revenue is that at the time when the Modvat Credit was taken in respect of the duty paid subsequent to the receipt of the inputs in the appellants' unit by the suppliers of the goods, Rule 57E which provides for variation of the credit, did not cover such a contingency and it was only later, on amendment of Rule 57E of the Central Excise Rules, such a credit was allowed to be taken. The plea is that in the absence of any specific provision for variation of the credit in respect of the duty paid subsequently on the inputs received, the Modvat credit thus taken could not be varied.
2. The learned Collector in this context has urged the following question of law for reference to the Hon'ble High Court:
"Whether in the facts and circumstances of this case the order of the Tribunal, holding that in the absence of any prohibition, Rule 57A by itself is the authority for allowing the credit where duty in respect of the goods is paid subsequent to the date of receipt of the goods in the factory, is correct in law?"
The learned JDR for the Department reiterated the pleas urged in the Reference Application. The Tribunal in the order has held as under :-
"Modvat Credit is allowed in terms of Rule 57A and the Notification issued thereunder equal to the amount of duty paid on the inputs, unless otherwise specified and in the absence of any prohibition Rule 57A by itself is the authority for allowing the credit where duty in respect of the goods is paid subsequent to the date of receipt of the goods in the factory. In this context, the East Regional Bench of the Tribunal in the case of Collector of Customs & Central Excise, Bhubaneswar v. SAIL, Rourkela, in Orders 41 /Calcutta/1990 and 42/Calcutta/1990 has held that "Rule 57A, does not limit the credit to duty paid at the time of original clearance and excludes the duty paid subsequently... . Duty may be paid subsequent to the time of removal from the factory for a variety of reasons like finalisation of provisional assessments, short levy due to mistake on the part of the assessee or even the Department etc. In such cases, it will be entirely wrong to deny the benefit of Modvat credit in respect of such duty payments. The specific provisions of Rule 57E, after its amendment from 1-3-1987 does not go against the substantive provisions of Rule 57A, which is the basic authority for the Modvat Scheme. The amended provisions of Rule 57E are not by way of expanding the scope of Rule 57A. They are in the nature of a clarification only and the benefit in question would be available right from 1-3-1986 when the Modvat Scheme was introduced".
3. We observe that Rule 57A provides for taking Modvat credit in respect of specified inputs and once the appellants have filed declaration under Rule 57G and so long as it can be shown that the particular quantum of duty has been paid towards the inputs in question the Modvat credit for that quantum can be taken subject to the limitation that may be read in this regard. Rule 57E itself provided for the contingency for variation of the Modvat credit at the relevant time when the supplier of the goods was given a refund in respect of the inputs for which the Modvat credit had been taken by the assessee who purchased the inputs. The absence of a provision for the assessee to take further Modvat credit in case further duty was paid by the supplier would not mean that the substantive provision of Rule 57A would not come into operation. It is for this reason it has been held that the subsequent amendment of Rule 57E providing for the later contingency above is only clarificatory in nature. In view of the above matter we hold that no question of law arises for reference. The Reference Application is therefore, rejected.