TMI Blog1995 (5) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing Shri K.K. Banerjee, learned Advocate who appeared for the appellants and Shri D.K. Saha, learned Senior Departmental Representative who appeared for the respondent Collector. Their respective arguments are common for the three appeals. 2. Explaining the case of the appellants, Shri Banerjee, learned Advocate stated that they had furnished a declaration of their inputs and final products on 8-11-1988. They availed Modvat benefit by way of duty paid on the inputs used by them in the manufacture of their final products. At the end of each financial year, namely, 1988-89, 1989-90 and 1990-91 they switched over to complete exemption from duty in terms of exemption Notification 175/86, dated 1-3-1986 and cleared their final products free of duty till they reached the maximum limit eligible for duty free clearance. When they stopped payment of duty on their goods at the end of each financial year and started availing of full exemption from duty, they reversed and paid back the credit of duty corresponding to the inputs, in stock or in process or contained in the final products which were cleared free of duty. By the same token they should be allowed credit of duty in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or yarn manufactured in U.P. and sold. It had nothing to do with the transformation by printing and design on the cloth. The cloth exported was the same as the cloth sold with the variation or difference that the colour had changed by printing and processing. Shri Banerjee contended that on the above basis the product Toughened Sheet Glass made out of duty paid sheet glass would be covered by the provision in Rule 57H(1) relating to inputs lying in stock or received in the factory on or after 1-3-1987. Accordingly the orders of the authorities below denying them the benefit of credit in respect of inputs not lying in stock but contained in the final products are not correct and require to be set aside, urged the learned counsel. 3. Without, prejudice to the above mentioned submissions, Shri Banerjee referred to the new ground raised by them vide their application which had also been allowed. This is about the validity of the original declaration filed by them on 8-11-1988 for the subsequent years also. Though they had filed declarations subsequently each year when they reverted to modvat procedure after exhausting their duty free clearances, such declarations were superfluous an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled such declarations every year. Having complied with the statutory requirement in the matter of filing declaration, the appellants rights will be what is permissible under the said Rule 57G read with Rule 57H insofar as the inputs received before the filing of declaration are concerned. Shri Saha, learned Senior Departmental Representative, pleaded in conclusion that the appeals be dismissed. 6. I have considered the submissions made by both the sides. I have perused the record as also the authorities cited. The impugned decisions have taken into account the effect of deletion of clause (ii) of sub-rule (1) of Rule 57H by Notification No. 20/89-(N.T.) C.E., dated 5-5-1989. The deleted provision read as follows :- (ii) such inputs are used in the manufacture of final products which are cleared from the factory on or after the 1st day of March, 1987. Because of the deletion of this provision it had been held in the impugned orders that credit could not be taken by the appellants in respect of the inputs not lying in stock at the time of filing the declaration on each year when they opted for Modvat benefit after crossing the maximum limit available for duty free exemption. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h these decisions in the light of the arguments now advanced before me in the present case I find that in the aforesaid two cases, the argument was mainly on the deleted sub-clause (ii) and that such deletion would have no effect on clearances made in and after May, 1989 which were in any case, after the cut off date 1-3-1987 contained in the said deleted provision. The arguments advanced and considered in the aforesaid two cases did not take adequate note of sub-clause (i) of Rule 57H(1) as it stood after the 5-5-1989 amendment. The said sub-rule as it stood at the material time has been extracted earlier. It covered inputs received by a manufacturer immediately before obtaining the dated acknowledgement of the declaration made under Rule 57G if such inputs are lying in stock or are received in the factory on or after 1-3-1987. The second alternative position of receipt of inputs on or after 1-3-1987 had not received necessary attention in the earlier two cases referred to above nor, for that matter, in the present cases before me. The impugned orders have also been passed entirely on the footing that sub-clause (ii) did not exist at that time and did not cover goods contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is nothing in the relevant Modvat Rules themselves which requires that a manufacturer who, after availing modvat benefit, switches over to complete exemption from duty should file a fresh declaration when he again switches over to the Modvat regime when he starts clearance of the final products on payment of duty for which he wants to use the credit of duty paid on the inputs used in or in relation to their manufacture. No doubt, Sections 57C and 57H will come into reckoning when the declaration under Rule 57G remains dormant during the period of availment of exemption and during the two stages of switch over to complete exemption and to the stage of payment of duty respectively. When the manufacturer who had availed Modvat Credit while engaged in clearance of goods on payment of duty switches over to complete exemption, he comes under the discipline of Rule 57C and has to reverse the credit corresponding to the final products cleared under full exemption. Shri Banerjee made a submission during his argument that they had reversed such credit. The appellants have also contended likewise in their appeal. This has to be verified by the Assistant Collector. Once this is found to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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