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TMI Blog1997 (10) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... dated manner in form RG 23A Part II. Credit in respect of duty paid on all inputs received in the factory are entered in this register. Excise duty liability on the final products is discharged by payment of duty by debit in the RG 23A Part II register. Duty is also discharged by debit in PLA whenever required. 4. The Central Excise Department found that the duty payable on cars (Tata Estate/Tata Sierra) is substantially higher than the Modvat credit available on inputs used in their manufacture. According to Para 7 of the show cause notice, Modvat credit available on the inputs for motor cars worked out to around 15% of the assessable value of the motor cars while duty payable thereon is 40%. 5. The Central Excise Department also felt that the duty payable on LCV/HCV and chassis thereof is much less than the Modvat credit available on the inputs used in their manufacture. According to Para 8.2 of the show cause notice Modvat credit available on the inputs for LCV/HCV was around 12.65% of the assessable value of LCV/HCV while the rate of duty on fuel efficient LCV was 10% and HCV was 15%. 6. The Department alleged that only a small portion of the duty was being pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inputs were never used in the manufacture of passenger cars, Modvat credit thereon cannot be utilised for paying duty on the cars. The Collector also found support for this findings in Tribunal decisions 1994 (74) E.L.T. 463 and in Order No. 2329/94-WRB, dated 19-10-1994. The Collector also rejected appellants plea for adjusting capital Modvat credit under Rule 57Q against the demand saying that they had already utilised it for other commodities. 15. It was also a ground in the show cause notice that cars and LCV/HCV cannot be considered as similar products for purposes of Rule 57F(4) which provides that credit on inputs used in manufacture of products exported under bond shall be allowed; to be utilised towards payment of duty on similar products cleared for home consumption. 16. Shri V. Sridharan, the ld. Counsel for the appellants submitted that even accepting Collector's conclusion that Modvat credit can be allowed only on inputs used in the manufacture of cars, and it cannot be claimed on inputs not used at all in its manufacture; there are other contentions by which appellants would resist the demand. In this context the ld. Counsel contended that LCV/HCV are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout Rs. 8.60 crores would represent credit available for payment of duty on cars which amount of opening balance ought to have been taken into account, it was pleaded whereas the Collector has proceeded on the assumption that no part of the opening balance would relate to car inputs which he has taken as exclusively relating to LCV/HCVs. It was also argued that in any case no mala fides can be attributed to the appellants so as to justify the penalty on them which should be set aside. 20. The ld. SDR Shri V.K. Puri, contended that the appellants are raising the additional grounds regarding eligibility to refund under Rule 57F(4) for the first time now. It was not raised at any earlier stage of stay application also. Hence the Collector had no occasion to go into it as such a stand had not been taken in their reply to show cause notice. 21. The ld. SDR referred to the meaning of the term 'similar' in Law Lexicon to say that similarity in this context will have to be construed to mean that the credit on exported LCV/HCV's will be available for payment of duty on other vehicles which are similar to LCV/HCV's, and not on cars Tata Estate/Tata Sierra as done by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of duty of excise on similar final products cleared for home consumption or for export on payment of duty and, where for any reason, such adjustment is not possible, by refund to the manufacturer subject to such safeguards, conditions and limitations as may be specified by the Central Government in the Official Gazette." 27. In the Hindustan Motors case (supra) proceedings were initiated against appellants therein for recovery of duty alleging that Modvat credit relating to inputs used in manufacture of motor vehicles falling under sub-heading 8706.20 and 8706.40 of the Central Excise Tariff Act (CETA), i.e. chassis fitted with engines for buses and trucks, was wrongly utilised for payment of duty on clearances of the motor vehicles under headings other (sic) 8706.20 and 8706.40 CETA. The appellants therein resisted the demand that motor vehicles exported and those cleared for home consumption were similar goods, all being motor vehicles falling under Chapter 87 of CETA. It was also alternatively contended that even assuming that the two categories of vehicles are not similar products, Hindustan Motors would be eligible to the refund of Modvat credit on inputs used in man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in the case of Ranbaxy Laboratories (supra), is applicable to the facts of the present case. The fact that cars fall under Heading 87.03 and LCV/HCV's fall under Heading 87.04 CETA cannot be the criterion for saying that they are dissimilar final products for the purposes of Rule 57F(4) as they are motor vehicles falling under Chapter 87 CETA. In this view of the matter the credit on inputs used in the manufacture of LCV/HCV's exported under bond during the material period can be utilised for payment of duty on passenger cars Tata Sierra/Tata Estate, being similar products. 31. In such a situation an amount of Rs. 18,05,95,569 representing Modvat credit availed on inputs used in manufacture of exported LCV/HCV's during the period in question has to be adjusted against the present demand. The above figure, we are informed, has been verified by the Department. The demand therefore has to be redetermined after adjusting the above amount. 32. In the light of the above conclusion as above, we do not feel called upon to go into the other alternative submissions made by the appellants, including the one relating to their eligibility to refund under Rule 57F(4), and we find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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