TMI Blog1996 (2) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Rule 57A, credit of specified duty or inputs may, in a case where the duty on inputs has been paid under a Notification issued under sub-rule (1) of rule, 8 [or sub-section (1) of section 5A of thc Act] [or section 5A of the Act, as the case may be] exempting such inputs from a part of the duty leviable thereon on the basis of value of clearances of such inputs during any specified period, be allowed at the rate otherwise applicable to such inputs but for the said notification : Provided that the said notification provides for grant of credit in respect of such inputs at such higher rates as may be specified therein. RULE 57H. Transitional provisions. (1) Notwithstanding anything contained in Rule 57G, the Assistant Collector of Central Excise may allow credit of the duty paid on inputs received by a manufacturer immediately before obtaining the dated acknowledgement of the declaration made under the said rule if he is satisfied that - (a) such inputs are lying in stock, or are received in the factory, on or after the 25th day of July, 1991, or (b) such inputs are used in the manufacture of final products which are cleared from the factory on or after the 25th day of J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be allowed by the Assistant Collector. It will create discrimination between input held in stock at the time of filing of 57G declaration and inputs received after such declaration in terms of credit allowable. Therefore, the benefit of Rule 57B for inputs received from small scale manufacturers cannot be taken away by any other provision/Rules of Modvat. The words credit of duty used in Rule 57H has to be interpreted in accordance with Rule 57B. 3. In the grounds of appeal, the appellant - Commissioner has urged as under : 2. Rule 57B does not provide for availing notional higher credit at a later date than the receipt of the inputs. Hence, the notional higher credit is not permissible on the inputs lying at the time of filing declaration but which have been received much earlier to it. 3. Collector (Appeals ) has erred in holding that the term `duty paid on inputs in Rules 57H and 57G is the same and cannot be construed differently inasmuch as Rule 57H beginning with a non obstante clause viz., notwithstanding anything contained in Rule 57G, which signifies the overriding effect of Rule 57H over Rule 57G and hence the provisions of Rule 57G cannot be equated to Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of duty. The legislature therefore felt that an element of incentive should be brought in to encourage the buyers of the goods to procure the goods from small scale sector. For this purpose, therefore, Rule 57B was introduced. This rule as would be seen has a non-abstante clause and so far as the quantum of credit is concerned the same in terms of this rule is not limited to actual payment of duty as set out in Rule 57A i.e. equivalent to the duty paid on the inputs but it is higher at the level of the full rate of duty payable on the goods notwithstanding that the same had suffered exempted rate of duty at lower level for having been manufactured in a unit entitled to exemption based on the value of clearances. By this, the legislature has given the buyer of the inputs the benefit of credit more than the actual duty paid as reflected in the invoice. Therefore, the manufacturer, who opted for the MODVAT Scheme had therefore, the benefit of Rule 57B by way of higher notional credit in case he chose to purchase the input from small scale sector as above. The question that arises is whether an assessee who has not opted for MODVAT Credit and had made purchase in the normal course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for tea chests or. [(vi) bags or sacks made out of fabrics (whether or not coated, covered or laminated with any other material) woven from strips or tapes of plastics. It is seen that credit allowable under this rule is the entire duty of excise or additional duty under Section 3 of the Act as may be specified in the Notification issued under this rule paid on the goods which are referred to as inputs for use in or in relation to the specified finished product. The Government also has reserved the power to restrict the credit of specified duty in respect of certain specified goods or class of goods. From the above it is clear that it is not as if in terms of Rule 57A credit of duty has necessarily to be equal to the duty paid actually on the goods and it can also be restricted or can be more under Rule 57B. It is seen that Rule 57B carves out an exception to Rule 57A. Under Rule 57B notwithstanding the fact that lower rate of duty may have been paid or nil rate of duty may have been paid in respect of goods procured from exempted sector, the purchaser of these inputs could take higher notional credit equivalent to the duty otherwise payable but for the exemption. Clearly thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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