1992 (6) TMI 139 - AT - Central Excise

Summary

Issues:
Appeal against disallowance of Modvat credit under Rule 57-I of Central Excise Rules, 1944.

Detailed Analysis:

1. The appellants, manufacturers of Paper and Paper Board, availed Modvat credit on Gum Tapes but were found to have exceeded the eligible credit amount as per Notification No. 177/86. The dispute arose regarding the applicability of Rule 57B for credit availment from an SSI unit and the restrictions under Notification No. 177/86.

2. The appellants argued that Rule 57B should prevail over Rule 57A and the notifications issued thereunder. They contended that the non-obstante clause in Rule 57B gives overriding effect, allowing them to avail of the credit amount based on purchase from an SSI unit. Reference was made to a decision by the Andhra Pradesh High Court to support their plea.

3. The Respondent argued that Rule 57A is the main provision for the Modvat Scheme, and Rule 57B should not be interpreted to give purchasers from SSI units preferential treatment. Reference was made to another decision of the Andhra Pradesh High Court to support the contention that the specific provisions of Notification No. 177/86 should prevail.

4. The Tribunal considered whether Rule 57B would override the notification issued under Rule 57A. It was noted that Rule 57A is the main provision for the Modvat Scheme, defining the scope of credit availment, while Rule 57B provides for specific situations like purchases from SSI units.

5. The Tribunal analyzed the non-obstante clause in Rule 57B, concluding that it was intended to give overriding effect on the credit of duty amount. The Tribunal referred to the decision of the Andhra Pradesh High Court to support the interpretation that provisions with a non-obstante clause prevail over others.

6. Since the appellants had been availing Modvat credit under Rule 57B for purchases from an SSI unit, and the restriction imposed by Notification No. 177/86 was found to be overridden by Rule 57B, the demand raised and confirmed based on the notification was deemed unsustainable.

7. Consequently, the appeal was allowed, and the order disallowing the Modvat credit was set aside, providing consequential reliefs to follow.