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TMI Blog1993 (1) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... e unutilised stocks of inputs as on 1-4-1987 when they had reverted to complete exemption from duty. He had also imposed penalty of Rs. 3,000.00 on them. The Collector (Appeals) had set aside the penalty but had upheld the Deputy Collector's order. Thus the duty demand and the disallowance of the Modvat Credit balance as on 1-4-1987 at the time of the appellants' reverting to complete exemption were sustained. 2. Shri K.P. Dey, learned Advocate argued the appellants' case. Giving a brief outline of the facts he explained that when the appellants switched over to complete exemption from duty with effect from 1-4-1987, they had unutilised credit balance of Rs. 750.72 (Basic) and Rs. 689.85 (Special) In their RG23A, Part-II Account and also unutilised inputs themselves. The credit of duty taken thereon amounted to Rs. 34,980.45. The show cause notice was issued for disallowing this credit amount but not the actual RG23A balance as on 1-4-1987 referred to earlier. Even without the said amount being covered in the notice, the Deputy Collector had disallowed the same. Thus he went beyond the scope of the show cause notice. Shri Dey conceded that this point had not been raised before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fide lapse on their part due to the inexperience of their staff not to have made the entries up to date and debited the duty amounts from the respective accounts. The Collector (Appeals) had, it was contended by Shri Dey, wrongly held that they could not avail the credit in respect of inputs received in the previous year when the inputs in question when they opted for full exemption from duty from the next year. He had also wrongly referred to Question No. 22 in the Guide to Modvat published by the Central Board of Excise and Customs in support of his decision. The particular question does not at all support his finding. Shri Dey wound up his argument with the plea that their appeal be allowed. 3. Shri M.N. Biswas, learned Senior Departmental Representative appeared for the respondent Collector. He opposed the arguments advanced by Shri Dey. As regards the wrong reference to Question No. 22 in Guide to Modvat, Shri Biswas pointed out that the correct number of the Question is No. 36 in Guide to Modvat (2). It has been clearly stated therein that if a manufacturer who had taken Modvat Credit in a financial year opts for complete exemption from the beginning of the next year, he may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 700 001. 26-6-1987 Dear Sir, We have received under mention (List enclosed) duty taken under Modvat scheme and whole Credit amounts were utilised towards payment of Central Excise duty when excisable goods were cleared before 31-3-1987 leaving inputs in stock in our factory on or after 31-3-1987. We are availing exemption benefit under Notification No. 75/87 dated 1-3-1987, up to clearance value Rs. 5,00,000/- from 1-4-1987. Now we intend to utilise the inputs lying in our stock since 31-3-1987, to manufacture the excisable goods which will be cleared on payment of C.E. duty after crossing the exemption limit (Rs. 5,00,000). Hence, you are requested to permit us to utilise the lying stock under Rule 57H to manufacture the excisable goods which will be cleared on payment of C.E. duty after crossing the exemption limit. Thanking you, Yours faithfully, For KWALITY REFRIGERATION CO. Sd/- A.K. Lamba Partner Enclose : List of Inputs. STOCK LYING AS ON 31ST MARCH, 1987 Item Model Sl. No. Qty. Condenser 10 x 12 x 3 row 31 Nos. 14 x l4 x 4 row 5" Condenser Coil 25/8 2" Cooling Coil 25/9 10 x 10 x 3 row 10 x 10 x 2 row 2" 3" 12" Motor 1/30 & 1/35 1/10 & 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inputs are still available at the time of filing a fresh declaration at the time of their re-entry into the Modvat Club, they would be eligible for the benefits as available under Rule 57H(1), as stated above. Their declaration of June, 1987 about the availability of stocks as on 1-4-1987 cannot be easily verified, particularly where the inputs did not have any distinguishing identity or marks which could be verified with reference to the stocks themselves or the documentary evidence available. There is no discussions in the Deputy Collector's order as to why the duty involved on the inputs lying in stock as on 1-4-1987 (RG-23A, Part-I balance amounting to Rs. 34,980.45) should be paid by them. He has held that all the charges in the show cause notice had been established. The Collector (Appeals) had, in his impugned order, observed, inter alia, as follows :- "....Under Modvat Rules, unit availing Modvat benefit cannot be held to be debarred from availing full exemption under a notification providing for such benefit in the next financial year provided the unit is eligible for such exemption. But the unit paying excise duty at the end of a financial year and availing Modvat may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tarted availing of full exemption were used by them only when they started manufacturing goods which were cleared on payment of duty. Though the appellants have not followed the correct procedure of reversing the credit and/or paying the duty equivalent to the inputs in stock on 1-4-1987, their application under Rule 57H has to be examined on merits with regard to the identity of the goods used by them in the manufacture of dutiable goods cleared by them after availing full exemption and whether they were the same as what was in stock as on 1-4-1987 as claimed by them. This question has to be looked into afresh with reference to whatever documentary evidence has been submitted by them and any other contemporaneous statements already submitted by them. As the order-in-original has been passed without taking care of this position, the matter requires to be remanded to the Assistant Collector of Central Excise for deciding the matter afresh on merits in accordance with the conditions of Rule 57H. I accordingly set aside the impugned order and allow the appeal by remanding the matter to the Jurisdictional Assistant Collector for de novo decision on merits as indicated above. The disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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