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Issues: Whether duty liability that accrued before the MODVAT Scheme came into force could be discharged by debit entry in RG 23A Part II instead of the statutory PLA register.
Analysis: The duty liability itself was not in dispute. The only question was the permissible mode of payment. Since the liability accrued when the MODVAT Scheme was not in force, there was no basis to permit discharge of that liability through RG 23A Part II. Rule 57F, which governs utilisation of MODVAT credit, did not provide for retrospective use of such credit for duty on goods already cleared before the Scheme commenced. The credit under the MODVAT scheme was only a set-off mechanism for specified end products and could not be treated as money available for unrestricted payment of past duty dues.
Conclusion: The duty had to be discharged by debit entry in PLA, not by RG 23A Part II, and the challenge to the departmental view failed.
Final Conclusion: The appeal was rejected on the ground that MODVAT credit could not be applied retrospectively to discharge a duty liability that arose before the scheme came into force.
Ratio Decidendi: In the absence of a provision for retrospective utilisation of MODVAT credit, a duty liability that accrued before the scheme commenced must be paid in the manner prescribed by the law then in force.
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