2000 (3) TMI 124 - AT - Central Excise

Summary

Issues: Interpretation of Rule 57F(12) regarding utilization of credit of Additional Excise Duty for payment of Basic Excise Duty on final products.

Analysis:
1. The Commissioner's order observed that the proviso to Rule 57F(12) allows credit of input to be used for payment of excise duty on any final product, regardless of whether the input was used in that product. The proviso is seen as overcoming the restriction in Rule 57F(12) regarding the utilization of credit towards the duty on the final product. The Commissioner ordered recovery of duty and penalty on the appellants based on this interpretation.

2. The facts of the case involve the appellants using tyre cord fabric for manufacturing tyres and tubes, with Additional Excise Duty paid on the fabric. The dispute arose from the interpretation of Rule 57F(12) and Notification No. 5/94 regarding the utilization of credit on inputs for payment of duty on final products. The Commissioner's interpretation led to the appeals.

3. The appellant's counsel argued that Rule 57A allows credit for specified duty paid on inputs to be used for specified final products. The proviso in Rule 57F(12) permits the utilization of credit towards duty on any final product, regardless of actual use in manufacturing. The counsel cited a Tribunal decision supporting this interpretation, emphasizing the flexibility under Rule 57F(12) for adjusting duties.

4. The counsel contended that the 'non obstante' clause in the proviso allows ignoring Rule 57A and related notifications, enabling credit utilization for any final product. As the inputs were received after March 1997 and used in the factory, the credit was appropriately utilized. The counsel's argument relied on a Tribunal decision allowing adjustments between different types of excise duties under the Modvat scheme.

5. The respondent's representative highlighted that Notification No. 5/94 restricted the credit of Additional Excise Duty for payment of only additional duty, not Basic Excise Duty. The Commissioner's decision was supported, emphasizing the clarity in the rules regarding specified duties.

6. The Tribunal analyzed Rule 57F(12) in light of Rule 57A and Notification No. 5/94, focusing on the utilization of credit for excise duty payment. The 'non obstante' clause allowed flexibility in credit utilization, while the enacting clause specified conditions for such utilization. The Tribunal found that the credit of Additional Excise Duty paid on tyre cord fabric was correctly used for Basic Excise Duty on tubes, meeting the requirements of the enacting clause. Therefore, the impugned order was set aside, and the appeals were allowed.