Proforma credit and MODVAT restrictions before amendment, with notional credit denied on exempt intermediate goods.
Rule 56A barred simultaneous proforma credit and MODVAT credit on the same inputs for the period before 15.4.1987, because the pre-amendment text of Rule 56A(9), read with Rule 56A(8), operated as a complete restriction. The substitution by Notification No. 117/87 from 15.4.1987 relaxed that bar and allowed proforma credit for inputs not covered by MODVAT, so eligibility after that date required fresh determination. Notional credit under Rule 57B was not available on intermediate goods covered by exemption under Notification No. 217/86, since the exemption could not be ignored merely because duty had been paid on the goods. The claim for higher notional credit was rejected.
Issues: (i) Whether a manufacturer could simultaneously avail proforma credit under Rule 56A of the Central Excise Rules, 1944 and MODVAT credit under Rule 57A of the Central Excise Rules, 1944 prior to the substitution of Rule 56A(9) by Notification No. 117/87 dated 15.4.1987; and (ii) whether notional credit under Rule 57B of the Central Excise Rules, 1944 could be claimed on intermediate goods in respect of which exemption under Notification No. 217/86 dated 2.4.1986 was available.
Issue (i): Whether a manufacturer could simultaneously avail proforma credit under Rule 56A of the Central Excise Rules, 1944 and MODVAT credit under Rule 57A of the Central Excise Rules, 1944 prior to the substitution of Rule 56A(9) by Notification No. 117/87 dated 15.4.1987.
Analysis: Rule 56A(9), as it stood before the amendment, provided that nothing in Rule 56A would apply to a manufacturer availing credit of duty paid on inputs under Rule 57A. Read with Rule 56A(8), the provision operated as a complete bar against simultaneous availment of proforma credit and MODVAT credit in respect of the same period before 15.4.1987. The substitution introduced by Notification No. 117/87 dated 15.4.1987 relaxed the restriction and permitted proforma credit in respect of inputs not covered by MODVAT.
Conclusion: The bar against simultaneous availment was valid only up to 15.4.1987, and the position after that date had to be re-determined by the lower authority.
Issue (ii): Whether notional credit under Rule 57B of the Central Excise Rules, 1944 could be claimed on intermediate goods in respect of which exemption under Notification No. 217/86 dated 2.4.1986 was available.
Analysis: The intermediate goods were exempt from duty under Notification No. 217/86 dated 2.4.1986, and no classification list had been filed to claim duty payment on such captively consumed goods at a lesser or different rate while also seeking higher notional credit. The exemption could not be disregarded merely because duty had been paid on the intermediate product. The lower authority's view that the assessee could not obtain higher notional credit on the same goods was accepted.
Conclusion: The claim for notional credit under Rule 57B was rejected.
Final Conclusion: The decision upheld the restriction on concurrent credit only for the pre-amendment period, rejected the claim for notional credit on the intermediate goods, and sent the matter back for fresh determination of eligibility after 15.4.1987.
Ratio Decidendi: A manufacturer could not simultaneously avail proforma credit and MODVAT credit before the amendment of Rule 56A(9), but the amendment from 15.4.1987 permitted such concurrent availment for inputs not covered by MODVAT; exemption available for captively consumed intermediate goods could not be bypassed to claim higher notional credit on the same goods.