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TMI Blog1988 (12) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... ma credit under Rule 56A in respect of inputs on Tissue Paper, Maplitho paper, printing paper etc. used in the manufacture of finished products duplicating and carbon paper. When MODVAT was introduced on 1-3-1986, the scheme was not extended to this final product paper classifiable on Chapter. However, they were eligible for availing MODVAT facility in respect of other items falling under Chapters 32, 37, 38, 39 and 96. Accordingly, they applied for availing MODVAT facility in respect of the aforesaid goods, which was granted by the department. However, in respect of paper classifiable under Chapter 48, they continued to avail of Rule 56A benefit since the same was available to them. By a communication dated 29-8-1986 the Range Supdt. informed the appellants inviting their attention to sub-rule (9) of Rule 56A, whereunder the manufacturer availing credit-of duty on inputs under Rule 57A cannot avail of facility under Rule 56A. In this letter the Range Supdt. has presumed that the facilities under Rules 56A and 57A cannot be permitted simultaneously and requested the appellants to take remedial steps at once. The appellants sent a reply that they are functioning within the perimeter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Shroff pointer out that, even according to the Finance Minister's speech MODVAT facility was a revenue neutral exercise and was not intended as revenue benefit to the manufacturers. It was mainly to reduce or eliminate the cascading effects of the input taxation. Since the MODVAT was sought to be introduced by stages, benefit under Rule 56A was also continued. Hence the obvious intention was to permit proforma credit facility in respect of those inputs and finished products, which are not covered by the MODVAT facility introduced in 1986 Budget. Judged from this intention it is abundantly clear that the bar specified in sub-rule (9) of Rule 56A prior to amendment cannot be said to totally preclude a manufacturer from availing of the proforma credit in respect of those inputs not covered by the MODVAT scheme. Shri Shroff submitted that the short point to be decided is whether under sub-rule (9) of Rule 56A, as it existed prior to amendment on 15-4-1987, did bar an assessee from availing of proforma credit under Rule 56A during the same time when he had opted for MODVAT credit in respect of totally different inputs used in different final products. According to him, on this short p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986 to Oct. 1986, the credit taken during the period up to 25 May 1986 was barred by limitation of time, since it was beyond six months. The show cause notice alleges that the letter from the assessee stating that they are working within the parameters of sub-rule (9) is as a wilful mis-statement or suppression of facts. This allegation is wholly untenable. The letter from the Supdt. referring to sub-rule (9) of Rule 56A was only in the nature of raising a presumption as seen from the wording of the letter itself. That letter indicates that it is presumed that both benefits cannot be availed of simultaneously. The assessee have replied that they are working within the perimeters of sub-rule (9) of Rule 56A under the bona fide belief that according to their interpretation they can avail of proforma credit in respect of inputs not covered by MODVAT scheme. Hence such a reply cannot be taken to be a wilful mis-statement or suppression of facts for invoking the extended period. However, the counsel fairly conceded that this plea of time-bar was not taken in their reply to the show cause notice, Before the Assistant Collector or before the Collector (Appeals). Again in the case of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the department is not violative of the legislative intent In this context he took us through the Budget Notes reproduced in ECR Volume VI Mar., 1986, Bombay Collectorate Trade Notice No. 15/86, dated 10-3-1986 and also the Book-let brought out by the Central Board, of Excise and Customs on MODVAT. According to these publications intention of the legislature has also been brought out clearly to the effect that a manufacturer availing of the input benefit under MODVAT scheme cannot be simultaneously permitted to avail of proforma credit under Rule 56A prior 10 amendment of sub-rule (9). He also argued that the appellant being reputed manufacturer cannot be unaware of these publications when they were availing of proforma credit under Rule 56A simultaneously while availing of MODVAT credit. In the background of these publications bringing out clearly the purpose and intention of sub-rule (9) of Rule 56A as it stood then, the appellants should not have availed of the proforma credit, especially when the same was also pointed out by the Range Supdt. He also argued citing the Tribunal's decision reported in 1986 (26) E.L.T. page 367 and 1983 ECR 218 Madras that fiscal statute and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended period has been rightly applied. As regards the plea of the appellants for reversing the MODVAT credit taken during the relevant period but allowing retention of the proforma credit, Shri Mondal pleaded that such a request has not been made even when the appellants were alerted by the Range Supdt. pointing out the provisions of sub-rule (9) of Rule 56A. Hence this request, at this stage, does not merit consideration. 12. Shri Shroff contended that Shri Mondal referred only to. the Executive Instructions of the Board and Budget Notes, which cannot be construed to bring out the legislate intent and cannot have legal binding. 13. We have carefully considered, the submissions made on both the sides and perused the available records. 14. Firstly, we propose to take up the plea regarding admissibility of proforma credit under Rule 56A for the appellants during the period prior to amendment of sub-rule (9) or Rule 56A. Sub-rule (9) of Rule 56A was introduced for the first time by Notification No. 176-C.E., dated 1-3-1986. By this notification Chapter V Section AA relating to the extension of MODVAT has also been introduced. Sub-rule (9) of Rule 56A as introduced by Notification N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intendment. Even on the intention behind introduction of sub-rule (9), various communications received from the Board as well as the booklet on MODVAT clearly point out that prior to the amendment of sub-rule (9), a manufacturer cannot avail simultaneously both proforma credit and MODVAT, even if the inputs covered are different. Though we agree with Shri Shroff that executive instructions do not have the force of law, in the absence of any evidence produced by Shri Shroff defining the objective behind introduction of sub-rule (9) of Rule 56A as laid down in the Parliament, references cited by Shri Mondal cannot be brushed aside. 16. Shri Mondal has also brought to our notice the latest decision of the CEGAT, South Regional Bench, reported in 1988 (38) E.L.T. page 358, wherein the specific issue has been dealt with and that decision is in favour of the revenue, Shri Shroff did not dispute that the facts involved in that case are different from the case of the present appellants. In that decision, the South Regional Bench had held : "Therefore, on a reading of sub-rule (9) along with its amendment on 15-4-1987 it is clear that there was a total restriction until 15-4-1987 on simu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants was availing of MODVAT credit and the appellants have not made any request for withdrawal of MODVAT credit. He also contended that the department themselves have issued the demand well in time in regard to the show cause notice dated 5-3-1987. Hence the allegation of suppression is only an after thought to cover up the delay on the part of the department. We find considerable force in the argument of Shri Shroff. It is not the case of the department that the appellants had suppressed of availment of MODVAT credit and proforma credit simultaneously, from the legally prescribed monthly RT-12 returns. From the correspondence, if the department had got an impression that the appellants have withdrawn from the MODVAT facility, they would not have issued the show cause notices subsequently. On perusal of the RT-12 returns and other records, wherein facts are not suppressed the department apparently has issued the show cause notice. In the circumstances, we are unable to subscribe to the allegation made in the show cause notice that because of the appellant reply to the Range Supdt. there is a wilful mis-statement and material suppression of facts with the intend to evade duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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