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TMI Blog1991 (1) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... before the jurisdictional Assistant Collector of Central Excise, as required under the Rules and started availing of the benefit under the Modvat Scheme. Monthly returns were filed and a credit account in Form No. RG 23A Part I and II was also maintained. The Classification List was approved by the Assistant Collector effective from 21-3-1986 as per the Endorsement made in Annexure-C. 3. By letter dated 4-5-1987 (Annexure-D), the Superintendent of Central Excise, Hospet, called upon the petitioner to resubmit the declaration in form-I giving better particulars of the final products as also the inputs used in the manufacture of the products. The petitioner sent a reply dated 21-5-1987, as per Annexure-'B' stating that the petitioner was manufacturing and fabricating in their factory only parts of components of hydraulic structurals such as, gates, hoists etc., for assembly at the site. It was also submitted in the said reply that the petitioner had, in the list sent by them in accordance with Rule 57-I, furnished all the details required in the proforma. A copy of the declaration is filed under Rule 57G is produced as Annexure-'F' to the writ petition. Not being satisfied with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding for proforma credit, the Modvat credit in 57A providing for money credit under Rule 57K are all self-contained schemes prescribing the period of limitation, wherever it is found necessary and that, therefore, the provision 11A should not be imported into the scheme of Modvat. 8. The learned Counsel has also relied upon the decision of the Supreme Court in Shivaram v. Radhabai (AIR 1984 SC 786), in which it was held that it is not permissible to accommodate individual version, which may appear reasonable when the intention of the Legislature has been expressed with sufficient vocabular clarity. Reliance was also placed on the decision of the Supreme Court in Assistant Collector of Central Excise v. Ramakrishna Kulwant Rai (41 E.L.T. 3), wherein the validity of Rule 10A was upheld even though it did not prescribe any period of limitation. The action of the respondents in disallowing the credit was, therefore, justified on these grounds. 9. The alternative argument of Shri Ashok was that an opportunity of being heard would be given to the petitioner in case this Court comes to the conclusion that such an opportunity is mandatory before any recovery is made. The learned Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly availed of or utilised in an irregular manner. Under the rule, if the proper officer finds that any credit of duty paid on inputs has been taken wrongly, may disallow the credit and adjust in the credit account or current account maintained by the manufacturer or if such adjustment is not possible for any reason, by cash recovery from the manufacturer. Applying this Rule, the Superintendent of Central Excise issued to the petitioner an Endorsement, as per Annexure-H. This was followed by Annexure-H1, intimating the petitioner-company that whatever Modvat credit was availed of by it upto 16-10-1987 may be debited in PLA and compliance reported. 11. The learned Counsel has sought reliance on several decisions of the Appellate Tribunal in support of his contention on point No. (ii). Several Benches of the CEGAT have taken a consistent view that the effect of disallowance of an inadmissible credit would, in effect, is a recovery under the Act and the provisions of Section 11A would stand attracted. Since there is no decision of any High Court on this question, I propose to refer to the reasoning and the view taken by several Benches of the CEGAT. They are: (i) S.M. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise pay the duty leviable on such inputs within 10 days of the notice of demand". The argument developed on the basis of this substitution is that any recovery after disallowing the Modvat credit even for the period prior to the amendment of Rule 57-I should be subject to the provisions of Rule 11A, as laid down by the CEGAT. It was also submitted that Rule 57-I is only procedural and the substantive provision for recovery under the Act is 11A. Therefore, the argument against Rule 57-I, as it stood before amendment, is that the said Rule does not provide for any procedure to adjudicate the dispute and confers arbitrary power on the department. 13. The learned Counsel has also relied upon the decision of the Supreme Court in J.K. Spinning and Weaving Mills Ltd. Anr. v. Union of India Ors. [1987 (32) E.L.T. 234], and in particular, the observations made in Paragraphs 30, 31 and 32. The Supreme Court was dealing with the scope of Rules 9 and 49 of the Central Excise Rules, which were retrospective by notification No. 20/82. The Supreme Court held, even though the rules were made retrospective from 1944, no recovery could be made beyond the period of limitation pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to bring it in conformity with the spirit and scope of Section 11A. The effect of the subsequent amendment to Rule 57-I is a point in favour of the petitioner in the interpretation of Rule 57-I, before amendment, as contended for by the petitioner. 16. Under the scheme of Modvat credit in Chapter 4AA of the Rules, the assessee gets a rebate on the duty payable on the final products to the extent the duty is paid on inputs. This is in addition to the proforma credit allowed under Rule 56A. Under Rule 56A, the proforma credit of the duty paid on the inputs, material or component parts, is allowed provided the finished excisable goods and the material or component parts are eligible to duty under the same heading or sub-heading of the Schedule to the Central Excises and Salt Act. The additional benefit allowed under the Modvat scheme is that such credit and the duty paid on inputs is allowed, whether the finished product and the inputs availed are under the same heading or not. Thus, under both the schemes, viz., proforma credit and the Modvat credit, the benefit or the rebate the manufacturer gets is the rebate in the duty payable on the manufactured goods under Section 3 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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