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TMI Blog1997 (6) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... duty paid as is confirmed by the appellants. 3. The learned lower appellate authority after considering the scope of the DEEC Scheme and exemption Notification No. 203/92 dated 19.5.1992 entitling the exporter to duty-free importation under DEEC Scheme has held that the remedy in the matter did not lie by way of denial of MODVAT Credit in respect of the inputs used in the exported goods but elsewhere. His findings in this regard are reproduced below : 7. I examined the rival contention. This is a case when on the advice of the Department the appellant reversed the credit of CVD taken as MODVAT credit. The Assistant Commissioner's contention that the credit so taken should be reversed when goods manufactured out of the duty paid inputs are exported under DEEC scheme is not covered by any authority. It is perhaps for this reason he fails to mention the Rule under which he seeks to reject the refund claim. Department seemed to have asked the appellant to reverse the credit in the present case without any authority of law. Under Rule 57 (I) of C.E. Rules, credit can be recovered if it is wrongly availed of or utilised in an irregular manner. The appellant took credit of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red against Export obligation under VBAL scheme. Assessees have initially reversed the credit of duty taken on imported ISO butyl rubber to claim the benefit under DEEC Scheme and latter filed refund claims for the said amount on the plea of erroneous 3. Asst. Commissioner in his Order-in-original has correctly rejected the refund claim by stating the credit taken should be reversed when goods manufactured out of duty paid inputs are exported under DEEC Scheme. 4. Commissioner (A) has erred in holding that the assessees are entitled to the refund of the reversed credit and by allowing recredit of the amount in RG 23A Part-II. Since the condition under para V of notification of 203/92 denies input stage Modvat credit for the goods intended for export obligation. The assessees have availed the duty free import under notification 203/92 after rightly reversing the credit availed and hence the refund allowed by Commissioner (A) would reject in un intended double benefit. 5. The learned JDR for the Department while adopting the grounds of appeal has urged that with a view to set up export effort the Government of India introduced DEEC Scheme and one of the salient features of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the imports and exports are undertaken from sea ports at Bombay, Calcutta, Cochin, Kandla, Mangalore, Marmgoa, Madras, Nhava Sheva, Paradeep, Tuticorin and Visakhapatnam, or through any of the airports at Ahmedabad, Bangalore, Bombay, Calcutta, Delhi, Jaipur, Varanasi, Srinagar, Trivandrum, Hyderabad and Madras or through any of the Inland Container Depots at Bangalore, Coimbatore, Delhi, New Gauhati Goods Shed, Moradabad, Ludhiana and Hyderabad: Provided that the Collector of Customs may by special order and subject to such conditions as may be specified by him, permit imports and exports from any other sea port, airport, land customs station or inland container depot; (v)that the export obligation is discharged, within the period specified in the said certificate or within such extended period as may be granted by the Licencing Authority, by exporting goods manufactured in India in respect of which - (a)no input stage credit is obtained under rule 56A or 57A of the Central Excise Rules, 1944 (hereinafter referred to as the said rules); (b)facility, under rule 191A or rule 191B as in force immediately before the 1st October, 1994, or under rule 12 (1) (b) or rule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iting instruments (including gift sets and refills/nibs), all export items covered by one serial number in the Standard Input Output and Value Addition norms as contained in Handbook of Procedures, 1992-97, Volume-II, published, vide Public Notice No. 121 (PN)/92-97, dated the 31st March, 1993, of the Government of India in the Ministry of Commerce, shall be deemed to be single export product: Provided further that nothing contained in this notification shall apply to import of Acetic Anhydride against licences issued after 24th November, 1993, except where such licences together with the quantity required for manufacture of the export product mentioned therein have been issued with the approval of Advance Licensing Committee in the office of the Director General of Foreign Trade; (b)spares and mandatory spares, within a value limit of 5% of the value of the licence issued upto the 31st March, 1993, which are required to be exported along with the export product; and (c)packaging materials required for packing of export product. He referred us among the other conditions stipulated specifically to Condition (v) of the said notification. He has pleaded that the duty-free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or in relation to the manufacture of final products for which such inputs have been brought into the factory; or (ii)be removed, subject to the prior permission of the Collector of Central Excise, from the factory for home consumption or for export on payment of appropriate duty of excise or for export under bond, as if such inputs have been manufactured in the said factory: Provided that where the inputs are removed from the factory for home consumption on payment of duty of excise, such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such inputs under rule 57A. (2)Notwithstanding anything contained in sub-rule (1), a manufacturer may, with the permission of the Collector of Central Excise and subject to such terms and conditions and limitations as he may impose, remove the inputs as such, or after the inputs have been partially processed during the course of manufacture of final products, to a place outside 2[the factory - 3[(a)for the purposes of test, repairs, refining, reconditioning or carrying out any other operation necessary for the manufacture of the final product or remove the same without payment of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty, where it belongs to such class or category of waste as the Central Government may from time to time by order specify for the purpose for being used in the manufacture of the class or categories of goods as may be specified in the said order, subject to the procedure under Chapter X being followed; or (c)be destroyed in the presence of proper officer on the application by the manufacturer, and if found unfit for further use, or not worth the duty payable thereon, the duty payable thereon being remitted: Provided that such waste may be destroyed by the manufacturer governed by Chapter VIIA after informing the proper officer in writing regarding the quantity of such waste and the date on which he proposes to destroy, at least seven days in advance and after observing all such conditions as may be prescribed by the Collector of Central Excise by a general or special order with regard to the manner of disposal of such waste. (5) No part of the credit of duty allowed shall be utilised save as provided in sub-rule (3). 5[(6) On an application made by a manufacturer, the Collector may, subject to such conditions and limitations as he may impose, permit a manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of intermediate products received by a manufacturer for use in or in relation to the manufacture of final products, in respect of which the specified duty paid on the said inputs shall, subject to the conditions and restrictions that may be specified in the notification, be allowed as credit under Rule 57A]]. He however could not point out that in terms of Rule 57I there was an error, omission or mis-construction and the credit was taken on account of any one of these factors. He however pleaded that the purpose of notification 203/92 which exempts goods from import duty under the DEEC Scheme was to ensure that the benefit of MODVAT Credit is not taken in respect of the exports which were taken into reckoning for the benefit under DEEC Scheme. He therefore stated that when the appellants were going to operate under the DEEC Scheme they should not have taken the MODVAT Credit and therefore for that reason provisions of Rule 57I should be invoked. He also referred us to Rule 57F (3) under which the manner of utilisation of the MODVAT Credit is provided for. After referring to this Rule while accepting the position that for the purpose of export a special dispensation has been gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pleas made by both the sides. We observe that the Revenue has sought for upholding of the order of the original authority for reversal of the MODVAT Credit in the context of Notification 203/92. Therefore it is necessary to examine the scope of this notification and the point to be determined is whether the conditions of this notification can be read into the MODVAT Rules. This notification as has been elaborated before us earlier is an exemption notification which has been issued under Section 25 of the Customs Act and it exempts from whole duty of customs leviable in respect of the materials which are imported into India against the value based advance licence issued in terms of para 49 of the Export and Import Policy 1st April 1992 to 30th March, 1997 subject to the conditions stipulated therein. It is seen from the notification that it covers both the contingencies of importation of goods before exportation of the finished goods as well as after the exportation of the finished goods. The only condition which has been focused before us is Condition (V) which has been stated not to have been satisfied. The question that arises is that in the event of a particular condition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has the approval of the Parliament and any reversal of the MODVAT Credit or action thereon has to be strictly in terms of the said Rules. We observe that at the time of taking credit of duty in this case the same was taken in accordance with law and the contingency of export of the goods by using these inputs on which credit was taken for being used in the goods which were going to be exported might not have been known then. This contingency in any case is not in any way covered under Rule 57I for the reversal of the MODVAT Credit. Any reversal of MODVAT Credit under Rule 57I has to be strictly within the parameters mentioned therein and its scope cannot be extended by reading of subsequent notification and Clause (V) of the same as is contended on behalf of the Revenue. A reading of Rule 57I shows that before any recovery can be made in terms of the said rule it should be shown that MODVAT Credit has been taken on account of an error, omission or mis-construction on the part of the officer or the manufacturer or the assessee. None of these contingencies have been shown to exist in the present case. If that be so we are not able to appreciate the plea of the Revenue how the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong declaration would amount to the violations of the conditions of the notification. Once the conditions of the notification is violated action under the law in terms of Section 111 (o) of Customs Act, 1962 can be taken and also in respect of the exported goods under Section 113 of Customs Act, 1962 can be taken. The Hon'ble Supreme Court in the context of similar notification in the case of Sheshak Sea Foods Pvt. Ltd. Vs. Union of India and others reported in 1997 (68) ECR 17 (SC) = 1996 (17) RLT 617 (S.C.) has clearly held so in the context of the violations committed in the matter of duty-free importation under duty exemption scheme for export purposes in the context of Notfn. 116/88 where a view was taken by the Tribunal that after the importation of the goods the customs authorities have no jurisdiction to take action under Section 111 (o) and that only the licencing authorities can take action against the violations committed, as under : 7. For the reasons stated above, the Ministry of Law have advised that it may not be possible to take action under Section 111 (o) with respect to the conditions of the licence relating to the use of goods after they are cleared fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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