1995 (3) TMI 222 - AT - Central Excise

Summary

Issues: Interpretation of Rule 57A and Rule 57E regarding Modvat credit for duty paid subsequent to receipt of inputs in the factory.

In this judgment by the Appellate Tribunal CEGAT, MADRAS, the issue at hand revolves around the interpretation of Rule 57A and Rule 57E concerning the allowance of Modvat credit for duty paid subsequent to the receipt of inputs in the factory. The Tribunal, following a previous decision, held that appellants were entitled to take Modvat credit in such cases in line with Rule 57A, despite the absence of a specific provision in Rule 57E at the time. The Revenue contended that the Modvat credit could not be varied due to the lack of provision in Rule 57E for such situations.

The learned Collector proposed a question for reference to the High Court regarding the correctness of the Tribunal's order in allowing Modvat credit under Rule 57A in the absence of a prohibition, even when duty is paid after the receipt of goods in the factory. The Tribunal, in its order, emphasized that Rule 57A itself serves as the authority for granting credit in such scenarios, citing a previous case where it was established that the absence of a limitation to duty paid at the time of original clearance does not preclude the benefit of Modvat credit for duty paid subsequently.

The Tribunal further analyzed Rule 57A and Rule 57E, noting that once the necessary declarations are filed and duty payment for the specified inputs is proven, Modvat credit can be claimed, subject to any applicable limitations. It clarified that Rule 57E addresses variations in Modvat credit when a supplier receives a refund for the inputs, but the absence of a provision for the assessee to claim additional credit for further duty paid by the supplier does not negate the operation of Rule 57A. The Tribunal concluded that the subsequent amendment to Rule 57E was merely clarificatory and did not alter the substantive provisions of Rule 57A, ultimately rejecting the Reference Application as no legal question necessitating reference arose.

In summary, the judgment delves into the interplay between Rule 57A and Rule 57E concerning Modvat credit for duty paid subsequent to the receipt of inputs in the factory, ultimately affirming the entitlement of appellants to claim such credit under Rule 57A despite the absence of a specific provision in Rule 57E at the time.