TMI Blog2000 (6) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... on over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in the said final products and such other information as the said Assistant Commissioner may require, and obtain a dated acknowledgement of the said declaration . Sub-rule (2) of the same Rule stipulates that a manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgement aforesaid, take credit of the duty on the inputs received by him . Thus, it is a requirement under this Rule that manufacturers intending to take credit of duty paid on inputs shall file declaration before the jurisdictional Assistant Commissioner of Central Excise and obtain dated acknowledgement and after obtaining the acknowledgement, they may take credit of duty paid on inputs. Rule 57H which deals with 'transitional provisions' contains exception to Rule 57G. It stipulates that Assistant Commissioner of Central Excise may allow credit of duty paid on inputs received by a manufacturer immediately before obtaining the dated acknowledgement of the declaration made under the said rule subject to the Assistant Commissioner's satisfaction of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such inputs in the manufacture of final products which are cleared from the factory before that clause was deleted with effect from 5-5-1989, the inputs which went into the manufacture of final products which were cleared from 5-5-1989 were also not eligible for Modvat credit. 5. The reason for making the reference to this Larger Bench is that the Tribunal had taken different views on the subject. In Konark Cement Asbestos Ltd. v. CCE, Bhubaneshwar [1994 (69) E.L.T. 669 (Tribunal)], a Division Bench of the East Regional Bench took the following view :- 7. We accept the contention of the learned Senior Departmental Representative that sub-rule (1) of Rule 57 as it existed after 5-5-1989 sans the protecting sub-clause (ii) thereunder cannot be given effect to, as if the latter provision existed thereafter also. While deleting the said provision apparently on the ground that it was no longer necessary to lay down the condition of clearance on or after 1-3-1987, the vital coverage of inputs not in stock as such but used in the manufacture of final products cleared after a crucial date had also been deleted. The effect is that after the said amendment deleting sub-clause (ii) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or after the 1st day of March 1987. The plea that even after the deletion of sub-clause (ii) the surviving clause viz. clause (1) would still cover inputs used in the manufacture of final products which are cleared from the factory on or after 1-3-1987 does not appear to be tenable and, in fact, had been held to be so vide the Tribunal decision in Konark Cement Asbestos Ltd. v. Collector of Central Excise, Bhubaneswar to which I was a party. It was held therein that the expression inputs in stock in the amended Rule 57H(1)(i) as it existed after 5-5-1989 would cover only inputs present as such and that once they are taken into use and converted into other material they cannot be said to be inputs in stock. That case was reported in 1994 (69) E.L.T. 669 = 1993 (49) ECR 692. That decision was followed by me in another case, Collector of Central Excise v. Okay Steel (P) Limited reported in 1994 (73) E.L.T. 694. After carefully going through 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 clearan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so refers to the decisions of the Tribunal in favour of the assessee in the case of Collector of C. Ex., Ahmedabad v. Navdeep Packing Industries [1994 (69) E.L.T. 358 (Tribunal)] and Collector of Central Excise, Madras v. Kothari Industrial Corpn. Ltd. [1995 (61) ECR 621 (Tribunal)], even though these decisions were rendered either subsequent to restoration of clause (ii) or prior to amendment dated 5-5-1989. 6. When the cases were taken up for argument, the appellants did not appear for arguing. Instead, they filed written submissions. We have, therefore, heard the Ld. DR and Shri R. Swaminathan who appeared as intervener. 7. In the case of M/s Zoloto Industries, the claim for Modvat credit was in respect of stocks of inputs available as on 2-5-1989 i.e. prior to deletion of clause (ii). Therefore, during the period, both the clauses were present in the rule and as a result, there is no dispute that credit was permissible both on inputs in stock as well as inputs in process or which had been used in the manufacture of finished products. Since the claim pertained to the stock prior to the amendment dated 5-5-1989, the Commissioner (Appeals) allowed the appellants' claim on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees prior to their coming under the Modvat scheme would have been all cleared. Therefore, that clause would no more have been operative. The learned Counsel has also submitted that this position is clear from the fact that, that provision was restored to Rule 57H once new products were brought under Modvat scheme. Shri Swaminathan also referred to the decision of the Supreme Court in CCE, Shillong v. Wood Craft Products Ltd. [1995 (77) E.L.T. 23 (SC)] wherein the Supreme Court has held that amendments to Chapter Note 5 with effect from 20-3-1990 and 1-3-1992 were only clarificatory and made explicit what was already implicit in the Heading throughout. He submitted that an amendment necessarily did not mean that the legal position has changed. 9. The learned DR submitted that the law as laid down by the Tribunal in Konark Cement Asbestos Ltd. constituted the correct law. He referred in particular to the finding that inputs lying in stock will cover inputs lying in stock as such only and that if the expression 'inputs in stock' was intended to cover inputs contained in final products also, then there was no necessity to re-introduce the deleted provision i.e. sub-clause (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easoned order pointed out what they perceived to be an error of law in the earlier decision and stated the points for the President to make a reference to a Larger Bench. It is clear from the above observations of the Supreme Court that the proper thing for the Single Bench to do would have been to refer the matter to a Larger Bench than to render a differing decision. 11. With regard to the merits of the case, we find that Rule 57H(1) after its amendment continued to relate to grant of transitional credit i.e. an assessee moving from not availing of Modvat credit to availing of Modvat credit. The rule, thus, relates to inputs already at hand. This rule is an exception to the provisions in Rule 57G which relates to procedure for availing of Modvat credit. The rule opens with the non-obstante clause notwithstanding anything contained in Rule 57G . The Rule may be reproduced below :- (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 - (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1991 also permitted grant of Modvat credit in respect of both inputs lying in stock as well as inputs in process or used in relation to the manufacture of the final products provided such inputs had been received in the factory after the filing of the declaration made under Rule 57G. The reference is answered accordingly. 13. Coming to the appeals of M/s Crown Industries and M/s Bhanu Chemicals, we find that their entitlement to Modvat credit in respect of inputs in process and inputs contained in finished products has not been considered from the point of view whether those inputs were received in the factory after filing the declaration made under Rule 57G . They have been rejected only on the ground that the inputs were not in stock as such. Therefore, their claim is required to be reconsidered based on the factual position as to whether the inputs were received after filing the declaration made under Rule 57G. These cases are, therefore, remanded to the jurisdictional Assistant Commissioner for such reconsideration and passing of fresh orders after giving the appellants an opportunity of being heard in the matter. The appeal of the Revenue in the case of M/s Zoloto Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X
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