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TMI Blog1997 (3) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... o "final product avails of exemption from whole of duty of excise leviable thereon" in order to allow the party to avail option. (ii) Whether in construing Rule 57C, the only question to be asked and answered is whether the final product is exempt from the whole of duty of excise or it is chargeable to nil rate of duty or any other condition is required to be considered. (iii) Whether embargo laid down by Rule 57C is absolute and categorical. (iv) Whether the provisions of explanatory notes appended to the Finance Bill 1994 will apply to the unregistered units also. (v) Whether in the facts and circumstances of the case and in view of decision of A.P. High Court in the case of M/s. Ganesh Metal Processing Industry an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of excise leviable thereon or is chargeable to nil rate of duty". The only exception is in the case of the goods cleared to a Unit in a free trade zone or to a 100% export oriented Unit. Here, we are not concerned with this exception. Rule 57C clearly and advisedly enacts an embargo against the credit of duty paid on the inputs being allowed if the resultant final product is exempt from the whole of the duty of excise leviable thereon. The raison d'etre of this Rule is not difficult to seek. Credit is available under Chapter AA (which is the newly introduced Chapter to give effect to Modvat scheme) only towards the payment of duty leviable on the final products. If the final products themselves are exempt from the duty or chargeable to nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which, despite the prohibition contained in Rule 57C, enables the assessee to seek shelter under Modvat scheme. Thus, I am of the view that the Modvat credit was erroneously allowed to the petitioners even after the Notification 202/88 granting exemption from the whole excise duty payable was an issued by the Central Government. Obviously, this was done under a mutual mistake and the course of action adopted by the petitioners and assented to by the Department has no sanction of law." 3. He submitted that in view of the decision of the Hon'ble High Court, the question of law arising out of the order of the Hon'ble Tribunal be referred to the Hon'ble Delhi High Court for their valuable opinion. 4. Shri J.S. Agarwal, advocate ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of exemption or to opt for credit of duty under Modvat Scheme. The applicant relied upon the decision of the Hon'ble High Court of Andhra Pradesh in the case of Ganesh Metal Processing v. Union of India reported in 1996 (81) E.L.T. 11 (A.P.) = 1995 (57) ECR 252. The applicants relied upon the observations made in Para 19 where the Hon'ble Justice P. Venkatarama Reddy while agreeing with the conclusion he has taken a different route to reach the same conclusion. In para 9 of the judgment the Hon'ble High Court held that "we are of the view that sole purpose of granting exemption from payment of duty on benefit of Modvat scheme is to give incentive and some financial help to the Small Scale Industries and this very purpose will be frustrat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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