9911796707
TMI Blog2000 (10) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... its thitherto taken on certain inputs and had ceased to take credits on such inputs for future periods as directed by Departmental authorities. This state of affairs continued on account of the fact that the orders of the Assistant Collector and the Collector (Appeals) were, by and large, adverse to the party. It was the Tribunal's favourable order that changed the scenario. 2.On the strength of the Tribunal's order dated 18-7-96, the appellants took Modvat credits, for the period March, 1987 to September, 1996, on inputs held to be eligible for Modvat credit as per the said order. The credits so taken included the following :- (a) Rs. 4,96,744/- taken on 23-9-96 (b) Rs. 88,89,512/- taken on 21-10-96 (c) Rs. 10,57,409/- taken on 23-9-96 (d) Rs. 58,50,833/- taken during the period September, 1996 to January, 1997 (e) Rs. 1,23,31,456/- taken during September, 1996 to January, 1997 The Department, by show cause notice dated 14-3-97, proposed to disallow the above credits [totalling to Rs. 2,86,25,954/-] and recover the same under Rule 9(2) and Rule 57(I) read with Section 11A of the Central Excise Act, to charge interest under Sections 11AA and 11AB of the Act; to impose penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Collector, as per order dated 9-12-1987, held some of the inputs to be eligible for Modvat credit limited to particular uses and held the rest of the inputs to be ineligible for credit. This order of the Assistant Collector, as we understand, was an order which decided the eligibility or otherwise of the inputs declared by the party for Modvat credit under Rule 57A. Pursuant to the directions of the Superintendent and the subsequent order of the Assistant Collector, the party on 22-12-1987 debited the credit of Rs. 10,57,409.88 taken earlier for the period March, 1987 to October, 1987. They also debited on 14-3-88 the credit of Rs. 4,96,744.87 taken earlier for the same period. This fact was intimated to the Superintendent by the party by letters dated 2-4-1988 and 7-10-1988. For the periods subsequent to the order of the Assistant Collector, the appellants took Modvat credit on inputs only in terms of the said order. Nevertheless, they preferred appeal against the Assistant Collector's order to the Collector (Appeals). The Collector (Appeals) as per order dated 28-12-90 upheld the Assistant Collector's order except in respect of one of the inputs, viz. Sodium aluminate. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purification of water by reacting with oxygen and converting it into water inside the deareator system. The steam generated by using this water is then used for cooking of bamboo/hardwood chips, drying of paper and generation of electricity for running the plant. These are used for treatment of water to prevent the deposit of salts and for removing unwanted elements from raw water and thus for maintenance of boiler. 11. Ion Exchange Resins For treatment of boiler water to make it fit for generating steam to be used for cooking of bamboo/hardwood chips drying of paper and generation of electricity for running the plant. -do- 12. Wetnol This is an organic surface active agent used for cleaning of felts and for removing short fibres/fines and impurities. If these are not so removed, the quality of the paper will be badly affected. This chemical is used for cleaning the felts and felts are equipments for paper making plant. 13. Lissapol -do- -do- 14. Needled Regular Felts, Synthetic Press Felt, Cotton Felt, Synthetic Screen Fabric, Special Link Dryer Fabric and other felts For supporting wet paper sheet at different stages. Needled regular felts and synthetic felt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 18-7-1996. Neither side has claimed to have preferred any appeal to the Hon'ble Supreme Court against the Tribunal's order, which has attained finality, subject only to the High Court's decision in the Reference. 6.In respect of those inputs for which credit was disallowed in toto by the lower authorities but allowed by the Tribunal as per order dated 18-7-1996, the appellants took full credit by making appropriate entries in their RG-23A Register Parts I and II during the period September, 1996 to January, 1997. In that connection, they stated full details of the duty-paying documents and the amounts of duty paid on the inputs in the said register. In respect of those other inputs for which the lower authorities had allowed Modvat credit limiting the same to certain particular uses of the goods and for which entries had already been made on a day-to-day basis in RG-23A Part I register, the appellants took the remaining credit by making appropriate entries in RG-23A Part II register on 21-10-96, in the light of the Tribunal's order dated 18-7-1996. All these credits totalled to Rs. 2,86,25,954/-, which the Department proposed to disallow as per show cause notice dated 14-3-97, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, in the counsel's view, the limitation of six months prescribed under the aforesaid proviso to Rule 57G(2) cannot be applied to the appellants' case and all the credits which were disallowed by the Commissioner on the ground of limitation should be restored to the assessees. Learned Counsel has also relied on the CBEC Circular No. 275/109/96-CX., dated 26-11-96 which clarified that the restriction of six months under Rule 57G for availment of Modvat credit was applicable only to those cases where the assessee himself took/availed the credit. Relying on this clarification of the Board, counsel has submitted that the present appellants' case is not one of having omitted to avail of Modvat credits but one of having been prevented by Departmental authorities from taking such credit. It was only after the Tribunal's decision on 18-7-96 in their favour that they could take the credits. In such circumstances, the limitation of six months could not be applied to the appellants' case inasmuch as, undisputedly, they took the credits within a period of six months from the date of the Tribunal's order. Learned counsel has further argued that the Board's circular is binding on the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other of these requirements, they were not entitled to the credits in question. The order of the adjudicating authority has, therefore, to be upheld, pleads learned DR. 9.On a careful examination of the submissions before us, we note that the adjudicating authority has denied Modvat credits of Rs. 86,72,247/-, Rs. 58,50,833/- and Rs. 1,23,31,456/- totalling to Rs. 2,68,54,536/-. Out of these credits, the credit of Rs. 86,72,247/- had been taken on the inputs mentioned at Sl. Nos. 1 to 5 in the Tribunal's order dated 18-7-96. We note that these inputs were held by the Tribunal to be eligible for Modvat credit. This being so, the credit of Rs. 86,72,247/- is admissible to the appellants, subject to our decision to be taken on limitation. Regarding the credit of Rs. 58,50,833/-, we note that the said credit was taken on 8 items of inputs mentioned below :- (i) Industrial Cloth (ii) Copper wire netting (iii) Metal Cloth (iv) Bronze Cloth (v) Bronze Metal Cloth (vi) Peeling Bars (vii) Lava Shells (viii) Deolite These inputs do not appear to have figured as such in the list of inputs (vide Para 5) which had arisen for consideration before the Tribunal and, therefore, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than six months old. We note that the Larger Bench had no occasion to consider a factual situation like the one obtaining in the instant case. In the case before us, the appellants had originally taken Modvat credit on various inputs in RG-23A Part I/Part II register after filing the necessary declaration but the same was reversed by them as directed by Departmental authorities. But, later on, they restored the credit to themselves in the light of the Tribunal's order dated 18-7-96. The credits which the appellants could not take due to Departmental injunction were also taken by them in RG-23A Part-II on the strength of the Tribunal's order. All this was done within six months from 18-7-96, which fact is not disputed. For any period upto 29-6-95, there was no limitation for taking Modvat credit. For any subsequent period, there is a period of limitation of six months from the date of duty-paying document as explained by the Larger Bhench in a case where apparently there was no Departmental embargo on availment of Modvat credit unlike in the present case. The Board's circular dated 26-11-96 cited before us was not attracted by the facts of the Larger Bench case. We are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were eligible for credit of duty under Rule 57A. The Appellants are entitled to the benefits of the order and the Department is bound to give effect to it. The credit of Rs. 86,72,247/- is accordingly liable to be given. Out of the amount of credit of Rs. 1,23,31,456/-, that part which relates to the inputs mentioned at Sl. Nos. 8 and 11 of the Para (5) - list should also be allowed to the party. With regard to the remaining part as well as the credit of Rs. 58,50,833/-, the Commissioner should pass orders in accordance with law and principles of natural justice after the High Court's decision in Reference. But no part of such credit shall be denied to the appellants on the ground of limitation. 12.On the question of penalty, we have found no record of any reasoning for a penalty of equal amount under Rule 173Q, in the impugned order. In the facts and circumstances of the case, there is no warrant for such or any penalty under Rule 173Q on the appellant or for any interest under Rule 57-I. 13. In view of our findings, Parts (i), (iv) and (v) of the impugned order are set aside. While upholding part (iii) of the impunged order, we direct that the question of recoverability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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