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TMI Blog1994 (3) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for manufacture of the finished excisable goods specified for Modvat purposes under Rule 57A, when a part of the finished product was cleared on payment of duty and a portion of the same was cleared without payment of duty for a specified use and for that reason the proportionate Modvat credit in respect of the inputs used in that portion of the finished goods which was cleared free of duty should be reversed. The Tribunal in the order has taken the view that at the time when the MODVAT credit was taken the same was correctly taken in terms of Rule 57A read with Rule 57G and the credit taken was correctly utilised in terms of Rule 57F for payment of duty towards the finished excisable goods and, therefore, the question of reversal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. We observe that provisions similar to provisions regarding Modvat credit under Rule 57A to 57-I exist in the Central Excise Rules under Rule 56A. The basic difference is that under Rule 56A the proforma credit can be taken and utilised when the inputs and the finished product fall under the same Tariff heading while in the case of Modvat provisions the input and the final product need not fall under the same Tariff heading but the same are required to be specified in the notification issued under Rule 57A. The procedure regarding taking of the Modvat credit and utilisation of the same is also similar. In a similar case arising in the context of Rule 56A in the case of C.C.E., Bangalore v. Wipro Information Technology, reported in 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods in the manufacture of which the inputs are utilised. This we think is how the Central Excise Department in general would have understood the clarifications of the Board, and also how the provisions of Rule 56A were being interpreted and applied. If the view put forward by Shri Bhatia is correct, utilisation of the credit would have to be rationed out, by providing that against the clearance of each computer only that much of the credit which could be attributed to the duty content of the inputs utilised in the manufac ture of that computer, could be utilised. This would reduce the procedure to one of set-off . As far as we are aware, Rule 56A has not been interpreted or applied in this manner. Certainly if the Central Excise authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regional Bench in the context of MODVAT credit has taken a divergent view in the case of East India Pharmaceutical Works Ltd., quoted supra, and the scope of Rule 57C requires to be interpreted in the context of the other provisions viz. Rule 57A and Rule 57F, we hold that a question of law does arise for reference as pleaded by the Revenue. We, therefore, refer the following question of law to the Hon ble High Court of Kerala under Section 35G(1) of the Central Excises Salt Act, 1944 : Whether the Tribunal is right in holding that the credit taken in respect of the inputs contained in that portion of the goods which were cleared without payment of duty does not require to be reversed, as the credit was correctly taken when the inputs w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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