1991 (9) TMI 184 - AT - Central Excise

Tribunal Rules on Unutilized Credit & Transfer of Duty Paid on Inputs

The Tribunal ruled against The Associated Cement Cos. Ltd., stating that the unutilized credit in their RG-23 account could only be used until the ... Modvat Credit Issues:1. Transfer of unutilized balance of credit from RG-23 account to RG-23A account after the extension of Modvat Credit to cement.2. Applicability of Section 6 of the General Clauses Act regarding the right accrued before the rescission of Notification 201/79.3. Interpretation of Rule 57H of the Central Excise Rules in the context of transferring credit of duty paid on inputs.Issue 1: Transfer of unutilized balance of credit from RG-23 account to RG-23A account after the extension of Modvat Credit to cement.The appeals by The Associated Cement Cos. Ltd. contested the rejection of their appeal by the Collector of Central Excise (Appeals) regarding the utilization of unutilized balance in their RG-23 account towards payment of duty on cement post the extension of Modvat Credit to cement from 1-3-1987. The appellants argued that the unutilized credit should be admissible for duty payment on cement under the Modvat Scheme. The respondent, Senior Departmental Representative, opposed this, stating that the unutilized balance should lapse after the rescission of the relevant exemption notification on 1-3-1986. The Tribunal noted the arguments but ruled against the appellants, emphasizing that the rescission of the notification meant the exemption was no longer available, and the unutilized credit could only be used until the withdrawal of the benefit on 28-2-1986.Issue 2: Applicability of Section 6 of the General Clauses Act regarding the right accrued before the rescission of Notification 201/79.The appellants relied on Section 6 of the General Clauses Act to argue that the right accrued to them before the rescission of Notification 201/79 should not be denied. However, the Tribunal found this argument unconvincing, stating that the exemption under the notification ceased when it was rescinded on 1-3-1986. The Tribunal highlighted that the appellants did not seek the credit facility from 1-3-1986 but only from 1-3-1987 when the Modvat Facility was extended to cement. The Collector (Appeals) noted that the appellants did not provide any authority for utilizing the unutilized credit towards duty payment on cement from 1-3-1986.Issue 3: Interpretation of Rule 57H of the Central Excise Rules in the context of transferring credit of duty paid on inputs.The Tribunal analyzed Rule 57H of the Central Excise Rules concerning the transfer of credit of duty paid on inputs. The appellants sought to transfer the unutilized balance of credit from RG-23 Part III account to their new RG-23 Part II account. However, the Tribunal found that the appellants were not availing the credit facility immediately before obtaining the dated acknowledgement of the declaration in March 1987, as required by Rule 57H(3). The inputs contributing to the credit were exempt from duty, making them ineligible for the Modvat Scheme. The Tribunal dismissed the appeal, concluding that the appellants did not have a case for transferring the unutilized credit based on the provisions of Rule 57H and the circumstances of the case.