1991 (8) TMI 219 - AT - Central Excise

Summary

Issues: Interpretation of Rule 57H regarding transitional provisions for availing Modvat credit.

In this case before the Appellate Tribunal CEGAT, Bombay, the appellants, engaged in the manufacture of coated fabrics, appealed against the order passed by the Collector of Central Excise (Appeals), Bombay. The Collector had partially confirmed a demand for the period August and September 1987, amounting to Rs. 16,304.67. The dispute arose from the rescission of Notification No. 68/84 on 1-3-1987, which provided proforma credit on duty-paid plastic sheets and films. The appellants, unaware of this change, continued availing the benefit until 27-9-1987. A demand notice was issued, alleging wrongful availment of proforma credit. The Collector (Appeals) confirmed the demand for August and September 1987, based on the interpretation of Rule 57H(1) regarding the transitional provisions. The appellants argued compliance with Rule 56A and eligibility for Modvat credit under Rule 57H, even without obtaining dated acknowledgments. The JDR supported the Collector (Appeals)'s interpretation of Rule 57H. The Tribunal noted that the appellants validly availed of proforma credit and later opted for Modvat credit. Rule 57H allows credit for inputs used in final products cleared after 1-3-1987. The Tribunal disagreed with the Collector (Appeals)'s interpretation, emphasizing that if inputs were used in products cleared after 1-3-1987, Modvat credit should be granted. The Tribunal allowed the appeal, holding the appellants eligible for Modvat credit for inputs used between 1-3-1987 and 27-9-1987, overturning the lower authorities' decision.

This case primarily revolved around the interpretation of Rule 57H concerning the transitional provisions for availing Modvat credit. The Tribunal clarified that if inputs were used in the manufacture of final products cleared after 1-3-1987, the benefit of Modvat credit should be granted, as per the provisions of Rule 57H. The Tribunal emphasized the need for the discretionary powers of the Asstt. Collector to be judiciously exercised in favor of the assessee if the criteria in the rule are met. The Tribunal disagreed with the Collector (Appeals)'s interpretation of the term "immediate" in Rule 57H, stating that it should be read in conjunction with other provisions. Ultimately, the Tribunal allowed the appeal, holding that the appellants were entitled to Modvat credit for the relevant period, as they had complied with the statutory requirements and were eligible for the credit under the transitional provisions of Rule 57H.

In conclusion, the Tribunal's decision in this case highlights the importance of correctly interpreting statutory provisions, especially concerning transitional provisions like Rule 57H for availing Modvat credit. The Tribunal emphasized that if inputs were used in the manufacture of final products cleared after the specified date, the benefit of Modvat credit should be granted to the assessee. The Tribunal's decision overturned the lower authorities' ruling and allowed the appeal, affirming the appellants' eligibility for Modvat credit for the period in question.