TMI Blog2010 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the assessee to claim Modvat credit on the indigenous input would tantamount to giving a benefit twice for the same process that began with the manufacture and culminated in the export of the specified goods. The assessee cannot be held to be not entitled to claiming Modvat credit on finished goods where duty is not incident. Any attempt to avail it subsequently, casts serious aspersions on the bonafide intention of the assessee. The argument of the assessee that action had to be taken under the Duties Drawback Rules, 1971 and not through reversal of credit does not bear merit. The reversal of credit is meant to deny the assessee of a benefit that they would have otherwise enjoyed without justification. The drawback equivalent to CVD is legitimately permissible vide the process of AR4 declarations and thus, it is the benefit that is enjoyed without justifiable basis that has to be reversed. - Decided in favor of revenue - 10413/2010 - - - Dated:- 9-12-2010 - Dr. Mukundakam Sharma and Anil R. Dave, JJ. JUDGMENT Dr. MUKUNDAKAM SHARMA, J. 1. Leave granted. 2. The assessee (appellant herein) seeks to challenge the judgment of the High Court of Rajasthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the manufacture of exported goods, and they had not received any duty free consignment of PP Granules (Inputs) from anyone for exporting the goods on its behalf till the date of above-said exports, and that they had also not reversed any credit taken on the inputs used in the goods exported vide above referred AR4s. Thus, the assessee, it was alleged, had wrongly taken credit of Modvat, to the tune of ₹ 5,37,799, which was not admissible. 6. The Assessing Officer confirmed the demand, which was set aside in appeal, and was reconfirmed in further stages of appeal, as delineated above. 7. The High Court dismissed the appeal, holding that the assessee had resorted to subterfuge and impermissible technicalities in attaining its desired end to claim the Modvat credit. While the High Court admitted that the assessee had not indeed claimed the Modvat credit on the inputs at the date when Form AR4s were submitted and the goods were exported, it was held by the Hon'ble Court that the said line of argument could not make a case in favour of the assessee. The High Court arrived at this conclusion on a reading of the provisions enshrined in Rule 57A, Sub-rules (1) and (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs, and the finished products were exported without payment of excise duty and subsequently, Modvat credit was claimed on such inputs. To explain further, we may elaborate briefly on the technicalities that made this possible for the assessee. 10. In the normal course, an assessee is entitled to Modvat credit on the duty paid in the manufacture of finished products and it is from out of that excise duty, the Modvat credit is availed of by the assessee. In the case of imported raw materials, a countervailing duty (CVD) has to be paid, equal to excise duty on such goods. On the other hand, an assessee who manufactures finished goods to be exported out of imported input material is given an Advance License to import the inputs required for the manufacture free from duty. 11.The case that is then made out by the assessee in the present appeal is that the goods exported by the assessee were manufactured out of indigenous goods, and hence Modvat credit could be claimed. At the same time, however, credit for the CVD was availed of by the assessee in respect of the goods imported to be used in manufacture. Therefore, the crux of the entire case at hand is whether the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding the specified benefits is postulated in Rule 57A of the Rules. Rule 57A. Applicability.-(1) The provisions of this section shall apply to such finished excisable goods (hereafter, in this section, referred to as the final products) as the Central Government may, by notification in the Official Gazette, specify in this behalf for the purpose of allowing credit of any duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification hereafter, in this section, referred to as the specified duty) paid on the goods used the manufacture of the said final products (hereafter, in this section, referred to as the inputs) 2) The credit of specified duty allowed under sub-rule (1) shall be utilised towards payment of duty of excise leviable the final products, whether under the Act or under any other Act, as may be specified in the notification issued under sub-rule (1) and subject to the provisions this section and the conditions and restrictions, if any, specified in the said notification. A literal reading of the aforestated provision makes it amply clear that an entitlement to Modvat cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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