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TMI Blog1996 (1) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tata Iron and Steel Company of India Ltd. (hereinafter referred to as TISCO ). On the strength of such invoices, the appellant had taken MODVAT credit of Rs. 635542.34. It was alleged in the show cause notice dated 14-9-1989 that the appellants were eligible only for the deemed credit of Rs. 301199.26, and thus they had taken excess MODVAT credit of Rs. 334343.08. The demand was confirmed by the Addl. Collector of Central Excise, Chandigarh under Rule 57-I of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ). No penalty was however, imposed on the ground that the RT 12 Returns for the relevant period had been assessed by the Department. 3. The matter was posted for hearing on 2-5-1995 when Ms. Archana Wadhwa, Advocate appeared for the appellant. Shri K.K. Datta, JDR represented the respondent. 4. Ms. Archana Wadhwa, the learned Advocate stated that the invoices had been issued by TPC which was a subsidiary of TISCO. Taking of MODVAT credit on the strength of such invoices, was covered by the trade notices. The learned Advocate also submitted that the demand was hit by time bar, and relied upon the Tribunal s decision in the case of Atma Steels Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying in stock received on or after 1-3-1986 and received upto 31-3-1986, for availing MODVAT credit. The Asstt. Collector of Central Excise was however, required to make the necessary verification as referred under Rule 57H, before allowing the credit (refer CBEC F. No. 211/74/86-CX 6, dated 11-2-1987). 8. The Addl. Collector had mentioned that prior to issue of Notification No. 28/88-C.E., dated 6-10-1988, no time limit was prescribed in Rule 57-I to recover the amount of the MODVAT credit wrongly taken and utilised by the assessees. In this case the show cause notice was issued on 14-9-1989 but the period involved is from 8-9-1987 to 18-8 -1988. Almost identical issue came up for consideration before the High Court of Gujarat at Ahmedabad in the case of Torrent Laboratories Pvt. Ltd. v. Union of India - 1991 (55) E.L.T. 25 (Gujarat), and the Hon ble High Court after detailed analysis held as under :- Rule 57-I of the Rules provided for taking measures in case of wrongful availment of credit. Clause (1) of the rule has been substituted by adding fresh clause (1). By introducing this amendment, what did the legislature do? The legislature simply made detailed and precise provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld rules even though refund claim was lodged subsequently. In para 11 of their judgment it was held as under :- In these petitions, it is clear that the payment of the excise duty, of which refund is claimed, is made and a right to refund thereof arose prior to 6-8-1977 i.e. the date on which the new rule 11 has come into force. The said right to claim refund is a vested right which has accrued to the petitioner prior to new Rule 11, or at any rate is an existing right. It is a settled principle of interpretation of statutes that a vested right or even an existing right, including a right of action is not affected or allowed to be taken away unless it is so affected or taken away by the enactment expressly or by necessary implication. It is only a declaratory or procedural enactment which is normally held to be retrospective. A remedial Act, on the contrary, is not necessarily retrospective, it may be either enlarging or restraining and it takes effect prospectively, unless it has retrospective effect by express terms or necessary intendment. (See AIR 1960 S.C. 12 (para 29) - The Central Bank of India and Others v. Their Workman AIR l973 S.C. 1227 - The Workmen of M/s. Firestone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber (J)]. - I have gone through the order written by my Learned Brother Shri Lajja Ram, Member (T). I agree with my Learned Brother that the stockyard of TPC could not be covered by the provisions of the proviso to sub-rule (2) of Rule 57G. However, I am of the considered opinion that the demands are barred by time and the decisions relied by the Learned Brother are clearly distinguishable. Even, to attract larger period, the allegation of suppression, misstatement, fraud and misrepresentation as stated in proviso to Section 11A is required to be established. In this case admittedly, the RT-12 returns had been assessed by the department and there being no allegation of the proviso to Section 11A, the demands are, therefore, to be considered as barred by time. 12. The Karnataka High Court has examined the recovery of duty under Rule 57-I of the Central Excise Rules, 1944 vis-a-vis Section 11A of the Act in the case of Thungabhadra Steel Products Ltd. v. Supdt. of Central Excise as reported in 1991 (56) E.L.T. 340 and has held that the demand to be time barred, in a similar circumstance like this, as can be noticed from the Para 17 of the order which is reproduced herein below : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment and should be made applicable to the facts of the present case as well. The earliest decision of the CEGAT on this point was by the Bombay Bench in Collector of Central Excise v. Bharat Containers Pvt. Ltd. [1990 (48) E.L.T. 520 (Tri.). The Tribunal held thus ( para5 ) : When the credit has been taken wrongly or it is in excess of the eligibility, it is a case of erroneous credit, which can be recovered by a demand. Such a demand cannot go beyond the purview of the statutory provisions of Section 11A of the Central Excises Salt Act, 1944. Even if Rule 57-I is sought to be invoked, it is to be read with the provisions of Section 11A, which is the statutory provision for recovery of any duty - either short-levy or non-levy or duty taken erroneously as proforma or MODVAT credit. I fully agree with the reasoning of the Tribunal." 13. The Madras High Court likewise in the case of Advani Oerlikon Ltd. v. Assistant Collector of Central Excise, as reported in 1993 (63) E.L.T. 427 has taken a similar view and has held the demands to be barred by time in respect of wrong availment and utilisation of MODVAT Credit, and the amount of MODVAT Credit already taken and enjoyed ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chana Wadhwa for the appellants and submissions made by Shri Y.R. Kilania, ld. D.R. have been considered. On the question of limitation, the Hon ble Member (Technical) has relied upon the judgment of the Gujarat High Court in the case of Torrent Laboratory v. U.O.I. reported in 1991 (55) E.L.T. 25 to say that the provisions of Section 11A of the Central Excises Salt Act, 1944 regarding limitation, could not be read with the unamended Rule 57-I before its amendment on 6-10-1988. The hon ble Member (Technical) has also sought to distinguish Larger Bench decision in the case of Atma Steel v. CCE reported in 1984 (17) E.L.T. 331. 18. On a careful examination of the reasoning in both the proposed orders of the hon ble Member (Technical) and hon ble Member (Judicial), one is inclined to agree with the proposed order of the hon ble Member (Judicial) having regard to the series of judgments of the Tribunal on this aspect and of the Karnataka High Court, a whole list of which had been furnished in the East Regional Bench decision in the case of India Linoleums Ltd. v C.C.E. reported in 1995 (67) E.L.T. 678 (Tribunal). The East Regional Bench in that case has considered in detail a caten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding apart, the reliance placed by he Collector on the judgment of the Gujarat High Court in the Torrent Laboratories case is misplaced as the said judgment was with reference to demands issued in the pre-amended period. When the demand in the present case has been issued only on 8-9-1989, after the amendment of Rule 57-I, it is only the amended Rule that will be relevant. The decision of the Larger Bench of the Tribunal in the Atma Steel case 1984 (17) E.L.T. 331 will be applicable. The same has been followed by the West Regional Bench in the Apar Limited case. I respectfully follow the said decisions and hold that the demand in this case is hit by limitation." 19. It is clear therefrom that consistent view in this aspect on limitation for recovery of modvat credit under Rule 57-I has been that the limitation thereunder would continue to be governed by the provisions of Section 11A of the Central Excises Salt Act, 1944. Moreover the ratio of the Larger Bench decision in Atma Steel case is also relevant wherein it has been laid down that the law which is in force on the date of issue of show cause notice will govern the case covered by the show cause notice and in this case th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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