1994 (12) TMI 222 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 57E in relation to Rule 57A for adjustment of Modvat Credit, allowance of differential duty credit, power of Appellate Tribunal to grant relief not provided under law.

Analysis:

1. Adjustment of Modvat Credit - Rule 57E vs. Rule 57A:
The Collector of Central Excise filed a Reference Application questioning the Tribunal's decision regarding the adjustment of Modvat Credit under Rule 57E. The Tribunal upheld the order-in-appeal, allowing the credit under Rule 57A based on certificates issued by suppliers for differential duty. The Department contended that Rule 57E, as it stood before 1-3-1987, did not permit upward variation of credit for additional duty paid on inputs. However, the Tribunal relied on past decisions and held that Rule 57A, as the substantive provision for credit, could override Rule 57E. The Tribunal emphasized that any deficiency in procedural provisions should not deny the facility of credit corresponding to duty paid.

2. Allowance of Differential Duty Credit:
The case involved Maruti Udyog availing Modvat Credit under Rule 57A and seeking differential credits based on revised duty payments on inputs. The Preventive Unit observed discrepancies, disallowed the credit, and directed adjustment. The lower appellate authority overturned this decision, allowing the credit under Rule 57A. The Tribunal upheld this decision, emphasizing that the subsequent payment of duty should be admissible as credit if properly documented, even if Rule 57E did not explicitly provide for upward variations at that time.

3. Power of Appellate Tribunal to Grant Relief:
The Reference Application raised the issue of whether the Appellate Tribunal could provide relief not explicitly provided under the law. The Collector argued that Rule 57E was self-contained and did not allow for upward variation of credit. However, the respondents contended that Rule 57A, as the substantive provision, could authorize such variations. The Tribunal, citing past decisions, noted that the amendment to Rule 57E was clarificatory and retrospective, aligning it with Rule 57A. The matter was referred to the High Court to clarify the legality of allowing upward variation of credit and the retrospective effect of the rule amendments.

In conclusion, the Tribunal referred the questions of law to the High Court for clarification, highlighting the need to determine whether Modvat Credit could be varied upwards, the interplay between Rule 57A and Rule 57E, and the retrospective applicability of the rule amendments. The conflicting views within the Tribunal necessitated High Court intervention to resolve the legal uncertainties surrounding the adjustment of Modvat Credit and the authority governing such adjustments.