TMI Blog2000 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 14/97-C.E., dated 3-5-1997 issued under Rule 57A restricted the credit to 10% on furnace oil. The department alleged that the Modvat credit on furnace oil used as fuel in the factory was restricted to 10% as per Notification No. 5/94-C.E., dated 1-3-1994. The department, however, observed that the restriction imposed by Notification No. 5/94-C.E. as amended by Notification No. l4/97-C.E. would be applicable in respect of inputs mentioned in Rule 57B also and, therefore the appellants were entitled to Modvat credit only to the extent 10% and not the entire duty paid on furnace oil. 3.Arguing the case for the appellants, Shri V. Sridharan, ld. Advocate submits that Rule 57B(1) permits for taking of credit of specified duty paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57B. 4.Ld. Counsel submits that Rule 57B starts with a non-obstante clause and therefore provisions of Rule 57B will prevail over the provisions of Rule 57A. He submits that the authorities below have overlooked this aspect. He submits that Notification No. 14/97 dated 3-5-1997 was issued under Rule 57A and, therefore the restrictions under the notification does not apply to Rule 57B. He submits that the items mentioned in the Notification No. 14/97 namely, naphtha, furnace oil, low sulphur heavy stock and light diesel oil are used as raw materials in the manufacture of final products. He submits that when they are so used and are described as feedstock, they will be entitled to Modvat credit not under Rule 57B but under Rule 57A. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the above notification clearly shows that the Government has always maintained a distinction between credit availed under Rule 57A and Rule 57B. He submits that earlier Rule 57G(1) which related to Modvat declaration indicated that a person availing credit under Rule 57A has to file a declaration. He submits that this Rule was amended by Notification No. 46/97-C.E., dated 1-9-1997 to include Rule 57A or Rule 57B. He submits that this Tribunal by its final order No. A/684-89/2000-NB dated 18-8-2000 held in para 11 is as under :- "Having discussed the various aspects as above, we find that for purpose of finding the specified duty, we have invariably to go to the Notification issued under Rule 57A. Going to the Notification, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government may also specify in the said notification the goods or class of goods in respect of which the credit of specified duty may be restricted. Rule 57B reading as "(1) Notwithstanding anything contained in Rule 57A, the manufacturer of final products shall be allowed to take credit of the specified duty paid on the following goods, used in or in relation to the manufacture of the final products whether directly or indirectly and whether contained in the final products or not." 9.The emphasis of the Counsel for the appellants was on the words "to take credit of the specified duty paid" very important in Rule 57B. His contention was that there is no prohibition or restriction in taking credit of an amount equal to the duty paid whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government is authorised to restrict the credit of specified duty paid, therefore we have to read this in Rule 57B. We find that similar view was taken by this Tribunal in the case of the appellants themselves. We do not see any reason either to refer the matter to the Larger Bench or to disagree with the findings in that order. We, therefore, follow the ratio of the decision of that order and held that Modvat credit of the specified duty paid shall be restricted to 10% in the instant case. 10.Insofar as the penalty is concerned, we find that in the instant case, the penalty imposed is equal to the amount of the duty. Since the duty has arisen out of the interpretation of the provisions of law, therefore, the penalty appears to be harsh. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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