TMI Blog2000 (10) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer of the inputs and consequently additional duty that had become payable on the enhanced price which was paid during the period from 19-12-1986 to 28-10-1987. The credit for the amount so paid was taken by the assessee in the relevant registers between 16-8-1987 and 30-12-1987. The differential duty in respect of which credit was so taken was in the sum of ₹ 6,43,994.47. 3. The Modified Value Added Tax Scheme was introduced from 1-3-1986. Prior to its introduction, the scheme prevailed was Proforma Credit Scheme. Under the Proforma Credit Scheme in the 3rd proviso under Explanation 2 to Rule 56A(2) it was provided that if the duty paid on the material or on the components parts for which credit has been allowed under the sub-rule be varied subsequently due to any reason resulting in the payment of refund, to or recovery of more duty from the manufacturer or importer as the case may be of such material or component parts, the credit shall be varied accordingly by adjustment in the credit account maintained under sub-rule (3) or in the account current maintained under sub-rule (3) or Rule 9 or Rule 173G(1), or, if such adjustment be not possible for any reason, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of the duty paid by the manufacturer of inputs or importer of inputs, as the case may be, is allowed to him for any reason, then the manufacturer of the final products shall accordingly adjust the amount of credit in his credit account and if such adjustment is not possible for any reason, the manufacturer of the final products shall pay the amount in cash equal to the amount of refund allowed to the manufacturer of inputs or importer of inputs. (ii) If a manufacturer of the final products has not taken any credit or has taken credit on any inputs and subsequently it so happens that any additional amount of duty is recovered by the manufacturer of such inputs or importer of such inputs in respect of such inputs, then the manufacturer of the final products shall be allowed an additional credit equal to the amount of duty recovered, if the manufacturer or importer of such inputs has passed on the incidence of the additional amount of duty to the manufacturer of final products. (iii) The provision of sub-rule (2) shall not apply in cases where the additional amount of duty became recoverable from the manufacturer or importer of inputs on account of any short levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex court in several subsequent rulings to which it is unnecessary to refer. 7. Rule 57A which deals with substantive right of the manufacturer manufacturing specified product, with regard to the extent of his right to claim credit of the duty paid on inputs, specifically provides that his right is to take credit for the duty paid on goods used in or in relation to manufature of the said final product . 8. As originally framed with amendments upto 15-4-1987, Rule 57A read thus : 57A. Applicability. - (1) The provisions of this Section shall apply to such finished excisable goods (hereinafter referred to as the final products ) as the Central Government may, by notification in the Official Gazette, specify in this behalf for the purpose of allowing credit of any duty of excise or the additional duty under Section 3 of Customs Tariff Act, 1975 (51 of 1975) as may be specified in the said notification (hereinafter referred to as the specified duty paid on the goods used in or in relation to the manufacture of the said final products (hereinafter referred to as the inputs ) and for utilising the credit so allowed towards payment of duty of excise leviable on the final prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be determined in the background of the objective sought to be achieved by the Modvat scheme, and also bearing in the mind, the need to harmonise the rules which deal with the scheme. The substantive right conferred by Rule 57A is not to be whittled down unless the Legislative intention to so whittle down has been set out expressly or is necessarily implicit in any part of the statute or the Rules. The procedures laid down in the later rules, cannot reduce the width of the earlier rule which deals with the substantive right. The omission in the procedural rules to deal with one aspect of the adjustment also does not have the effect of denying a benefit which was intended to be conferred under Rule 57A. The procedural provision subsequently introduced by way of amendment or substitution which makes explicitly the intention, such intention being in conformity with that has been set out in Rule 57A must necessarily be regarded as clarificatory, and given effect to, accordingly. 11. While determining the scope of Rule 57A and 57E as also Rule 57G, the scheme that prevailed prior to the introduction of Modvat scheme as to the manner in which the Legislature had dealt with the manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the inputs by reason of further amount having been paid towards the duty on the inputs received, does not imply that the manufacturer has no right to take such credit. 14. Rule 57E which deals with adjustment in duty credit, initially dealt with only one aspect of the adjustment, namely, the fact of refund of a part of the duty paid by a manufacturer or by importer of the inputs. It did not deal with the other aspects namely the effect of the further payment towards duty after receipt of the inputs into the factory of the manufacturer. This rule, again, as it stood prior to the amendment on 15-4-1987, cannot be so construed as to limit the right of the manufacturer to claim credit for the duty paid on inputs, only to the amount that had been paid at the time of receipt of those goods in the factory of the manufacturer. Rule 57E as it stood prior to 15-4-1987 cannot be construed as being exhaustive on the question of adjustment in duty credit. This rule must necessarily be read in harmony with Rule 57A and the object of Modvat scheme and the right of the manufacturer to take credit for the duty paid on the inputs cannot be cut down by reason of procedure, having been prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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