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TMI Blog2016 (6) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the documents specified in sub-rule (3) thereof, whereas, insofar as the availment of deemed credit under Notification No.29/96 is concerned, provision is made for availing the same without any document evidencing payment of duty on the inputs. Under the circumstances, in the absence of any documents specified in sub-rule (3) of rule 57G of the rules being available for the purpose of availment of deemed credit, the limitation would not commence to run insofar as the deemed credit is concerned. Consequently, it would not be possible to apply sub-rule (5) of rule 57G of the rules to the facts of the present case. Sub-rule (5) of Rule 57G of the rules postulates that credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3) thereof and where intermediate products manufactured by the user of inputs specified under rule 57 are received by the manufacturer, after nine months. But neither sub-rule (5) of rule 57A of the rules under which Notification No.29/96 has been issued provides for any limitation for availment of the benefit under the notification, nor does Notification No.29/96 provide for any such li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 46,97,771/- in its deemed credit register in the month of December, 1998 for the deemed credit involved in the goods exported under bond for the period July 1997 to April 1998, that is, after a lapse of seventeen months. It was the case of the Department that after a lapse of seventeen months, it was not permissible for the assessee to avail the deemed credit and accordingly, a show cause notice dated 18.06.1999 came to be issued to the assessee calling upon it to show cause as to why wrongly availed deemed credit to the tune of ₹ 46,97,771/- should not be recovered under rule 57(1) of the Central Excise Rules, 1944 (hereinafter referred to as the rules ) read with section 11A of the Act, and as to why penalty should not be imposed under section 173Q for violation of rule 57A of the rules. 5. By an Order-in-Original dated 24.09.1999, the adjudicating authority disallowed the deemed modvat credit of ₹ 46,97,771/- under rule 57I of the rules read with section 11A of the Act and also imposed penalty under section 173Q of the rules for contravention of rule 57A thereof. The assessee carried the matter in appeal before the Commissioner (Appeals), Ahmedabad, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at and construed strictly. It was submitted that there is no ambiguity whatsoever in terms of the language in rule 57G(5) of the rules. 6.1 Next, it was contended that even if it is considered that since this is a case of deemed credit and credit is admissible without producing documents evidencing payment of duty and hence, the time limit prescribed under rule 57G would not be applicable, there has to be some time limit for claiming any benefit by the manufacturer and similarly, even for recovery by the department. The normal time limit fixed by the legislature for claiming any benefit under the Central Excise Act and the rules is one year from the relevant date and hence, the availment of deemed credit by the assessee after a period of seventeen months is clearly beyond even a reasonable period of time. 6.2 It was pointed out that by a Notification No.44/98 dated 10.12.1998 issued by the Central Government under sub-rule (2) of rule 57A of the rules, the earlier Notification No.29/96 came to be modified by introducing paragraphs 7B and 7C. As an outcome of the said notification, the benefit of deemed credit would cease to be available to those manufacturers (independent pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim Cenvat/Modvat credit. Therefore, a provision has been made for deemed credit of the duty paid on final product. Referring to paragraphs 4, 6 and 7 of the notification, it was submitted that the same provide for cases where deemed credit would not be available. It was argued that it is not the case of the revenue that during the period July 1997 to April 1998, the goods have not been exported. It was submitted that the fact that the final products have been exported after following due procedure, is not in dispute. The fact regarding duty actually leviable or payable on the final product is also not in dispute. Further, there is no dispute as regards the amount. All the transactions are accounted for. The only objection of the revenue is that the respondent did not take credit at the time when it exported the goods. It was submitted that in the light of the question framed at the time of admission of the appeal, the only question that arises for consideration is as to whether the bar of rule 57G would apply in the facts of the present case. 7.1 Referring to rule 57G of the rules, it was submitted that sub-rule (5) applies only to documents under sub-rule (3) thereof. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly. The inputs are not received in the factory, and therefore, the question of inputs being received in the factory under invoice would not arise. It was submitted that under rule 57G(3) of the rules, the inputs are received for which credit is allowed, whereas the scheme of rule 57A(5) has nothing to do with rule 57G(3) and hence, rule 57G(5) would not apply. It was submitted that sub-rule (5) of rule 57A of the rules is a complete separate code in itself and that no reference is required to be made of any other provision of the rules. It was pointed out that rules 57A to 57J fall under section AA of Chapter V of the rules. It was submitted that there is a conscious departure insofar as rule 57A(5) is concerned, and it is not subject to section AA of the rules. Referring to Notification No.29/96, it was submitted that the same makes provision for all eventualities and is a complete code in itself and that the other provisions of section AA of the rules would not apply and consequently, the provisions of rule 57G(5) would not be applicable in the facts of the present case. 7.3 To bolster his submissions, the learned counsel placed reliance upon the decision of this court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion applicable to the assessee is under subrule (5) of rule 57A of the rules, and hence, it would be necessary to advert to the same. Sub-rule (5) of rule 57A of the rules reads thus: (5) Notwithstanding anything contained in sub-rule (1), the Central Government may, by notification in the Official Gazette declare the inputs on which declared duties of excise or additional duty (hereinafter referred to as declared duty) paid shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in the said notification and allow the credit of such declared duty deemed to have been paid in such manner and subject to such conditions as may be specified in the said notification even if the declared inputs are not used directly by the manufacturer of final products declared in the said notification, but are contained in the said final products. 11. Thus, sub-rule (5) of rule 57A of the rules opens with a non-obstante clause and says that notwithstanding anything contained in sub-rule (1), the Central Government may by notification in the Official Gazette declare inputs on which declared duties of excise or additional duty paid shall be deemed to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57G cannot be made applicable to inputs or final products notified under sub-rule (5) of rule 57A of the rules. 15. Apart from the fact that section AA of the rules having not been made applicable to the inputs and final products declared under sub-rule (5) of rule 57A of the rules, the applicability of rule 57G(5) of the rules may also be independently examined. Rule 57G provides for taking credit of the duty paid on inputs under rule 57A. Sub-rule (1) thereof provides for the procedure to be observed by the manufacturer. Sub-rule (2) provides that a manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgment, take credit of the duty on the inputs received by him. Sub-rule (3) provides that no credit under sub-rule (2) shall be taken by the manufacturer unless the inputs are received in the factory under the cover of any of the documents enumerated thereunder. Sub-rule (4) provides that no credit shall be taken by the manufacturer in respect of invoices referred to in clause (g) of sub-rule (3) after 30th September, 1996. Sub-rule (5), which is relevant for the present purpose, provides that credit shall also not be taken by the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) of rule 57G of the rules to the facts of the present case. 17. Insofar as the reliance placed upon the subsequent notification dated 10.12.1998 for the purpose of imputing mala fide motives to the assessee of availment of deemed Cenvat credit only in view of the new notification having been issued is concerned, in the opinion of this court while examining the applicability or otherwise of a statutory provision under a taxing statute, it is not necessary to go into the question of motive for availing the benefit thereof. All that is required to be examined is the question of entitlement to such benefit. In the facts of the present case, the entitlement of the respondent to deemed credit is not in dispute. The only dispute which has been raised is that the availment of deemed credit after seventeen months is beyond a reasonable period of time. 18. As discussed hereinabove, sub-rule (5) of rule 57G of the rules postulates that credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3) thereof and where intermediate products manufactured by the user of inputs specified under rule 57 are received by the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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