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TMI Blog2018 (3) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Swapnil Bangur for the appellant. Mr. V. Sridharan, Senior Advocate with Mr. Jas Sanghvi i/b. PDS Legal for the respondents. JUDGMENT : (Per A.S.Oka, J.) By this appeal, the appellant-Revenue has taken an exception to the judgment and order dated 10th November 2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (for short CESTAT ) in the appeal preferred by the respondents-assessees. The respondents are engaged in the manufacture of vegetable oil, soap stock, acid oil, industrial mono carboxylic fatty acid, distilled fatty acid etc. falling under Chapters 15 and 38 of the Central Excise Tariff Act, 1985. The respondents were clearing the said goods on payment of duty after availing Modvat credit of duty paid on the inputs used in the manufacture of the products. According to the case of the appellant, during the period from March 1997 to August 2001, the respondents availed Modvat credit to the tune of ₹ 1,54,71,283/and utilized the same for payment of duty which was to the extent of ₹ 1,62,80,444/. Balance amount of ₹ 11,25,600/was paid by them through PLA. 2. A show cause notice dated 9th April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.T. 380 when admittedly some of the duty paid inputs were used in the manufacture of final products on which no duty was payable and in fact no duty was paid on such final products ? B) Where the Modvat credit availed on inputs is ₹ 1,54,71,283/and the inputs are used in the manufacture of non dutiable final products and dutiable by products, the fact that the assessee has paid duty on byproducts amounting to ₹ 1,62,80,444/and paid ₹ 11,25,000/through PLA, would absolve the assessee of its obligation to pay interest and penalty for wrongfully taking credit on inputs used in the final products on which no duty was payable and in fact no duty was paid ? 4. The learned counsel appearing for the appellant-Revenue has taken us through the impugned order, the allegations in the show-cause notice and the order passed by the Commissioner of Central Excise. His submission is that the three decisions of the Apex Court, which are referred and relied upon by the CESTAT, could not have been applied to the facts of the case. He relied upon the decision of the Apex Court in the case of Escorts Ltd. v. Commissioner of Central Excise, Delhi-II 2004 (173) ELT 113 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rayan Polyplast (supra). Paragraph 6 of the said decision, reads thus: 6. The issue in this case is similar to the one which this court had dealt with CA. Nos.48774880 of 1998 today. Here also the Modvat credit which according to the appellant had been wrongly availed by the respondent-assessee was ₹ 20,01,728 which is the exact amount paid by the assessee by way of the excise duty during the relevant period. It is further stated by the assessee that the determination of the issue would be revenue neutral. The appeal is, accordingly, dismissed. If upon verification the submission of the respondent is found tobe incorrect, liberty is granted to the appellant to mention the matter for recall of this order. 8. This was a case where a Modvat credit was wrongly availed by the assessee. However, the amount of credit availed was paid by the assessee towards excise duty. This was in the facts of one of the two cases before the Apex Court which were decided together. In the other case before the Apex Court which was decided by the same decision, the question involved was whether an assessee is bound to avail an exemption or can forgo the same in order to avail the Modvat c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be claimed simply for the reason that the CENVAT credit has been wrongly taken as such availment by itself does not create any liability of payment of excise duty. Therefore, High Court on a conjoint reading of Section 11AB of the Act and Rules 3 4 of the Credit Rules proceeded to hold that interest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is wrongly utilized. In our considered opinion, the High Court misread and misinterpreted the aforesaid Rule 14 and wrongly read it down without properly appreciating the scope and limitation thereof. A statutory provision is generally read down in order to save the said provision from being declared unconstitutional or illegal. Rule 14 specifically provides that where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest would be recovered from the manufacturer or the provider of the output service. The issue is as to whether the aforesaid word OR appearing in Rule 14, twice, could be read as AND by way of reading it down as has been done by the High Court. If the aforesaid provision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cumulatively it is to sub-serve the object of the legislation. Old golden rule is of respecting the wisdom of legislature that they are 24 aware of the law and would never have intended for an invalid legislation. This also keeps courts within their track and checks individual zeal of going wayward. Yet in spite of this, if the impugned legislation cannot be saved the courts shall not hesitate to strike it down. Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear to be in defiance of the Constitution. These interpretations spring out because of concern of the courts to salvage a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic. This infuses fertility in the field of interpretation. This equally helps to save an Act but also the cause of attack on the Act. Here the courts have to play a cautious role of weeding out the wild from the crop, of course, without infringing the Constitution. For doing this, the courts have taken help from the preamble, Objects, the scheme of the Act, its historical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... randi, had contravened different provisions of the Central Excise Rules, 1944 and the CENVAT Credit Rules, 2001 with intent to evade duty (availment of ineligible MODVAT/CENVAT credit and passing on the same to the customers to enable them to make use of such credit for payment of duty on their final products amount to evasion of duty.) They suppressed the manufacture of fixed vegetable oil while applying for registration. In the various classification declarations filed by them, they did not declare the manufacture of fixed vegetable oil by them. Similarly, in the declarations filed by them under rule 57G and 57T, giving particulars of the inputs and capital goods on which they were availing of MODVAT / CENVAT credit, M/s Parekh Foods Ltd. did not make any mention of the main product i.e., fixed vegetable oil as final product manufactured by them. All these exercises were done by them intentionally to give the impression to the department that the inputs and capital goods were used exclusively for the manufacture of the by-products on which they had chosen to pay duty. From the above, it is clear that M/s Parekh Foods Ltd. had given misleading and wrong information in the var ..... X X X X Extracts X X X X X X X X Extracts X X X X
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