2006 (2) TMI 197 - AT - Central Excise

Summary

Issues Involved:
Retrospective nature of the amendment to Rule 57F(4) by Notification No. 11/95-C.E.

Analysis:
The issue referred to the Larger Bench was whether the amendment to Rule 57F(4) by the introduction of a proviso through Notification No. 11/95-C.E. dated 16-3-1995 is retrospective in nature. The Rule prior to the amendment allowed the credit of specified duty on inputs to be utilized for payment of excise duty on final products, waste arising during manufacture, or on the inputs themselves if cleared under sub-rule (1). The proviso introduced on 16-3-1995 extended this provision to allow credit for payment of duty on any final product, regardless of actual use in manufacture, provided the inputs were received and used in the factory for production after the specified date.

In the case of HPCL v. CCE, Visakhapatnam, the Tribunal had relied on previous decisions to conclude that Notification No. 11/95 was retrospective without independent reasoning. However, the decision in CCE v. Nav Bharat Paper Mills and CCE & C v. India Cements Ltd. did not address the retrospective operation of an amendment to a Rule. The Tribunal found that the amendment was not retrospective, emphasizing that the proviso introduced a new condition regarding the date of receipt and use of inputs, similar to the Supreme Court's decision in Bombay Oil Industries Pvt. Ltd. v. UOI regarding fresh conditions in notifications.

The assessee's reliance on various Tribunal decisions was deemed distinguishable as they did not address the specific issue of non-utilization of inputs on which duty was paid for final products. The Tribunal's decision in HMT Ltd. v. CCE, Hyderabad was also considered misplaced, as it did not discuss the retrospective application of the amendment. The decision in Bajaj Tempo Ltd. was found inapplicable to the present case as it did not support the admissibility of credit for final products where inputs were never intended to be used.

Ultimately, the Tribunal held that the proviso added to Rule 57F(4) by Notification No. 11/95-C.E. dated 16-3-1995 was not retrospective in nature. The decision was based on the extension of the rule's scope and the introduction of a new condition regarding the date of receipt and use of inputs. The papers were returned to the original Bench for further orders.