1992 (4) TMI 161 - AT - Central Excise

Summary

Issues:
- Whether Modvat Credit can be allowed for duty paid prior to the amendment of Rule 57E.
- Interpretation of Rule 57A and Rule 57E regarding the allowance of Modvat Credit.
- Discrepancy in the application of Rule 57E before and after the amendment.
- Conflict in views between different Regional Benches on the interpretation of Rule 57A and Rule 57E.

Analysis:
1. Modvat Credit Eligibility: The appeals revolved around the eligibility of Modvat Credit for duty paid before the amendment of Rule 57E on 15-4-1987. The appellants argued that they should be allowed credit under Rule 57A without the need for Rule 57E, as they were unable to claim credit initially due to non-notification of certain chapters under the Modvat Scheme.

2. Applicability of Rule 57A and Rule 57E: The advocates contended that Rule 57A covers duty paid on inputs, including subsequent differential duty, and that Rule 57E did not explicitly prohibit such adjustments before the amendment. The Judge Advocate sought to rely on the Mahindra & Mahindra case, emphasizing that Rule 57E was the only provision for credit adjustment.

3. Judicial Interpretations: The Tribunal referred to conflicting views from different Regional Benches, highlighting the need for a Larger Bench to resolve the discrepancies. The Tribunal acknowledged the evolving nature of Rule 57E through amendments and the necessity to consider the Modvat scheme as a whole, emphasizing the importance of statutory provisions.

4. Resolution by Larger Bench: The Tribunal proposed specific questions for the Larger Bench to address, including whether Rule 57A could stand alone without reference to Rule 57E and Rule 57G, and whether credit under Rule 57A could be granted retrospectively in cases where no initial credit was taken.

5. Policy Considerations: The Tribunal discussed the government's incremental changes to Rule 57E, indicating a deliberate policy shift in allowing credit adjustments. The Tribunal also considered the equity and objectives of the Modvat scheme in determining the permissibility of credit extensions.

6. Conclusion: The Tribunal concluded that the conflicting interpretations necessitated resolution by a Larger Bench to clarify the application of Rule 57A and Rule 57E, especially concerning the allowance of Modvat Credit for duty paid before the amendments. The Tribunal highlighted the need for consistency and statutory adherence in determining the eligibility for credit adjustments under the Modvat Scheme.