1992 (5) TMI 95 - AT - Central Excise

Summary

Issues Involved:
1. Interpretation of Rule 57H(1) of the Central Excise Rules, 1944.
2. Eligibility for Modvat Credit on inputs received before the filing of the declaration under Rule 57G(1).
3. The meaning and scope of the term "immediately before" in Rule 57H(1).

Issue-wise Detailed Analysis:

1. Interpretation of Rule 57H(1) of the Central Excise Rules, 1944:
The appeal concerns the interpretation of Rule 57H(1), which allows credit of duty paid on inputs received by a manufacturer immediately before obtaining the dated acknowledgment of the declaration made under Rule 57G(1). The Assistant Collector allowed credit only for the inputs received on 29-2-1988, immediately before the declaration filed on 14-3-1988, disallowing credits for inputs received earlier. The Collector (Appeals) reversed this decision, allowing credit for all inputs received before the declaration.

2. Eligibility for Modvat Credit on Inputs Received Before the Filing of the Declaration under Rule 57G(1):
The appellant Collector contended that the respondents are entitled to Modvat Credit only for the consignments received immediately before filing the declaration, specifically the last consignment received on 29-2-1988. Conversely, the respondents argued that the term "immediately before" should be interpreted to include all inputs received before the declaration, as long as they were lying in stock or used in the manufacture of finished products.

3. The Meaning and Scope of the Term "Immediately Before" in Rule 57H(1):
The South Regional Bench in the Soft Beverages case interpreted "immediately before" to mean "preceding the date," thus allowing credit for all inputs received before the declaration. This interpretation was supported by various judicial precedents and legal dictionaries, which equated "immediately before" with "preceding the date." The Judicial Member agreed with this broader interpretation, emphasizing the legislative intent of the Modvat Scheme to facilitate credit for duty-paid inputs.

Separate Judgments Delivered:

Majority Opinion (Judicial Member and Third Member):
The Judicial Member and the Third Member (K. Sankararaman) concurred that the term "immediately before" should be interpreted broadly to include all inputs received before the declaration, as long as they were in stock or used in the manufacture of final products. This interpretation aligns with the legislative intent of the Modvat Scheme and avoids incongruous situations where some inputs would be excluded from credit despite being received shortly before the declaration.

Dissenting Opinion (Technical Member):
The Technical Member (D.C. Mandal) held a narrower view, arguing that the benefit of Rule 57H(1) should be limited to the last consignment received immediately before the declaration. He contended that extending the benefit to all inputs received before the declaration would contradict the plain meaning of the rule and render the term "immediately before" redundant.

Final Decision:
The majority opinion prevailed, and the appeal was dismissed. The impugned Order-in-Appeal was upheld, entitling the respondents to Modvat Credit for all inputs received before the declaration, provided they were in stock or used in the manufacture of final products. The decision emphasized the necessity of interpreting the rule in a manner that advances the legislative intent of the Modvat Scheme.