TMI Blog2003 (12) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners are challenging the legality and validity of the Notification No. 177/86, dated 1-3-1986, issued under Rule 57A of the said Rules as being ultra vires the Rule insofar as it seeks to restrict the benefit of the Notification to certain inputs listed in Column No. 2 of the table thereunder to the exclusion of other inputs. It is the case of the petitioners that Rule 57A empowers the Government to issue notification specifying the final products and the duty paid on the inputs used in the manufacture of final product but such power does not include the one to specify certain inputs and to exclude the other inputs. In other words, all the inputs used in or in relation to the manufacture of the final products specified under the notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the impugned Notification. Since the petitioners on their own proceeded to avail the Modvat credit in spite of exclusion of the inputs from the said Notification, it was a clear case of availing credit contrary to the provisions of law and to the knowledge of the party availing the same and therefore, the authority was justified in imposing the penalty. 6.The facts relevant for the decision are not in dispute. The petitioners did file declarations under Rule 57G on 29-4-1988, and then on 17-6-1988 in respect of various inputs used in the manufacture of the final products by the petitioners and started availing the Modvat credit in respect of inputs falling under Chapter 27 from 18-6-1988. The Assistant Collector of Central Excise, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the credit for the inputs falling under Chapter 27 and hence interim relief was refused. However, the reversal of the credit was made subject to the outcome of the petition and the respondents were restrained from recovering the penalty. 7.The Rule 57A of the said Rules reads thus :- "Rule 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 exercise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereinafter refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssable value of the final products under Section 4 of the Act; (iv) cylinders for packing gases, or (v) plywood for tea chests." Undoubtedly, the said Rule relates to the subject of "credit of duty paid on excisable goods used as inputs". The Rule itself defines what is specified duty and it has been clarified that the same relates to the duty paid on the goods utilised as inputs in the final products and the one which is to be specified in the notification to be issued under the said Rule. It is only in relation to such duty paid on the inputs, the manufacturer is allowed to avail credit for the same at the time of payment of duty of excise leviable on the final products. The Rule clearly empowers the Government to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f duty paid on excisable goods used as the inputs, at the same time, the proviso clarifies that while enumerating the inputs in relation to which specified duty can be subject-matter of credit while paying the duty on the final products, the Government is empowered to restrict or to specify the goods or classes of goods i.e. the inputs or the classes of inputs in respect of which the credit of specified duty may be availed of. Being so the Notification issued by the Government specifying certain inputs, on which duty is paid and the credit of which can be availed at the time of payment of duty on final product, to the exclusion of some of the inputs, cannot be said to be ultra vires the Rule 57A of the said Rules. For the reasons stated abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the final product of the petitioners. Apparently, the petitioners had availed the Modvat credit in respect of the inputs falling under Chapter 27, contrary to the provisions of law. Being so, no fault can be found with the impugned order passed by the Collector in relation to the direction to reverse the Modvat credit to the extent of Rs. 32,44,904.46 ps. 11.As regards the challenge to the penalty, mere absence of mala fide can be no justification to interfere in the said order. Undoubtedly, the petitioners were fully aware that the notification did not include the inputs falling under the Heading 27 and therefore no credit could have been availed in respect of the duty paid on such inputs while paying the duty on the final product. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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