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2012 (11) TMI 864 - AT - Central Excise


Issues Involved:
1. Validity of the revalidation of Rule 57E certificates.
2. Applicability of sub-rule (3) of Rule 57E.
3. Entitlement of MODVAT credit by IPCL (now RIL) based on the revalidated certificates.

Detailed Analysis:

1. Validity of the revalidation of Rule 57E certificates:

The department argued that when the Assistant Commissioner passed Order-in-Original No. 109 dated 13-9-2004, there was no provision in the Central Excise Act or Rules for the issuance or revalidation of such certificates. The department contended that the revalidation of the certificates and the appellate Commissioner's order upholding the Assistant Commissioner's decision were unsustainable for this reason. The department also argued that the certificates were initially cancelled by the Superintendent on 14-1-2000 and that ONGC did not appeal against this cancellation, thus accepting it.

2. Applicability of sub-rule (3) of Rule 57E:

Sub-rule (3) of Rule 57E stipulates that additional credit shall not be allowed where the additional amount of duty became recoverable due to fraud, collusion, willful misstatement, suppression of facts, or contravention of any provisions with intent to evade payment of duty. The department argued that the Tribunal's order dated 28-5-2004 upholding the levy of interest under Section 11AB indicated that the differential duty was due to suppression of facts by ONGC, thus attracting sub-rule (3) of Rule 57E. However, the Tribunal noted that its order dated 28-5-2004 did not address the issue of liability to pay the differential duty on the grounds of fraud or suppression of facts. It also noted that the Tribunal had explicitly found no element of fraud, collusion, or willful misstatement on ONGC's part, which was accepted by the department.

3. Entitlement of MODVAT credit by IPCL (now RIL) based on the revalidated certificates:

The Tribunal held that the right to take MODVAT credit accrued to IPCL (RIL) when ONGC paid the differential duty on the inputs supplied to them. This right was protected by Section 38A of the Central Excise Act, which ensures that any right accrued under a repealed rule is not affected by such repeal. The Tribunal also noted that the procedural provisions of Rule 57E should not defeat the substantive right to take MODVAT credit under Rule 57A. The Tribunal referenced the case of Bell Ceramics, where it was held that Section 38A protected actions taken under the erstwhile rule, allowing the use of Rule 57E certificates for MODVAT credit even after the rule's repeal. Additionally, the Tribunal applied the principle of restitution, ensuring that the substantive right to take MODVAT credit was not defeated by procedural changes.

Conclusion:

The Tribunal concluded that sub-rule (3) of Rule 57E was not applicable as there was no finding of fraud, collusion, or suppression of facts against ONGC. It also held that the revalidation of the certificates was valid and that IPCL (RIL) was entitled to take MODVAT credit based on the revalidated certificates. The Tribunal dismissed the Revenue's appeal and allowed RIL's appeal, holding that the MODVAT credit in question was admissible to them.

 

 

 

 

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