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TMI Blog1991 (7) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be taken to be eligible for the benefit of MODVAT Credit under Rule 57G(2) in terms of Government of India order allowing deemed credit in respect of the goods falling under Tariff Heading 7213.90 purchased from the market. The learned Collector (Appeals) has held that inasmuch as the goods did not suffer any duty, in terms of this order under Rule 57G(2), no MODVAT Credit can be taken. Rule 57G(2) for the purpose of convenience is reproduced below: (2) A manufacturer who has filed a declaration under sub-rule (1) may after obtaining the acknowledgement aforesaid, take credit of the duty paid on the inputs received by him: Provided that no credit shall be taken unless the inputs are received in the factory under the cover of a Gate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs had been cleared under an exemption notification and being wholly exempt can be taken to be duty paid goods and could not be taken to have been cleared on payment of nil rate of duty. In this context he relied upon the decision of the West Regional Bench in the case of Arun Auto Spring Manufacturing v. Collector of Central Excise and Customs, Rajkot, reported in 1990 (48) E.L.T. 543 (Tri.) = 1990 (28) ECR 210. He referred to para 10 of the said order. He pleaded that the Tribunal in that order has clearly held that where the inputs were exempted, these were eligible for the benefit of MODVAT Credit, as these could not be considered as having been cleared on payment of nil rate of duty. He also referred to order of this Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailing of the exemption. Now the question is as to whether they could be construed as goods charged to nil rate of duty. The department s contention is that since the goods are exempted they are to be construed as goods charged to nil rate of duty. We are unable to appreciate this stand for the following reasons. The words charged to nil rate of duty appear to have a special significance. Sec. 3 of the Central Excises Salt Act, is the charging Section. Thereunder, it is laid down that duty of such excise on all excisable goods shall be levied and collected at the rates set forth in the First Schedule. Hence, levy and collection on excisable goods is to be done as per the rates set forth in the First Schedule. Where duty on any go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department will be within its right to hold that these are clearly recognisable as non-duty paid and deny deemed credit thereon . 6. We observe that the question of grant of MODVAT Credit has to be considered in the context of the Scheme as set out in the Rules. The Scheme basically envisages the relief to avoid cascading effect of the duty paid on the inputs specified under Rule 57A and duty paid on inputs is sought to be allowed as credit to subserve this purpose. The words nil rate of duty used in the Rule 57G(2) have to be read in the context of the totality of the Scheme. Wherever therefore, the goods are recognised to have not suffered any duty, no benefit of MODVAT Credit can be allowed. In view of this, as also the decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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