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TMI Blog2015 (8) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... edit? The issue is as to whether the petitioner is entitled to Input Tax credit in respect of tax paid Input purchased from a registered dealer used by the assessee in manufacturing of the final product ? 2. Petitioner has its manufacturing units in various places as are indicated in para 5.1 of the writ petition and its principal commercial place of business is situated in Napier Town, Jabalpur. They carry out manufacturing of the bodies for motor vehicles, their components, railway components and E.S.P. Components like filters to be used in power plants etc. Apart from manufacturing and sale of these articles job work on behalf of the railway administration is also carried out in the business premises of the petitioner. 3. It is a case of the petitioner that for the purpose of manufacturing bodies of motor vehicle, petitioner had purchased certain components for a total amount of Rs. 97,99,69,327/- from a registered dealer M/s Vijay Steel Yard. The components so purchased are ultimately used in the manufacturing of the final product. Infact, the components purchased was used for fabricating plant and machinery which is then used for manufacturing of the final manufacturing prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e territory of India; or (3) ........ (4) use as plant, machinery, equipment and parts thereof in respect of goods specified in Schedule II; or .........." (Emphasis Supplied) According to Shri Ganesh, learned Senior Counsel, a bare perusal of Section 14(1)(a)(2) and (4) clearly indicates that rebate shall be permissible when the good purchased are utilized for consumption or use for / in the manufacturing or processing of mining of goods. Further Section 14(1)(a)(4) provides for rebate in case the purchased goods are used for plants, machinery, equipment and parts thereof in respect of goods specified in Schedule II. According to Shri Ganesh, goods purchased by the petitioner from another dealer are used for fabrication into plant and machinery for manufacturing of the finished product. Therefore, in the present case as the interpretation of Section 14 of the VAT Act is called in question, it is a pure question of law. This petition under Article 226 of the Constitution is maintainable as it is only this Court which can interpretate and decide such a complicated question of law. It is said that even though similar provision are contained in the Central Excise Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excise Act and the rules framed thereunder, in the matter of granting MODVAT credit now named as "CENVAT", similar provisions akin to Section 14 are available in Rule 57(A) and 57(C) of the Central Excise Rules, 1944 and he invites our attention to the said provision which reads as under :- "57A. Applicability.- (1) The provisions of this section shall apply to such finished excisable goods (hereinafter referred to as the "final 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 (hereinafter referred to as the "special duty") paid on the goods used in or in relation to the manufacture of the said final products (hereinafter referred to as the "inputs") and for utilizing the credit so allowed towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the said notification, subject to the provisions of this section and the conditions and restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgment thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. 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 manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are reported in 2005(187) ELT 49 (Tri.Del.) - Commr. Of Central Excise, Lucknow Vs. Seksaria Biswan Sugar Factory Ltd.; 2005(191) ELT 383 (Tri. Mumbai) - Vidyut Metallics Pvt. Ltd. Vs. Commissioner of Central Excise, Mumbai-VI and 1998 (99) ELT 54 (Tribunal) - SIEL Sugar Vs. Commissioner of Central Excise, Meerut in support of his contention. Shri Ganesh accordingly argued that merely because the inputs purchased by the petitioner from M/s Vijay Steels was not directly used for manufacturing of the final product but as it was converted into a material (plant and machinery) which was ultimately used for manufacturing of final product, it is said that contention of the respondent cannot be accepted. It is argued that if such a contention is accepted, the benefit available to an assessee under Section 14 would be negated and this could never be the intention of the legislature. 7. As far as objection raised by the respondents, with regard to maintainability of the writ petition in view of the fact that a statutory remedy of appeal under the M.P. VAT Act is available, Shri Ganesh argues that this is not an efficacious remedy. Important questions of law with regard to interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial purchased after payment of tax is not directly used for manufacturing of the final product but is consumed by the petitioner. He submits that the interpretation advanced by Shri Ganesh is not correct. 9. We have heard learned counsel for the parties at length and we have also considered the rival contentions. Before adverting to consider the question of law, we may take note of the preliminary objection raised by Shri Samdarshi Tiwari, learned Dy. Advocate General, with regard to availability of a statutory remedy of appeal under Section 46(1) of the VAT Act. Normally when a statutory right of appeal is available to a party, discretionary jurisdiction under Article 226 of the Constitution are not exercised, particularly if questions of facts which are in dispute are also required to be scrutinized while deciding the matter. However, there are exceptions to this normal rule and there are large number of cases where bypassing the remedy of statutory appeal available, jurisdiction is exercised by the High Court under Article 226 of the Constitution. Even though Shri Samdarshi Tiwari tried to emphasize that there are disputed questions of facts involved in the matter, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples as laid down in the aforesaid case and taking note of the jurisdiction to be exercised by us in this petition, we are of the considered view that leaving it to the revenue to decide such a question may not be proper. Instead, it would be more appropriate if we deal with such questions and decide it in this petition under Article 226 of the Constitution as it is a question with regard to interpretation of statutory provision and no disputed question of fact as canvassed by Shri Samdarshi Tiwari are available. The judgments relied upon by Shri Samdarshi Tiwari are all cases where disputed questions of fact and law were involved and it was under those circumstances that this Court refused to interfere, whereas, in the present case such is not the position. 10. Accordingly, rejecting the objection raised by Shri Samdarshi Tiwari with regard to maintainability of this writ petition, we proceed to decide the matter on merits. 11. A comparison of the provision of Section 14 of the VAT Act with the provisions of Rule 57A explanation thereto along with Rule 57C and 57F indicates that both the provisions are infact paramateria with each other. Except for some difference in the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. as required under Section 9 of the VAT Act. Under Section 14(1)(a) and sub section (2) and (4) thereof, rebates are available on input tax which is permissible to be allowed to a registered dealer, when he purchases the goods from another such dealer after payment of input tax (as has happened in this case) and consumes or uses it for/ in the manufacture or processing or mining of goods or uses it as plant, machinery, equipment and parts thereof, in respect of case specified in Schedule II. Admittedly, in this case petitioner has purchased the goods from a registered dealer which was tax paid and the goods so purchased has been used by the petitioner as plant and machinery, which in turn has been put to use for making the final product as is specified in Schedule II i.e. the motor vehicle body which is sold and duty is paid. From the order of the assessment it is seen that the Assessing Authority holds that if the components produced after manufacturing and processing of the material purchased from M/s Vijay Steels, is sold by the petitioner, they are entitled to rebate on input tax under Section 14 but because they have consumed it for use as a plant and machinery, they are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nals in the judgment relied upon by Shri Ganesh. 14. The intention of the legislature in providing a provision for grant of rebate of input tax as contained in the VAT Act is akin to the provisions of MODVAT credit and CENVAT Credit applicable in Excise Law and when sub section 2 and 4 of Section 14(1)(a) indicates that the goods purchased by a registered dealer from another registered dealer after payment of duty is used by the purchasing registered dealer or is consumed in the manufacturing or processing of something or used as a plant, machinery, equipment and parts in respect of goods i.e. the final product is entitled for input rebate. If that be the intention of the legislature in giving input rebate to a dealer then it would be beyond the legislative purpose if the intention of the legislature is interpreted as done by the department by holding that the material used or consumed should be sold and should not be further used in respect of anything for the making of a final product which is ultimately sold. This could never be the intention of the legislature. 15. We need not dwell into this aspect of the matter any further for the simple reason that if the process for manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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