9911796707
TMI Blog1994 (4) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... MODVAT credit taken and utilised in respect of inputs for specified finished product could be reversed, when the final product became exempted, in respect of that portion of the input which were lying in stock on the day when the specified finished product became exempted. 3. The learned Advocate for the appellants pleaded that the issue is covered by the decisions in the case of Collector of Central Excise, Cochin v. M/s. Premier Tyres Ltd., reported in 1992 (62) E.L.T. 104, C.C.E., Bangalore v. Wipro Information Technology, 1988 (33) E.L.T. 172, and C.C.E. v. Sarvarya Sugar (Bottling Unit) Ltd., reported in 1992 (59) E.L.T. 125, and prayed for allowing the appeal. 4. The learned DR adopted the reasoning of the lower appellate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given for the input duty relief on a portion of the inputs which will not be going into the finished goods which suffer duty. We observe that the MODVAT Scheme has been framed as a beneficient piece of legislation and there is a deliberate omission in the Rules for batch-to-batch correlation of the inputs used in a certain batch of the finished product. To facilitate matters the Scheme is so devised that as soon as specified inputs are received duty paid on those inputs is taken as credit which goes into the pool of credit taken on the notified inputs for specified finished product under Rule 57A and the assessee thereafter is at liberty to draw from this pool the credit amount for setting it off against the duty to be paid towards finishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed of in the manner specified in this section the manufacturer shall upon a written demand being made by the Assistant Collector of Central Excise pay the duty leviable on such inputs within 10 days of the notice of demand." There is nothing in this rule to suggest that recovery can be made even when the MODVAT credit has been correctly taken and also correctly utilised. Rule 57-I(2), however, envisages that the inputs in respect of which credit has been taken are not fully accounted for as having been disposed of in the manner specified in this section, the manufacturer shall on demand being made pay the duty leviable on such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory. This view we have taken in the case of C.C.E. v. M/s. Chennai Bottling Co. Ltd. in Order No. 785/1993 dated 18-11-1993 [reported in 1996 (83) E.L.T. 355 (Tribunal)] and our observations in this regard in para 5 are reproduced below : 5. We would like to observe that the authority should examine as to whether these inputs in respect of which MODVAT credit has been taken are no longer covered by MODVAT Scheme and would not be used in the specified finished product in terms of Rule 57A of the Central Excise Rules, 1944, when they are taken in use, any duty can be recovered in respect of the same. We observe that Rule 57F(2) provides for removal of inputs as such and the same rule for purpose of convenience of reference is reproduced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in respect of the same treating them as the manufacture of the Company and this duty could be even more than the MODVAT Credit but it cannot be less than the MODVAT Credit taken. The fact that the aerated water was denotified under Rule 57A for the purpose of MODVAT Credit under Notification 203/87 does not in any way change the status of the inputs which are lying in stock. These by fiction created under the rule have to be treated as the manufacture of the Respondents factory and therefore when these are cleared for home consumption, from the factory, the same have to be charged to duty as if the same are the manufacture of the said Respondents manufacturing Unit. Under Rule 49 consumption of the goods in the factory has to be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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