TMI Blog1998 (11) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that Rule 57C would require reversal/recovery of credit taken others have held that the Rules do not provide for any such recovery or demand for reversal of such credit. 2. We had the benefit of hearing Ld. Advocates Shri J.P. Khaitan, who appeared in Appeal No. E/72/92-Cal (M/s. Khan Bhai Esoofbhai v. C.C.E., Calcutta), Shri Gopal Prasad, Consultant, who appeared in three Appeals No. E/3090/90-NB, E/936/97-NB and E/1272/97-NB (all Appeals filed by M/s. Vidya Plywood (P) Ltd. v. C.C.E., Kanpur), Shri L.P. Asthana, Advocate, who appeared in Appeal No. E/74/94-MAS (M/s. J.M. Bottling (P) Ltd. v. C.C.E.), Shri V. Sridharan and Shri M.P. Devnath, Advocates, who appeared in Appeal Nos. E/3080, 3081/94-NB, E/1681 to 1683/94-NB, E/2687/94-NB (filed by C.C.E., Meerut v. Super Electronics and M/s. Super Electronics v. C.C.E., Meerut) and Appeal No. E/1296/96-NB (filed by M/s. Brooke Bond Lipton (I) Ltd. v. C.C.E., Kanpur). In other Reference matters mentioned above, no one was present for the assessees when the cases were called. 3. Shri B.K. Gupta, Ld. Jt. CDR along with Shri Sanjeev Srivastava, Ld. JDR, represented the Department and made submissions on behalf of Revenue. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In two further decisions of the Tribunal relating to Modvat credit on aerated waters the Tribunal had taken the view that Modvat credit already availed and utilised in respect of unutilised inputs need not be reversed [C.C.E. v. Black Diamond Beverage (P) Ltd., 1998 (101) E.L.T. 48 (Tribunal) and C.C.E. v. Ludhiana Bottling Co., 1998 (99) E.L.T. 671 (Tribunal)]. He referred to and explained the provisions of Section AA of the Central Excise Rules, 1944 incorporating the Modvat scheme. Ld. Counsel contended that the Modvat scheme was introduced for avoiding the cascading effect of excise levy and the Rules provided for taking of credit on any duty of excise or additional duty paid by a manufacturer on the goods used by him in or in relation to the manufacture of final products and for utilising the credit so allowed towards payment of duty leviable on the final products. Rule 57C barred allowing of credit if the final product is exempted from the whole of excise leviable thereon or when it becomes chargeable to nil rate of duty. Rule 57F further provided that the inputs in respect of which the credit had been allowed under Rule 57A may be used in or in relation to the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit being availed of unilaterally by the assessee. Rule 57A specifically provided that the duty that may be specified by Notification has to be first paid on the inputs for utilising such credit towards payment of duty payable on the final products. He submitted that the credit is available only for utilising it towards payment of duty of excise payable on the final products and not for anything else. When no duty is leviable on the final products in terms of an exemption Notification or when the final product becomes leviable to nil rate of duty, there can be no question of any credit being available or being allowed. On a reading of Rules 57A to 57-I it would be clear that the credit on inputs available to the assessee is to be utilised for payment of duty on the final products manufactured by him out of such inputs. Rule 57C specifically sets an embargo on allowing credit of the duty paid on inputs if final product is exempted from payment of duty. Even in a situation envisaged under Rule 57F where the inputs are not used in or in relation to the manufacture of the final product and where it is allowed to be cleared for home consumption or for export, it is imperative that du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court decision in Mahabir Kishore v. State of Madhya Pradesh, [1989 (43) E.L.T. 205 (S.C.) (Para 10)] wherein the Apex Court had held that the principle of unjust enrichment can take the form of direct advantage to the recipient by way of receipt of money or by way of an indirect benefit where inevitable expenses have been saved. 9. We have considered the elaborate submissions made on behalf of the assessees and the Department. We do not feel it necessary to advert to in detail to all these submissions since for purposes of deciding the limited question which has been raised for our consideration, reference to the decision given by Hon'ble Allahabad High Court in Super Cassettes Industries Limited v. Union of India, [1997 (94) E.L.T. 302 (All.)] would suffice since it directly covers the issue and is binding on us. In the said case the assessee manufacturer had in a Writ Petition under Article 226 of the Constitution challenged the decision of the Collector of Central Excise (Appeals), Ghaziabad, rejecting the assessee's claim for refund of certain amounts on the ground of limitation. The appellants had taken credit on certain inputs used in the manufacture of final products, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been dealt with in the following manner :- As is evident, entries in PLA account and other documents10. are at times provisional in nature and become final after certain events take place. For example a personal ledger account is commenced with a credit entry represented by a cash deposit in the treasury as required under Rule 9. When the first deposit is made in the treasury there is no payment of any excise duty. The deposit and the corresponding credit in the PLA account is only a provision for making payments of excise duty on the goods that are manufactured and are to be removed. Therefore, when a person makes the cash deposit in the treasury he does not actually pay excise duty he only makes a provision for the payment thereof and the actual excise duty stands paid only when it becomes payable in accordance with the Act and the Rules. Rule 57A clearly shows that Modvat credit is available for utilising the credit so allowed towards payment of excise duty leviable on the final products. Therefore, there can be no finalised credit unless the inputs are used in accordance with Rules 57A and 57F and either excise duty on the final product is paid or the inputs are otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the Union of India has received only what it was justly entitled to receive i.e. the duty on the inputs. What was exempt from excise duty was only the final product and not the inputs. In view of the above discussions, I find no merit in the12. petitioner's claim for refund and it was patently barred by time as well. It is not necessary in the circumstances of the case to deal with the plea of alternative remedy because that is not a complete bar to the jurisdiction of this Court under Article 226 of the Constitution of India. The writ petition is, accordingly, dismissed with costs. 10. We are of the view that the above extracts of the Allahabad High Court judgment, fully covers the issue raised before us. Respectfully following the ratio we hold that Modvat credit taken in respect of inputs which are in stock as well in respect of inputs used in the manufacture of final products which have become exempt, would be inadmissible and will have to be reversed. 11. It is settled law that in the absence of any decision of a High Court holding a contrary view, the decision given by a High Court is binding on the Tribunal vide : - CIT v. Godavaridevi Saraf [1978 (2) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks cleared from Rajamundry factory, whereas according to the Revenue since the quantity cleared at Rajamundry on payment of duty is only 1/4th of the total quantity manufactured using 100 tons of barley malt, the appellant is entitled to take credit of only Rs. 2500/- against the duty payable at Rajamundry. Revenue also says that the respondent is not entitled to take credit of balance of Rs. 7500/- (duty paid on 75 tons of barley malt) from out of the duty paid on 750 tons at Bangalore. The question is who is right?" [We may respectfully point out that the word 'respondent' in the above quotation is not correct ; it should be 'appellant' because the manufacturer H.M.M. is an appellant and not respondent]. Further, vital difference in facts is that 'Horlicks', the final product was not exempt in H.M.M.'s case, unlike the final products in these cases. Therefore, the learned advocate's reliance on H.M.M. urging that Hon'ble Allahabad High Court's judgment in Super Cassette Industries is per incuriam H.M.M. is not at all tenable. He would have been correct, had the controversy been that after 'Horlicks' had become exempt from duty, whether the credit of duty taken on barley malt (i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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