1994 (10) TMI 160 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 57K and relevant notifications regarding Modvat credit on R.B. oil
- Allowance of differential credit based on the date of utilization of inputs in the manufacture of final products
- Application of Rule 57A for granting additional credit subsequently
- Differentiation between receipt of oil and utilization of oil for claiming Modvat credit

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the Modvat credit on R.B. oil under Rule 57K and relevant notifications. The respondents sought additional credit for stocks of R.B. oil as on 1-3-1988, following an enhancement in the credit rate from Rs. 320/- PMT to Rs. 640/- PMT. The Collector (Appeals) had allowed the appeal based on the date of utilization of inputs for manufacturing final products, contrary to the Revenue's contention that credit should be based on the date of receipt of inputs by the factory.

The Tribunal considered the submissions and referred to a previous case to distinguish the current scenario. It highlighted that the Modvat credit claim is governed by Rule 57K, which allows credit for the use of inputs in manufacturing final products. The Tribunal emphasized the distinction between the receipt and utilization of inputs, stating that credit is allowed upon receipt but can only be utilized for duty payment after actual utilization in production. It rejected the idea of inflating credit based on enhanced rates for stocks as of a specific date, emphasizing that the notification does not allow for such differential credit for existing stocks.

The Tribunal clarified that the Asstt. Collector's order only pertained to disallowing differential credit for stocks as of 1-3-1988 and did not restrict the utilization of credit at an enhanced rate post the notification amendment. Therefore, the Tribunal held that no additional credit could be claimed under Rule 57K for stocks as of 1-3-1988 due to the rate enhancement. Consequently, the impugned order was set aside, and the appeal of the Revenue was allowed.