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Issues: Whether rebate sanctioned under Rule 12(1)(a) of the Central Excise Rules, 1944 and credited by the assessee in RG 23A Part II could, after the introduction of Rule 57F(17), be claimed in cash on the footing that such credit did not constitute specified duty and had not lapsed.
Analysis: The assessee had accepted part of the rebate in cash and part by credit entry in RG 23A Part II, and had also utilised that credit for payment of duty on finished goods. On a combined reading of Rule 57A and Rule 57F(12), the credit taken in RG 23A Part II was credit of specified duty and was available only in the manner provided by the Modvat scheme. Once Rule 57F(17) came into force on 1-3-1997, any unutilised credit of specified duty lying with manufacturers of bulk drugs lapsed and could not be utilised for payment of duty. The later request to substitute cash for the already accepted credit was treated as an afterthought. The circulars relied upon by the assessee dealt with admissibility of rebate under Rule 12 and did not govern the separate question of lapsing of Modvat credit under Rule 57F(17). The earlier order in another case was distinguished on facts because it predated the amendment.
Conclusion: The credit entered in RG 23A Part II was correctly treated as specified duty credit and had lapsed under Rule 57F(17); the claim for cash payment was rightly rejected.
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