TMI Blog1995 (8) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... e only transfer of unutilised credit available in RG-23 but not the credit in the set off Register. It was further urged that the Collector s Trade Notices 113/81, 122/86 and 151/86 were superseded by Trade Notice 234/86 and the respondents having switched over to set off register effective from 1-11-1986, there was no RG-23 account at the relevant time, viz. 1-3-1987 to enable the respondents to transfer of balance of credit under RG-23A account in terms of Rule 57H(3) of the Central Excise Rules, 1944. It is in this view the learned SDR assailed the correctness [or] sustainability of the impugned order. 3. Shri Vijaya Raghavan, the learned Consultant contended that the fundamental object behind proforma credit, set off credit procedure and Modvat scheme was only to avert cascading effect on price by giving relief to the manufacturers in respect of the duty suffered by inputs used in the manufacture of end products. It was further submitted that so far as maintenance of register is concerned either for following proforma credit in terms of Rule 57A or by set off procedure, there is practically no difference either in the form or in the contents. The records would bear out that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit under the rules. It is also not disputed that the appellants were maintaining the set off register in terms of the Trade Notice issued by the Collector of Central Excise. I have perused the contents of the Trade Notice No. 234/86, dated 24-10-1986 issued by the Collector of Central Excise, Hyderabad. This Trade Notice itself prescribed that the stock particulars in respect of the inputs lying in stock at the end of the day on 31-10-1986 and duty particulars in respect of the stocks lying on 31-10-1986 as well as those in the manufacture of finished goods which were lying in stock as on 31-10-1986 may be taken in the set off register after obtaining the permission from the Range Supdt. Prior to 31-10-1986, the appellants were maintaining the account in RG 23 register. Under the circumstances, it has to be held that the set off register prescribed by the Collector was in continuance of the RG 23 account maintained by the parties earlier, and therefore the party has to be given the benefit of Rule 57H(3) for transfer of the credit as specified for RG 23 account. We would like to note that even in set off, Notification 201/79, dated 4-6-1979 under clause 4(d) it is clearly state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal), where the Triubunal has observed as under :- It is observed that it is not denied that the respondents were eligible for the credit under Rule 56A and the credit allowed was for the period before the introduction of Modvat scheme. Since the proceedings had been going on before the lower authority the appellants were given the benefit of the credit due to them for the period prior to the coming into force of the Modvat scheme at a later date after the Modvat scheme came into force. The appellant-Collector wants the Tribunal to read the Rule literally. The Rule has to be read in a manner to advance the purpose of the Scheme and in this case I observe that the appellant was eligible to the benefit of Rule 56A before coming into force of the Modvat scheme and credit with reference to the period prior to that had been given to them. This credit has to be deemed to be available before the coming into force of the Modvat scheme and the respondents have rightly been allowed this benefit of transfer by the learned Collector (Appeals). The respondents could not have taken this credit in the RG-23 and had necessarily to await the decision of the authorities. Once the credit was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Notifications and opted for the Modvat Scheme. They had on 1-3-1987 a balance of Rs. 1,75,554.98 shown as duty paid on inputs in their register prescribed for effecting the purpose of Notifications 225/86 and 258/86. The respondents sought the transfer of this credit under Rule 57H(3) to RG 23 Part II as credit of duty to be utilised towards payment of duty under the Modvat Scheme. The original authority held that the provisions of Rule 57H(3) did not envisage the transfer of the duty credit which was shown outstanding in the register as above on 1-3-1987. The learned Collector (Appeals) on appeal by the respondents has held that going by the wording of Rule 57H(3) the respondents could be held to be covered by the provisions of the said Rule and, therefore, respondents prayer for transfer of the amount as above had to be allowed. 7. The learned appellant-Collector has urged the following grounds in the appeal memorandum : 1. Rules 56A and 57A of the Central Excise Rules, 1944 and the Notification thereunder envisages utilisation of duty paid on inputs towards duty on the final products subject to terms and conditions laid therein. The set off notifications is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilise the said credit at their convenience for payment of duty on the finished excisable goods notified in the respective rules and notifications and no one-to-one correlation was envisaged in respect of the inputs used in the final product cleared. He pleaded the Notification 201/79 although is an exemption notification by a specific inclusion the provisions of Rule 56A have been made applicable so far as the utilisation of the benefit of the notification is concerned and set off of the duty could be taken for utilisation later for payment of duty on the finished goods. He pleaded that so far as Rule 57H(3) is concerned it only envisages the transfer of the credit in cases where the assessees opted for Modvat credit Scheme and who were earlier availing of the benefit under Rule 56A or any set off notifications similarly worded. He has pleaded the Rule 57A under which the Modvat credit is allowed on the inputs provides for the concession similar to the one as set out under Rule 56A or set off notifications providing for similar concession. He has pleaded that in the present case the notifications do not provide for taking of the credit of the duty paid on the inputs and utilisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts excisable goods of the description specified in column (5) of the Table hereto annexed (such goods being hereinafter referred to as `final products ) and falling under such Chapter, heading No. or sub-heading No. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as is specified in the corresponding entry in column (4) of the said table from so much of the duty of excise leviable thereon under the Central Excises and Salt Act, 1944 (1 of 1944) as is equivalent to the duty of excise leviable thereon under the said Central Excises and Salt Act, or the additional duty leviable under the Customs Tariff Act, 1975 (51 of 1975), as the case may be, already paid on the goods of the description specified in the corresponding entry in column (3) of the said table (such goods being hereinafter referred to as `inputs ) and falling under such Chapter, heading No. or sub-heading No. of the said Schedule as is specified in the corresponding entry in column (2) of the said table. TABLE Sl. No. Chapter Heading No. or sub-head- ing No. Description of inputs Chapter heading N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take the benefit of the exemption for each clearance, then the only course open to them is to have recourse to a refund claim establishing the quantum of duty paid inputs utilised in the finished product specified in the notification. The registers etc. prescribed are only in the nature of a monitoring mechanism to ensure that the respondents do not exceed the exemption provided for in the notification. If for any reason, as mentioned earlier, the respondents do not take the benefit of the exemption and keep on showing the duty paid on the specified inputs on the books, then they have themselves to be blamed for not availing the proportionate exemption at the time of clearing of the goods and the only way to get back the amount of duty paid on the inputs which have gone into the finished product in respect of which they have not availed of the exemption would be only by way of refund. There cannot be any roll over this amount for any other purpose unless the notification specifically provides that this amount has to be taken as a credit which may be utilised at the time of convenience of the respondents. As pleaded by the Revenue, a notification like 201/79 under which the facilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve accumulated the credit when they had been clearing their finished goods under the exemption notification. This could be only under two circumstances. (1) That is the finished goods were carrying less rate of duty than the aggregate duty paid on the inputs. We had put to the learned Advocate whether this was so. He could not say that in fact this was so. (2) The other contingency under which the credit could have been accumulated is that some of the inputs used did not result in production of the finished goods. The question of giving the benefit of exemption in respect of inputs which had not resulted in finished goods cleared from the factory is not envisaged in the notification for the reasons which have been mentioned above, as the notification envisages the input output ratio popularly known as one-to-one ratio between the inputs and the finished goods. 12. Before concluding I would like to mention that there are notifications as in the case of vegetable products like Notification No. 115/86 under which exemption has been given to the vegetable product falling under Chapter XV in which certain specified oils are used. There a complete procedure has been given as to how and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no provision for roll over of the duty paid on the inputs shown outstanding in the register by transfer to RG 23A-II account under Rule 57A in view of the above, as held by Member (Technical). Sd/- Sd/- (S. Kalyanam) (V.P. Gulati) Dated : 15-12-1993 Member (J) Member (T) [Order per : S.L. Peeran, Member (J)]. - The points of difference of opinion are already noted at page 15. The facts of the case and respective findings of both the members have been very explicitly brought out in their respective orders. I have heard Shri Arulswamy, ld. DR for the Revenue and Shri A. Vijaya Raghavan, ld. Consultant for the respondent. The Revenue have stated that the assessees were manufacturers of paper and Paper Board and they were availing set off of duty on various inputs as per Notification Nos. 225/86 and 258/86 and as per the Collector s Trade Notice No. 234/86, dated 24th Oct 1986 and 113/81 until 28-2-1987. It is stated that during the period in the last stages, they were permitted by the Collector of Central Excise, Hyderabad to utilise set off amounts on inputs of particular months (credits) on the cleara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs are lying in stock or are received in the factory after filing the declaration made under Rule 57G, or (ii) such inputs are used in the manufacture of final products which are cleared from the factory on or after the first day of March, 1987. and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification : Provided that such inputs are not used in the manufacture of final product which is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty. (2) Notwithstanding anything contained in Rule 57A, no credit of duty paid on the inputs used in the manufacture of a final product (other than those inputs used in respect of which credit of duty was allowable under any rule or notification prior to the 1st day of March, 1986, when used in the final products) shall be allowed if duty has been paid on the inputs on or before the 31st day of January, 1986. (3) On an application from a manufacturer who had been, immediately before filing a declaration under Rule 57G, availing of (a) the special procedure under Rule 56A in respect of materials or component parts for use in the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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