9911796707
TMI Blog1996 (4) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... is quite clear that there is nothing in Rule 56A or under the Modvat rules which authorises Revenue to demand back the credit amounting in a case of the nature under reference. When credit has been utilised for payment of duty without any irregularity it cannot be taken back by the deptt. Allowing credit and utilising it are two different stages. Since the credit is to be allowed as soon as the goods are brought into the factory, the grant of credit has not to wait till the finished goods have actually be manufactured. Allowing of credit therefore, will have to be with reference to the facts as prevailing at the time the inputs are taken to the factory. If there was no error or the irregularity in the allowing of credit at the point of time, there is no justification whatsoever in disallowing the credit. The case is also covered by the judgment of CEGAT reported in 1991 (56) E.L.T. 452 (Tribunal) = 1991 (34) ECR 324 (CEGAT SRB) wherein it has been held that once credit has been taken and there is no dispute about its use in the specified product, credit cannot be reversed over if the input is deleted from the specified category. In view of the above, I accept both the appeals with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty on the inputs either from RG 23A Part I or Part II; that the Collector (Appeals) wrongly relied upon the judgment reported in 1991 (56) E.L.T. 452 (Tribunal) = 1991 (34) ECR 324 because in that case the issue was different in the sense that it related to withdrawal of facility of deemed credit on certain metal inputs though the credit against the duty paying documents continued to be available and final products continued to be the specified under Notification No. 177/86. The learned SDR therefore, prayed that the impugned order may be set aside and the appeals may be allowed. 5. Shri S.K. Kohli, the learned Advocate appearing for the respondents submitted that their case was squarely covered by the judgment of the Tribunal in the case of CCE, Bangalore v. Wipro Information Technology reported in 1988 (33) E.L.T. 172. 6. Heard the submissions of both sides. We find that this Tribunal in the case of C.C.E. v. Sundar Engineering Industries, Bangalore reported in 1991 (56) E.L.T. 452 (Tribunal) = 1991 (34) ECR 324. In para 4 of this order, this Tribunal had held : "4. We observe that there is no dispute that the respondents at the time they brought in the inputs i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2)? In our view the answer to this is 'No'. We observe that the moment the goods under the Modvat scheme are brought into the factory, where the manufacturer is eligible to take Modvat credit, the manufacturer while he takes the Modvat credit gets bound down by the rigour of the other provisions under the Modvat rules. It is seen that in terms of Rule 57F the inputs on which the credit had been taken cannot be removed from the factory just like that and any removal of the same is subject to prior permission of the Collector of Central Excise on payment of appropriate duty of excise treating the said inputs as if these have been manufactured in the said factory. There is no plea that the inputs had been brought in were not being used for the specified finished product as specified under Rule 57A. All that happened was that the Central Government felt it necessary to modify the earlier direction given and held that the inputs in question, which were lying in the country, would no longer be deemed to be duty-paid and Modvat credit could not be taken in respect of the same without the documentary evidence or payment of duty. At the relevant time, when the inputs in question were broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be allowed as soon as the inputs are brought to the factory, the grant of credit is not to wait till the finished goods have actually been manufactured. Therefore, allowing of credit would have to be with reference to the facts as prevailing at the time of the inputs are taken to the factory. If there was no error or irregularity in the allowing of credit at that point of time, it does not appear that the credit becomes liable to be disallowed subsequently because the finished goods are subsequently exempted from duty. If this be the position, recourse to clauses (v) and (vi) of sub-rule (3) would not help the Revenue. Accordingly, in instant case, when proforma credit was taken by the respondents under Rule 56A and subsequently utilised by them against payment of duty on the computers manufactured by them, they are not liable to pay back the credit on account of the fact that on 17-3-1985, the Government had issued Notification No. 67/85-C.E. exempting computers from duty. 9. We observe that in the case of C.C.E. v. Sri Sarvaraya Sugar (Bottling Unit) Ltd. reported in 1992 (59) E.L.T. 125, this Tribunal in para 6 held : "6. We observe that Modvat credit facilities we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed." 10. Further this Tribunal in the case of Tripty Drinks (P) Ltd. v. C.C.E. reported in 1993 (63) E.L.T. 101 had held : "4. We have heard and considered the submissions. We have perused the record and gone through the decisions cited by the learned Counsel which have been referred to in the appeal. We find, the South Regional Bench of the Tribunal had dealt with an exactly similar situation in the case of Collector of Central Excise, Guntur v. Sri Sarvaraya Sugar (Bottling Unit) Ltd., reported in 1992 (59) E.L.T. 125 (Tri) = 1991 (37) ECR 617. It was held therein that there is no specific provision under Modvat Rules providing for recovering Modvat credit if, in respect of any particular commodity, credit allowed is utilised under Rule 57F and facility of Modvat is withdrawn and the inputs received prior to the date of withdrawal of the Modvat facility are still lying unutilised. Holding that credit had been correctly taken and utilised, they dismissed the Department's appeal. We find that this decision of the Tribunal is in line with the judgments of different High Courts in similar matters involving utilisation of credit during the currency of credit scheme under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts brought under Modvat Scheme have to be utilised for the manufacture of specified finished products and if Modvat facility is withdrawn from a particular date for a final product, the inputs lying in the factory on that date are not eligible for Modvat credit. Such final products cease to be specified goods, with their deletion from the Modvat Scheme. Any other view will lead to an anomalous situation against the Scheme and spirit of Modvat, he has held. We are not disposed to agree with this interpretation. The expression used in Rule 57F is the inputs may be used in, or in relation to the manufacture of final products for which such inputs have been brought into the factory. The application of the words 'specified goods' to designate final products for which such inputs have been brought into the factory is an interpretation by supplying the word specified which is not there in the Rule. No doubt the Collector is right that with the final products being deleted from the Modvat Scheme, they cease to be specified goods but this is not the relevant expression in the Rule. It is not the case of the Department that the inputs have not been used in the manufacture of the final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
