TMI Blog1990 (9) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 57C of the Central Excise Rules, Modvat benefit cannot be availed of in respect of duty paid on inputs going into the manufacture of final product which are exempted. Hence, inputs received prior to 29-2-1988 on which Modvat credit was taken but remained unutilised from 1-3-1988 was required to be reversed back. Accordingly, notice was issued for crediting back an amount of Rs. 3,89,346.28 availed wrongly. In the adjudication proceedings initiated by the Additional Collector, the demand for the aforesaid amount was confirmed under Rule 57-I read with Rule 9(2) and proviso to Section 11A of the Central Excises and Salt Act. The appellants were also imposed with a penalty of Rs. one lakh under Rule 173Q of the Central Excise Rules. The present appeal is against the aforesaid order of the Additional Collector. 3. Dr. Jois, the learned Advocate appearing on behalf of the appellants, after narrating the facts of the case stated that the issue to be considered in this case is, whether the appellants are required to reverse the credit and pay the amount in cash in respect of the duty involved on the inputs lying in stock as on 1-3-1988 and also on the stock of final product contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed period and imposed a penalty only on the ground that the information regarding the stock of inputs as well as the final product lying as on 1-3-1988 was furnished late and the final information came to be furnished by the appellants only on 18-10-1988 and the delay was deliberate with a view to evading payment of duty and in that view has justified the extended period and also imposed a penalty under Rule 173Q. He argued that the information required could have been very well taken by the Department from RG-23A Register. Since they have to compile it, which runs into pages, some delay has been noticed. It is not although they have withheld the information. Even the cause for the delay has not been enquired into. The Addl. Collector on his own assumes that it is deliberate. Even after furnishing the information on 18-10-1988, the show cause notice came to be issued only on 22-12-1988 nearly after two months. Hence, the delay on the part of the appellants could not be attributed to any mala fides warranting invoking of extended period or for imposition of penalty. 4. Shri Mondal on the other hand contended that in this case it is not disputed that the appellants had a stock of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion is whether, Modvat credit taken and utilised in respect of such stocks is to be reversed back and if there is no balance in RG-23A, this could be demanded by cash payment? It is also not disputed by the Department that there is no one to one co-relation between the inputs and final products and Modvat credit accrues instantaneously on receipt of inputs and it can be utilised immediately for the clearance of the final product. Viewed in the context of this admitted position, it is clear that when the appellants brought the inputs and took credit in RG-23A and utilised the same in the clearance of the dutiable final products, they were perfectly working within the scheme of Modvat. Credit was available in respect of the inputs and it was taken and utilised in the clearance of dutiable final product. But then, we are to take note of the contention of the learned SDR that Rule 57C specifically bars extension of credit on the inputs used in the final product, if the same is exempted or chargeable to nil rate of duty. In this case, in so far as the stock of inputs lying on 1-3-1988 is concerned, credit of duty on these inputs has been already taken and utilised. But these inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the context of Rule 56A, we find that the provisions of the aforesaid rule dealt with in the aforesaid decision are identical to the provisions of Modvat Rules. For purpose of easy comparison, the relevant provisions of Rule 56A and the corresponding provisions of modvat scheme are tabulated below: Provisions under Rule 56A Sub-rule of Rule 56A - Proviso (1) to sub rule (2) Corresponding provisions under Modvat Modvat Rules Provided that no credit of duty shall be allowed in respect of any material or component parts used in the manufacture of, finished excisable goods - (i) If such finished excisable goods produced by the manufacturer are exempt the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty." 57C - Credit of duty not to be allowed if final products are exempt - No credit of the specified duty paid on the inputs used in the manufacture of a final product shall be allowed if the final product is exempt from the whole of the duty of excise leviable- thereon or is chargeable to nil rate of duty." Sub-rule (2)(v) - If any material or component parts, in respect of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g provisions of Rule 56A. With the above position being confirmed on comparison of relevant provisions of Rule 56A and Modvat scheme, we proceed to go into facts of the case dealt with by the South Regional Bench in the case cited before us. In the case of Wipro Information Technology, proforma credit was taken in respect of the parts of computers and the credit was utilised by them against the payment of duty on computers on 17-3-1985, by issue of notification, computers were exempted. The question dealt with was, whether in respect of stock of parts of computers lying as on 17-3-1985, credit of duty taken is to be reversed. The South Regional Bench in the aforesaid case, considered the various arguments including the absence of requirement of one to one co-relation, the credit being available instantaneously and can be immediately utilised and finally came to the conclusion. The South Regional Bench while deciding the issue in favour of the assessee has held as below: It is not necessary to elaborate the point further, because it is abundantly clear, as we stated at the outset, that both at the time of taking credit and at the time of utilising it, the respondents were doing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is nature. It is no doubt an unusual case. It may be that Government by oversight omitted to provide for cancellation or taking back of the credit in such a case. But so long as no such provision exists, and when it has not been shown or even alleged that there was any irregularity either at the time the credit was taken or at the time it was utilised, we do not think the Department has the authority to take back the credit. We think the Collector (Appeals) was right in taking the view that he did and in setting aside the Assistant Collector s order. We accordingly reject this appeal." 8. We thus find that the S.R. Bench on the identical facts and provisions of law have taken a view that there should be specific provision for recovery of credit in such a contingency and in the absence of any such specific provisions, the Department cannot take back the credit. Though we do not share this view and on this ground, we could have referred this point for decision by Larger Bench, we are not inclined to do so, mainly, because of the fact that the appeal is required to be allowed on consideration of other ground of time-bar, which is dealt with in the succeeding para. In this case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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