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TMI Blog1992 (10) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... tricting the extent of modvat credit in respect of paper to Rs. 800 per Metric Tonne was applicable to paper used in the manufacture of final products. They did not use kraft paper in the manufacture of their final product Linoleum but used the same in relation to the manufacture of linoleum as packaging material. Hence they were entitled to avail the full amount of duty paid on the kraft paper and not the restricted amount of Rs. 800/- per Metric Tonne as per the Notification which, he emphasised, is applicable only for paper used in the manufacture of the final product. He contended that use in the manufacture (of final products) is different from use in relation to their manufacture. This difference would entitle them to the benefit of modvat credit for the full quantum of duty paid on their inputs kraft paper. 3. Apart from the above-mentioned question of interpretation of Notification 149/87 dated 28-5-1987 on the quantum of admissible modvat credit per Metric Tonne, Shri Biswas pointed out that the demand was hit by limitation. The notice was issued on 8-9-1989 and the period of availment of modvat credit being 21-5-1987 to 30-11-1988, it was time barred, being beyond a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellants are taking credit on kraft paper now also on the full duty amount and not the lower rate fixed under the Notification. No demands are also being received by them. He concluded his argument with the plea that the appeal be allowed. 4. Shri A. Choudhuri, learned Departmental Representative replied to the contentions raised by the learned Consultant. On merits, he submitted the appellants have no case. The Collector has fully discussed the point involved. There is no difference between goods used in the manufacture and in relation to the manufacture. Kraft Paper used by them as packaging material can be definitely said to be used in the manufacture of their final product, linoleum. Hence, only the restricted rate of Modvat credit is admissible to them, as rightly held by the Collector. On the alternative question of time bar, Shri Choudhuri left the matter to be decided by the Bench. On the question regarding the appellants continuing to take the full quantum of duty paid on Kraft Paper even at present without restricting it to the rate specified in the relevant Notification, Shri Choudhuri stated that it could be that the departmental Officers are under the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that such an extension of benefit accords with the scope of the term manufacture. This term has been defined in Section 2(f) of Central Excises and Salt Act, 1944, as including any process incidental or ancillary to the completion of a manufactured product. The expression in relation to" figuring in Rule 57A would fully encompass this definition and even escalate beyond it. 6. In the light of the above position, the attempt by the appellants to dissect the integrated process of manufacture of linoleum upto the stage of packing using Kraft Paper into two stages - manufacture and packaging - flies in the face of the statutory definition of manufacture. Their laughable description of their use of paper as being not in the stage of manufacture of paper but at the post-manufacturing phase in relation to the manufacture is obviously because of their anxiety to get over the restriction on the quantum of credit available to paper used in the manufacture and take the benefit of the full amount of duty paid on the same by relegating its use to the penumbra in relation to the manufacture . This attempt fails comprehensively. Hence, I hold that on merits, they have no case. In fact, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court laying down the applicability of the time limits under Section 11A even in proceedings for recovery of short levied/non-levied duty under other provisions which were themselves free from time limit restrictions, Section 11A will loom large. This judgment was taken note of in the Tungabhadra judgment of the Karnataka High Court but not brought to the notice of the Gujarat High Court in the Torrent case. It is incidentally to be noted that even in the Gujarat High Court judgment, they had observed that by amendment of Rule 57-I, the legislature simply made detailed and precise provision with regard to period of limitation and the show cause notice to be issued and for affording an opportunity of being heard to the assessee in certain cases. The provisions with regard to the limitation and the opportunity of being heard were required to be read into the Rules. Thus, that which was implicit in the Rules has been made explicit with a little more precision by introducing the amendment. It is in the background of this observation of theirs that their finding that the provisions of Section 11A cannot be read into Rule 57-I prior to its amendment has to be noted. Accordingly, ..... 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