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TMI Blog2003 (2) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the same as lapsed. 2. The facts are not much in dispute. The appellants are engaged in the manufacture of nuts, bolts, screws, etc. They were availing Modvat credit facility under Rule 57A and 57Q of the Rules. They vide their letter dated 16-2-95 opted out of Modvat credit scheme w.e.f. 8-2-95. They also filed classification list w.e.f. 24-8-94 declaring that they would pay full rate of duty on the goods without claiming the benefit of Notification 1/93 dated 28-2-93. They had credit balance of Rs. 4,16,823.91 in their RG 23A Part II register and Rs. 6668.17 in their RG 23C Part II register as on 8-2-95. They debited the amount of Rs. 3,24,691.05 from their RG 23A Part II register in respect of the goods removed by them either for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty the credit balance in their RG 23A Part II register had lapsed, and the moment the appellants opted out of the scheme, the credit under the scheme stands extinguished. To substantiate this ground, reference has been made in the show cause notice to the judgment rendered in Bangalore Body Builders v. CCE - 1995 (78) E.L.T. 76 (T) = 1995 (7) RLT 725. 4. The learned JDR has reiterated this very ground in his arguments. He has also in addition referred to the provisions of Rule 57H(5) and contended that on the opting out of Modvat credit scheme, the credit standing in the record of the appellants, automatically stood lapsed. He has also relied upon to the ratio of law laid down in Ceravit Sanitaryware (I) P. Ltd. v. Commissioner of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to any Rule while making these observations had been made by the Bench in that case. The decision of the Bench in that case on merits had not been referred in the show cause notice nor cited before the authorities below or even before me. 7. The learned JDR has referred to the provisions of Rule 57H(5) of the Rules to contend that there was automatic lapse of the credit standing in the statutory record of the appellants the moment they opted out of the Modvat scheme. But the said Rule is not at all applicable to the case of the appellants. That Rule only enacts that a manufacturer who opts for exemption from the whole of duty of excise leviable on the goods manufactured by them under a Notification based on value or quantity of clearan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under which the credit in balance, outstanding in the statutory record of the appellants was to be treated as lapsed or extinguished automatically, on account of their opting out of the Modvat credit scheme even if they after coming out of that scheme, had cleared the goods on payment of full duty and not claimed exemption under any Notification. 8. The nature of the Modvat credit and the right of the assessee to utilise the same, had been dealt with by the Apex Court in Eicher Motors Ltd. (supra) referred by the Counsel. In that case, the Apex Court has equated Modvat credit with the tax credit and observed that the provisions for facility of credit is as good as tax paid, till tax is adjusted on the future goods on the basis of several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product, that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. It is, therefore, that in the case of Eicher Motors Ltd. v. Union of India (supra) the Supreme Court said that a credit under the Modvat scheme was as good as tax paid . 10. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is fully adjusted. The ratio of the law laid down in Ceravit Sanitaryware (I) P. Ltd. v. CCE, Jaipur (supra) is not attracted to the facts of the present case. In that case, the assessee opted out of the Modvat scheme to avail complete exemption and for that reason, the outstanding amount in the RG 23A Part II was held to have extinguished and refund of the amount was disallowed. For these very reasons, the ratio of the law laid down in Shripati Iron and Steel Rerolling Mills (supra) is not applicable to the case of the appellants. In that case also, the assessee opted out of the Modvat scheme to avail full exemption from payment of duty and for that reason the outstanding credit utilisation was disallowed having been lapsed. 11. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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