9911796707
TMI Blog1990 (5) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... cating and carbon paper. The facility of proforma credit was available in respect of the aforesaid inputs used in the manufacture of other varieties of paper classifiable under Chapter 48 even before 1986 Budget. In the 1986 Budget, MODVAT Scheme was introduced on 1-3-1986. This scheme was not extended in the initial stages to the final product, namely paper classifiable under Chapter 48. All the same, the facility of Rule 56A in respect of the aforesaid inputs used in the manufacture of paper classifiable under Chapter 48 was not disturbed. The MODVAT scheme was, however, made available in respect of other inputs used in products like duplicating ink, typewriter ribbons etc., which are classifiable under other Chapters. Hence the applicants, while continuing availment of proforma credit benefit under Rule 56A in respect of different varieties of paper used in the manufacture of duplicating and carbon paper, also opted for MODVAT credit in respect of inputs used in the final products other than paper to which the MODVAT scheme has been extended from 1-3-1986 onwards. This was objected to by the department on the ground that by virtue of sub-rule (9) of Rule 56A which came to be ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inputs for which they had availed of the MODVAT benefit were totally different inputs used in totally different finished product and not in respect of paper in respect of which proforma credit was availed of. Hence they were not availing of the proforma credit benefit under Rule 56A in respect of the very same inputs for which they have availed of MODVAT benefit. (ii) Since the MODVAT scheme was sought to be introduced by stages, the benefit under Rule 56A was also continued in respect of those cases which were not covered by MODVAT scheme. Hence the obvious intention was to permit proforma credit facility in respect of those inputs and finished products which are not covered by MODVAT scheme newly introduced in the 1986 Budget. (iii) In view of the aforesaid position, the bar specified in sub-rule (9) of Rule 56A prior to amendment cannot be said to totally preclude a manufacturer from availing of proforma credit in respect of those inputs not covered by the MODVAT scheme. (iv) In the 1987 Budget, Chapter 48 relating to paper was deleted from Rule 56A and the same was included in the MODVAT scheme. (v) Sub-rule (9) of Rule 56A was also subsequently amended to bring out the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of time bar with regard to certain demands and partly allowed the appeal. However, on the main issue as to the question of availing of simultaneous benefit of MODVAT scheme as well as the proforma credit benefit by the applicants, their appeal was rejected. The reasoning given by this Bench is as below : The reading of sub-rule (9) of Rule 56A as it stood prior to 15-4-1987 indicates that two categories of manufacturers are envisaged, one coming under the purview of Rule 56A and another opting for MODVAT credit. The said sub-rule (9) puts a total bar on a manufacturer availing of the benefit under Rule 56A, if the said manufacturer fails of MODVAT credit under Rule 57A. This Bench did not accept the interpretation urged on behalf of the applicants that the bar is to be made applicable only if proforma credit has been availed of in respect of the very same inputs for which the manufacturer has opted for MODVAT scheme. This Bench was of the view that as sub-rule (9) was worded, then a plain and simple reading clearly indicates that if a manufacturer avails of the credit of duty paid on inputs under Rule 57A, proforma credit under Rule 56A shall not apply. This Bench took the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in sub-rule (9) of Rule 56A, as it stood then prior to amendment, referred to the inputs under Rule 57A. Hence the bar is applicable only if the manufacturer avails of the credit of duty paid oh inputs under Rule 57A (emphasis supplied). So long as the manufacturer does not avail of the duty paid on inputs under Rule 57A, the bar is not applicable. He, therefore, contended that the wording "inputs under Rule 57A" have considerable significance. The bar cannot be applied to a manufacturer as a class. Even going by the intention, the Government cannot give double benefit in respect of the same inputs used in the same final products nor can the Government permit a manufacturer to avail of both the benefits, if they are covered under both the schemes, where the manufacturer has to choose either one of the two schemes. In this case, benefit under Rule 56A was available in respect of paper even prior to 1-3-1986 and was continued thereafter as well. With effect from 1-3-1986 MODVAT scheme covering more inputs and more final products was also introduced but paper was not included in the MODVAT scheme. Hence the applicants, who are manufacturers of items of paper classifiable under Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in MODVAT scheme only in 1987 Budget and only then the amendment of sub-rule (9) of Rule 56A was carried out. This amendment was more in the nature of change in the policy decision rather than one of clarification of the already existing sub-rule (9) of Rule 56A. He, therefore, contended that the subsequent amendment carried put under Notification No. 117/87 dated 15-4-1987 cannot be construed as retroactive in operation. The benefit of this amendment can be applied only prospectively. 11. After hearing both sides, we observe that the issue raised by the learned advocate Shri C.S. Lodha for the applicants, is purely a question of law. The interpretation which he seeks to place on sub-rule (9) of Rule 56A, as it stood then, cannot also be dismissed as of no significance. The main question in the Reference Application to be decided is, whether the bar envisaged in sub-rule (9) of Rule 56A is applicable to the manufacturer per se if he avails of the benefit under the MODVAT scheme or whether the bar is applicable only if that manufacturer avails of MODVAT scheme in respect of the same inputs, for which proforma credit benefit is also availed of by the manufacturer. The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
