9911796707
TMI Blog1995 (6) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... n utilised? and at the time of its removal for home consumption under Rule 57F(1)(ii) of Central Excise Rules, 1944. 4. The assessee had been manufacturing inter alia electric horn falling under Tariff Heading No. 8512 of Central Excise Tariff Act, 1985. They had filed classification list for clearing bought-out Modvat inputs, namely CRCA sheets falling under Tariff Heading Nos. 7209.20, 7211.49, 7208.29 & 7211.41 as such, under Rule 57F(1)(ii) of Central Excise Rules, 1944 @ Rs. 735/- PMT. The assessee were issued with a show cause notice calling upon them to explain as to why the classification list should not be approved classifying the CRCA sheets under Heading Nos. 7209.20, 7208.29, 7211,41, 7211.49 attracting appropriate rate of duty as per Notification No. 60/90 dated 20-3-1990. 5. The assessee by their reply submitted that the wordings in Rule 57F(1)(ii), namely, "as if such inputs have been manufactured" carries the meaning that while clearing such Modvat inputs, they are required to follow the central excise procedure only and hence the CRCA sheets which have already suffered duty and on which no further process of manufacture has been carried on, it therefore, continu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in that event, the very purpose of granting Modvat, which is to avoid the cascading effect, would be defeated. The learned Counsel submitted that the Bombay Collectorate had also placed a similar interpretation as given by Tribunal in the case of SAE India Ltd. and has issued Trade Note No. 5/89, dated 16-1-1989, Trade Notice No. 57/III/Gen. (23)/89, dated 16-6-1989; and by Trade Notice No. 157/88-CE, dated 18-11-1988 and therefore, prayed for dismissal of this appeal. 9.We have carefully considered the submissions made by both the sides and have perused the facts of the case and the rulings on this point. Rule 57F(1) reads as follows :- The inputs in respect of which a credit of duty has been"(1) allowed under Rule 57A may - be used in, or in relation to, the manufacture of final(i) products for which such inputs have been brought into the factory; or shall be removed, after intimating the Assistant Collector(ii) of Central Excise having jurisdiction over factory and obtaining a dated acknowledgment of the same, from the factory for home consumption or for export under bond, as if such, inputs have been manufactured in the said factory : Provided that where the inputs are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son, without testing the goods, the goods were held to be as not marketable. In the case of the appellants' goods there is no plea of this nature in regard to sale of the goods and therefore, we hold that the ratio of the decision cited supra will not be applicable to the facts of this case. In view of above, we hold that the duty demanded is maintainable in law. The impugned order is therefore upheld and the appeal is rejected." On the other hand, the North Regional Bench on this very point has held in the case of SAE (India) Ltd. in para (5) at page 345 of the report as follows : "I have carefully considered the submissions made by both sides and perused the records. The short point to be considered in this case is that what will be the rate of duty applicable in case inputs are removed under Rule 57F(1). In other words, whether the rate of duty which is applicable on the date of removal or rate on which credit was taken in terms of Rule 57A of the Central Excise Rules. I find that assessable value of purchased duty paid inputs on which credit is taken under Rule 57A was allowed to be cleared for home consumption on appropriate rate of duty under Central Excise Rules 57F(1)(ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haser's end. The term "appropriately" cannot be read to mean "effective duty of excise" as prevalent at the time of manufacture and removal of goods, at the first instance by the original manufacturer of the goods. As the Rule 57F(1)(ii) is placing a burden on the user to make the payment of duty, therefore, a legal fiction has been created, to consider the user of the inputs as a manufacturer, only to recover the credit already utilised by him on such inputs. This is a requirement for payment of duty on the inputs removed for home consumption, as at the stage of its removal, the duty which it had suffered, has already been utilised by the user of input. Therefore, in order to undo this act, the duty which the input had suffered earlier, is required to be paid back, even if the duty had been reduced at a level lower than the rate at which duty had been paid by the original manufacturer. The proviso to Rule 57F(1)(ii) makes this aspect clear. Therefore, the Rule directs the user of the input to maintain the level of rate of duty, even if rates of excise duty have come down. This same benefit availed by revenue is also required to be granted to the user of inputs when the rates go up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been manufactured in the said factory. The plea is that the inputs in respect of which Modvat credit had been taken had been cleared from the factory from where these were manufactured after paying appropriate duty and also after complying with the necessary formalities for assessment i.e. approval of the classification list, price list, etc. and therefore there could not be any further classification approval and re-determination of the price of the goods and the only normal procedural requirements of a gate pass etc. for clearance from the factory for clearance for home consumption are required to be complied with. My learned Brothers have entered findings accepting this line of reasoning. I am afraid this line of reasoning though looks prima facie attractive does not take into consideration the fact that the legislature has in clear words set out under Rule 57F(1)(ii) that the inputs in respect of which the Modvat credit has been taken could be cleared from the factory for home consumption or for export under bond by treating them as having been manufactured in the said factory. The words used do not leave any doubt that the legislature intended these goods in respect of which M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, the provision of Rule 57F as above have to be interpreted. It has to be borne in mind that by virtue of the Modvat scheme a relief in respect of the duty paid on the inputs which go into the manufacture of a specified finished product has been provided for and the assessee under this scheme is eligible to this benefit in case he uses the inputs for the specified purpose i.e. for the manufacture of the finished excisable goods and in case this is not done and the goods as such are cleared after availment of the Modvat credit a provision has been made to recover the duty due on the goods. The legislature in its wisdom has thought it fit to provide for the recovery of the duty as would have been payable in case the said goods had been manufactured in the appellants factory, i.e. the duty as would be otherwise payable under the Central Excise law and procedure in respect of goods which have not suffered duty. A relief under Rules 57A, 57G has been given subject to the conditions as set out under Rule 57F as above. When a relief is given the Government retains its right to put certain conditions subject to which the relief could be availed. The conditions under the Modvat scheme amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory even though the process carried out may not be strictly according to the definition of manufacture given under Rule 2(f). 15.It is pertinent to note that in the case of goods which have been cleared for warehousing on clearance the duty on the same has to be paid as provided for under Rule 157 read with Rule 159 of the Central Excise Rules, 1944. For convenience of reference, the said Rules are reproduced below :- 157. Clearance of goods for home consumption. - Any owner of goods warehoused may, at any time (within the period during which such goods can be left or are permitted to remain in a warehouse under Rule 145] clear the goods for home consumption by paying - (a) the duty thereon assessed prior to entry or re-assessed under Rule 159; and (b) all rent, penalties, interest and other charges payable in respect of such goods. The goods shall then be assessed and cleared in the manner described in Rule 52. 159. Re-assessment. If, after any goods are entered- (1) for warehousing - (a) any alteration is made in the rate of duty leviable thereon, or in the tariff valuation (if any) applicable thereto, or (b) the goods are sorted, separated, crushed, or subjected to any ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
