9911796707
TMI Blog1997 (5) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... y equivalent to the Modvat credit which was earlier taken. 2. The learned Chartered Accountant for the appellants has pleaded that the amount of Modvat credit which was taken was reversed at the time when the goods were removed from the factory. Subsequently as a result of audit objection the re-computation of duty was done taking into consideration the value at which the goods were sold by the appellants and additional duty was therefore demanded taking that value into reckoning. He pleaded that the learned lower authority while taking note of the Larger Bench decision in the case of Collector of Central Excise, Coimbatore v. American Auto Services reported in 1996 (81) E.L.T. 71 (Tribunal) = 1996 (63) ECR 131 has stated that in the ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 57F(1)(ii) of CER, 1944. Therefore, the rule directs the user of the input to maintain the level of rate of duty, even if rates of excise duty have come down. This same benefit availed by revenue is also required to be granted to the user of inputs when the rates go up by recovering only the rate of duty utilised by him at the time of taking credit. Therefore, `appropriate duty of excise has to be taken as the rate of duty which they suffered at the first instance and it cannot be read to mean `effective rate of duty as prevalent at the time of clearance of inputs for home consumption. Hence, the case law of M/s. American Auto Service is applicable to those cases where there is change in the rate of duty of excise and for those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of removal from his factory. This position in our opinion, would hold good only after 1-3-1992 after the Rule 57F was suitably amended; and prior to that period, the rate prevalent on the date of removal of the goods from the factory from which the goods were removed under Rule 57F would have to be applied, in view of the specific provision of the rule prior to such amendment. In a recent judgment in the case of Collector of Central Excise, Meerut v. Century Laminating Co. - 1996 (86) E.L.T. 487 (Tribunal), the Hon ble CEGAT, Special Bench, New Delhi while upholding the judgment of Modi Rubber Ltd. v. Collector of Central Excise - 1993 (68) E.L.T. 247 has held that the duty payable on inputs when cleared as such under Rule 57F(1)(ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was originally taken as Modvat credit. He has pleaded that there was no scope for reading the judgment of the Tribunal in any other manner. He has therefore prayed that there has been no evasion of duty on the part of the appellants as the duty due has already been paid in terms of the Larger Bench decision. 3. The learned JDR for the Department has stated that the learned lower authority has taken note of the Larger Bench decision of the Tribunal in American Auto Services reported in 1996 (81) E.L.T. 71 (Tribunal) = 1996 (63) ECR 131 and after reading the judgment of the Modi Rubber Ltd. has come to the correct conclusion for demanding higher duty. He also relied upon the decision reported in 1996 (86) E.L.T. 487. The learned JDR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the duty which the input had suffered earlier, is required to be paid back, even if the duty had been reduced at a level lower than the rate at which duty had been paid by the original manufacturer. The proviso to Rule 57F(1)(ii) makes this aspect clear. Therefore, the rule directs the user of the input to maintain the level of rate of duty, even if rates of excise duty have come down. This same benefit availed by revenue is also required to be granted to the user of inputs when the rates go up by recovering only the rate of duty utilised by him at the time of taking credit. Therefore appropriate duty of excise has to be taken as the rate of duty which they suffered at the first instance and it cannot be read to mean effective rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set out above by us, the appeal is taken up for disposal with the consent of both the sides. 6. There is no dispute that the duty equal to the Modvat credit taken was paid at the time of clearance of the goods from the factory. This position however we would like to be verified and in case it is found that the duty due in terms of the decision of the Larger Bench i.e. equivalent to the Modvat credit taken was paid at the time of removal of the goods, no further action lies against the appellants and no penalty would be leviable. Otherwise the learned lower authority would adjudicate the matter afresh taking into consideration the ratio of the Larger Bench decision as interpreted by us and then collect the duty from them and if anything i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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