9911796707
TMI Blog1992 (2) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... r exemption notification, has to be reversed. The respondents are manufacturers of tyres and, after filing a declaration under Rule 57G, they took MODVAT credit in respect of the inputs specified under Rule 57A. After the finished product had been manufactured, the respondents cleared part of the goods free of duty under a notification. 3. The learned SDR for the Department pleaded that the MODVAT Scheme was introduced with the object of avoiding cascading effect of duty and under Rule 57C it has been specifically provided that credit of duty is not to be allowed if final products are exempt. The said Rule for convenience of reference is reproduced below: "RULE 57C. Credit of duty not to be allowed if final, products are exempt. - No cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Benches and he cited the following case laws in this regard: (1) 1988 (33) E.L.T. 172 (Tribunal) = 1988 (14) E.C.R. 490. (2) 1988 (38) E.L.T. 301 (Tri.) = 1989 (18) E.C.R. 30. (3) 1989 (41) E.L.T. 181. He pleaded that as held by the various Benches of the Tribunal no one-to-one correlation is provided for under Rule 57A and in that view of the matter once it is shown that the inputs are eligible for MODVAT credit, the credit taken can be utilised for payment of duty on the finished product, which is notified under Rule 57A, notwithstanding the fact that part of the finished product has been cleared under an exemption notification. He pleaded that at the time when the inputs are received the assessees may not know that a part of the fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no plea from the Revenue that the credit, which was taken on the inputs received, was wrongly taken. The objection of the Revenue is only in regard to the utilisation of the same. Further, we observe, in the nature of things when the inputs are received the respondents might not have known that part of the end-products would be cleared without payment of duty, as the clearance under the exemption for the use in original equipment by manufacturers would depend upon the orders placed for the supply. It would not also be known at the time when the inputs are received as to which portion of the goods into which the inputs are going would be cleared under the exemption notification. The Rules as such provide for taking of the MODVAT cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te in the present case that the respondents have utilised the credit for discharge of the duty on the finished product declared by them under Rule 57G(1). It has to be observed that no one-to-one correlation has been prescribed between the inputs and the finished product for the purpose of utilisation of the MODVAT credit and all that is required is that the credit should be utilised for discharging the duty liability on the finished product which has been declared under Rule 57G(1) in respect of the inputs for which the MODVAT credit was taken. Similar provision exists under Rule 56A, which is a parallel provision allowing proforma credit and this Tribunal's Special Bench in the various decisions cited by the respondent have held that even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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