2004 (8) TMI 123

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..... t availed the benefit of the Notification and pays duties alone can take Modvat credit. When the importer pays duties of customs in part by cash, he is not availing the benefit of the said Notification to that extent. That is why Para 7.41 of the Exim Policy stipulates that Modvat credit is taken to that extent, that is, to the extent to which duties are discharged by cash payment. In the Polyhose India Pvt. Ltd.[ 2002 (11) TMI 164 - CEGAT, CHENNAI] , the Tribunal did not discuss the purport of the Notification No. 34/97 and merely observed that under Rule 57G of the Central Excise Rules, an assessee can avail of Modvat credit on the strength of Bill of Entry. While it is true that the appellants availed of the credit on the strength of suc .....

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..... k by the DGFT authorities when the goods are exported. Credit obtained by an exporter can be used to discharge import duty liability on the goods imported. The scheme is basically a brain child of Commerce Ministry. In order to facilitate importers availing of the Scheme, the Govt. of India, Ministry of Finance issued Notification No. 34/97-Cus. which exempts duties of customs leviable on imported goods provided such duties are debited to credit available in the pass book issued by DGFT. In case entire duty payable cannot be debited in the pass book for want of requisite balance the importer is required to discharge balance duty by cash payment. During the relevant period Para 7.41 of the Exim Policy prescribed that the additional customs d .....

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..... shable and cannot be relied upon to support the appellants' stand. 5. We have carefully considered the rival submissions. Modvat scheme is a special scheme where an assessee can avail of the duty paid on inputs as Modvat under certain conditions. One such condition is that duty should have been paid on the inputs. In the present case, no such duty has been paid by availing of the benefit of Notification 34/97. In the cases relied upon by the learned Counsel for the appellant the Tribunal observed that the Department was standing on technicalities when it does not allow Modvat credit of duty paid by way of debit in the pass book while allowing credit of duty paid in cash. We, however, are unable to bring ourselves to agree with the above. Ou .....

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