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Issues involved: Interpretation of the amendment to Rule 57C of the Central Excise Rules, 1944 regarding Modvat credit eligibility for goods cleared to Free Trade Zones (FTZ) or Export Oriented Units (EOU).
Summary: The matter was referred to the Larger Bench to determine the nature and retrospective effect of the amendment to Rule 57C made on 1-3-1992. The amendment allowed Modvat credit on inputs even if the final product was exempt from duty or charged nil rate, provided it was cleared to a unit in FTZ or 100% EOU. The appellants argued based on previous decisions that clearances to FTZ and EOU were treated differently, and credit was not denied. They emphasized that specific provisions were necessary for such exemptions. The appellants also contended that duty liability shifted to the receiving unit in FTZ/EOU. They cited Supreme Court judgments on similar issues to support their case. The Revenue argued that the amendment was prospective, as stated in Notification No. 4/92-C.E. (N.T.), dated 1-3-1992. They highlighted that substantive amendments are prospective unless specified otherwise. They referred to various court decisions supporting the prospective application of statutory amendments. The Tribunal held that the amendment to Rule 57C was prospective, effective from 1-3-1992, and dismissed the appeal accordingly. In conclusion, the Tribunal ruled that the appellant was not entitled to the relief sought. The impugned order was confirmed, and the appeal was dismissed.
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