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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 ..... he bar imposed under sub-rule (5) of rule 57G of the Central Excise Rules, 1944 for availment of credit within a period of six months would be applicable in relation to deemed credit availed under sub-rule (5) of rule 57G and Notification No.29/96 issued thereunder?" 4. The respondent - M/s Balkrishna Textile Mills Pvt. Ltd. is engaged in the manufacture of Cotton Fabrics/Man Made Fabrics falling under Chapter 52, 54 and 55 of the Central Excise Tariff, 1985. The assessee, being an independent processor, was availing and utilizing deemed credit at the rate specified as per Condition No.3 of Notification No.29/96-CE (NT) dated 03.09.1996 prior to introduction of the compounded levy scheme in respect of independent processors under section 3A of the Central Excise Act, 1944 (hereinafter referred to as "the Act"). During the course of assessment of RT-12 for the month of December, 1998, it was observed that the assessee had taken deemed credit to the tune of Rs. 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rules already prescribed a time limit of six months for availing the credit. Referring to the contents of the said rule, it was submitted that the same makes it explicitly clear that the time limit within which a manufacturer could take the credit was six months from the date of issuing invoice/duty paying document. It was argued that procedural restriction is permissible in law as long as it does not take away any vested right of the manufacturer. It was contended that Notification No.29/96 issued under sub-rule (2) of rule 57A of the rules did not bear any time limit since rule 57G(5), which came into force prior to the notification, that is, in the year 1995, already had a prescribed time frame for letting the manufacturer take credit. It was urged that the notification is required to be read in consonance with the rules since it gets its force and power by the rules and hence, the language of the rules is what ought to be looked 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advocate for the respondent invited the attention of the court to the provisions of rule 57A of the rules. It was submitted that sub-rule (1) thereof provides a scheme where duty actually paid on inputs would be allowed as Cenvat credit. It was submitted that rule 57G is relatable to rule 57A(1) of the rules and provides for the manner of taking credit of duty paid on inputs under rule 57A. It was submitted that in the present case, the notification in question provides for deemed credit as contemplated under sub-rule (5) of rule 57A of the rules, which is a separate provision. Referring to the notification issued under sub-rule (2) of rule 57A of the rules, it was pointed out that all the inputs of the goods falling under Serial No.1 and 2 are various kinds of fibres and yarn which are all duty paid. The unprocessed fabrics are exempt from payment of excise duty and hence, the processors would not pay duty and 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not provide anything contrary to the interest of the assessee. It was submitted that insofar as paragraph 7C is concerned, the same relates to a transitional stage in relation to goods which were covered by the earlier notification and were not cleared prior to 16.12.1998 when the new notification came to be issued. Reliance was placed upon the decision of this court in the case of Baroda Rayon Corporation Ltd. v. Union of India and others, 2014 (306) ELT 551, to submit that there cannot be a time limit for claiming Cenvat credit even on actual basis. It was submitted that sub-rule (5) of rule 57A of the rules opens with a non-obstante clause and lays down that the scheme applies to those goods where the declared inputs are not used directly by the manufacturer of final product. The scheme, under sub-rule (5) of rule 57A of the rules, applies to those cases where inputs are not used by the processor directly. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l products) as the Central Government may, by notification in the Official Gazette, specify in this behalf for the purpose of allowing credit of any duty of excise or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereafter, in this section, referred to as the specified duty) paid on the goods used in the manufacture of the said final products (hereafter, in this section, referred to as the input)." On an analysis of rule 57A, it is apparent that what the same provides is that the provisions of section AA shall apply to finished excisable goods, namely, final products; the Central Government would specify such goods by notification; and the purpose for issuance of such notification is to allow credit of any duty of excise paid on the goods in the manufacture of final products, viz., inputs. 10. The notification 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 Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been paid on the inputs declared therein and further provides the rate of duty. It further provides that the credit of the declared duty so deemed to have been paid shall be allowed to the manufacturer of the final products, without production of documents evidencing payment of duty on the said inputs, at the time of clearance of the said final products. On a reading of the notification as a whole, there is nothing therein to suggest any limitation as regards availment of deemed credit. 14. As noticed earlier, the provisions of section AA apply to the finished excisable goods notified by the Central Government under rule 57A(1) of the rules. Insofar as the inputs on which declared duties are deemed to have been paid as notified under sub-rule (5) of rule 57 are concerned, the provisions of section AA have not been made applicable. Therefore, the provisions of rule 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 57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts at the time of clearance of final products. Thus, under the scheme of the notification, deemed credit can be availed of without production of documents evidencing payment of duty on the inputs. Thus, for the purpose of applicability of sub-rule (5) of rule 57G, the limitation would commence from the date of issuance 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. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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