9911796707
TMI Blog1997 (12) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... lier of the raw materials due to subsequent circumstances. 2. The ld. Original authority did not give the benefit of Modvat credit to the respondents while asking the supplier of raw material M/s. S and S Power Switch Gears Ltd., in the present case, to reverse the Modvat credit in respect of goods which were sent by them to the respondents. 3. Consequent on payment of duty on the inputs which were received by the respondents from M/s. S and S, the respondent took Modvat credit based on the certificate issued by the Inspector of the range concerned and which was subsequently backed-up by the certificate issued by the Superintendent concerned. The ld. Original authority has taken objection to the validity of certificate issued by the Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could have filed a refund claim on the duty paid erroneously on the processed goods received under 57F(2) procedure. Hence, I hold that the Duty Certificate under 57E produced by the assessee is not valid in this case for the purpose of allowing/taking Modvat credit and hence the credit taken is not in order." 4. The ld. Lower appellate authority, however, in his order in para 6 has held as under :- Coming to the subject appeal, had the inputs been removed as such by M/s. S S Switch Gears and was not expected to come back to the factory of S S Switch Gears Limited, this would have been covered by Rule 57F(1). Because, it was expected that the input, after some process by the appellants, was to be returned to the sender it came und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thenticated." 5. The ld. JDR Shri Rama Rao for the department has pleaded that apart from the certificate being not by the competent authority initially, the respondents could not have availed of the Modvat credit as proviso to Rule 57E did not cover the contingency as in the present case. He has pleaded that the goods were originally received without payment of duty and no Modvat credit in respect of same was taken and it is on account of subsequent events that the duty in respect of the goods which were cleared under Section 57F(2) was required to be paid by reversal of the Modvat credit which was taken in respect of goods by the supplier of raw material/components namely M/s. S S Power Switch Gears Ltd. 6. He has pleaded that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. In this connection, he referred to the Show Cause Notice. In the SCN, following has been set out:- Whereas it appears that the assessees have taken credit on the strength of a document which is not a document prescribed under Rule 57G(2) inasmuch as the Certificate was not issued by the competent authority, is not in order and thereby contravened the provisions of Rule 57G(2) of Central Excise Rules, 1944. Therefore M/s. Towers and Structurals Private Limited are hereby called upon to Show Cause to the Assistant Collector of Central Excise, Madras X Division, No. 110, Nelson Manickam Road, Aminjikarai, Madras 29 as to why the credit of Rs. 3,14,999.07 taken by them on 28-4-1994 should not be required to be expunged in their RG 23A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the SCN. Even on this point, the respondents have a good case. 12. It is observed that this is a case where originally the inputs cleared from M/s. S S were sent to the respondents for manufacture of goods on job work basis and M/s. S S did not pay the duty or reverse the Modvat credit attributable to those inputs. However, subsequently, the provisions of Rule 57F(2) for removal of goods without payment of duty were not fulfilled and M/s. S S paid the duty, as required under law, attributable to the inputs which were earlier cleared without payment of duty. The respondents were functioning under Modvat scheme as seen from the facts in the ld. Lower authority s order and therefore claimed the benefit of Modvat credit in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods, would be available. Here, it is the other way round. Here the inputs which were received did not suffer duty but the finished product suffered duty. When the inputs did not suffer duty and the duty was charged subsequently, the law provides under Rule 57E for variation of the Modvat credit in the event of recovery of duty in respect of inputs subsequently. Therefore, when the law provides for such contingency, there is no reason why in a case like this, the provisions of Rule 57E should not be made available. As it is the exercise in this case is revenue neutral. M/s. S S have paid duty payable in respect of goods in question and it is that amount which is taken as Modvat credit by the respondents. There is no loss of revenue to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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