1990 (8) TMI 284

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..... nd directed them to pay duty of Rs. 18,342.55 (basic duty) and Rs. 253.96 (special) from their Personal Ledger Account. 2. Shri S.K. Roy Choudhury, learned Counsel, appeared for the appellants when the appeal came up for hearing. He essentially reiterated the submissions contained in the appeal memorandum and clarified that when the appellants who were availing themselves of Modvat credit facility upto 31-3-1988 switched over to complete exemption from duty they worked out the credit of duty taken by them in respect of their inputs viz. Teak Veneers and Resin which were present as unutilised inputs or contained in the materials in process or in the finished outputs namely plywood which were to be cleared after that date. The said amount of .....

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..... was, learned SDR on behalf of the respondent Collector. He supported the impugned order and opposed the submissions made by Shri Roy Choudhury. 4. In have considered the matter. The impugned order is erroneous as it has treated the expunction of the available balance in the R.G. 23A, Part II account as payment of duty which, of course, cannot be effected from a lapsed account. But the expunction of the amounts available as unutilised balance is not in the nature of payment of duty at all. The appellants have also not been able to present the matter in proper perspective and thus contributed to the adverse decision. In terms of Rule 57C, no credit of duty paid on inputs used in the manufacture of a final product shall be allowed if the fina .....

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..... nt was called for. Payment of duty arises when dutiable goods are cleared. Here, the appellants wanted the credit to be utilised for payment of duty on the inputs themselves but it was clarified by the learned Counsel in reply to my specific query that no clearance of the inputs as such took place. The debit to the P.L.A. was only by way of the disallowance or forgoing of the credit taken as it was not eligible for utilisation for payment of duty. When the said credit amount had actually been disallowed by debiting it, there is no justification to ignore that reality and insist on the payment of equivalent amount in cash or debit to P.L.A. Accordingly, I have no hesitation in allowing the appeal setting aside the impugned Order-in-Appeal.

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