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TMI Blog1996 (3) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... as v. M/s. Jain Kamel Paints decided on 5-2-1996 in Appeal No. E/325/93/MAS. In this decision we have held as under : Before examining the issue regarding quantum of MODVAT Credit that could be allowed in terms of various rules cited before me, I would like to take note of the fact that MODVAT Credit scheme was introduced to obviate cascading effect of the duty paid on the inputs by allowing the assessees to take credit of the duty so paid for utilisation of the same for payment of duty towards the final product as may be notified under Rule 57A. That would mean that if an assessee was to procure goods from the duty paying sector i.e. from a manufacturer who pays full rate of duty he will get the input credit to the extent of the actual d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the inputs the benefit of credit more than the actual duty paid as reflected in the invoice. Therefore, the manufacturer, who opted for the MODVAT Scheme had therefore the benefit of Rule 57B by way of higher notional credit in case he chose to purchase the input from small scale sector as above. The question that arises is whether an assessee who has not opted for MODVAT Credit and had made purchase in the normal course without bearing in mind the availability of higher notional credit and in case he opted for the MODVAT Credit subsequent to the purchase of the inputs, he should be given the benefit of higher notional credit under Rule 57H. In this context it is relevant to consider the main provisions of Rule 57A which is reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of final products; (ii) packaging materials in respect of which any exemption to the extent of the duty of excise payable on the value of the packaging materials is being availed of for packaging any final products; (iii) packaging materials the cost of which is not included or had not been included during the preceding financial year in the assessable value of the final products under section 4 of the Act; [*] (iv) cylinders for packing gases; [*] (v) [plywood for tea [chests or]. [(vi) bags or sacks made out of fabrics (whether or not coated, covered or laminated with any other material) woven from strips or tapes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession of some inputs which might have been received earlier to that date and by way of a transitional provision Rule 57H was introduced to allow MODVAT Credit in respect of such inputs also. Rule 57H vests power to allow this credit in the AC and the words used are the AC may allow credit of the duty paid on the inputs (emphasis supplied) received before obtaining the dated acknowledgment as above. Non abstante clause used is with reference to Rule 57G. This would mean that in case an assessee has not complied with the provisions under Rule 57G even in that event in respect of inputs lying before dated acknowledgment was received, the assessee could still be given the benefit of MODVAT Credit. The words used, as mentioned above, are du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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