TaxTMI 
TaxTMI 
1993 (1) TMI 154
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....as the duty equivalent to the unutilised stocks of inputs as on 1-4-1987 when they had reverted to complete exemption from duty. He had also imposed penalty of Rs. 3,000.00 on them. The Collector (Appeals) had set aside the penalty but had upheld the Deputy Collector's order. Thus the duty demand and the disallowance of the Modvat Credit balance as on 1-4-1987 at the time of the appellants' reverting to complete exemption were sustained. 2. Shri K.P. Dey, learned Advocate argued the appellants' case. Giving a brief outline of the facts he explained that when the appellants switched over to complete exemption from duty with effect from 1-4-1987, they had unutilised credit balance of Rs. 750.72 (Basic) and Rs. 689.85 (Special) In their RG23A, Part-II Account and also unutilised inputs themselves. The credit of duty taken thereon amounted to Rs. 34,980.45. The show cause notice was issued for disallowing this credit amount but not the actual RG23A balance as on 1-4-1987 referred to earlier. Even without the said amount being covered in the notice, the Deputy Collector had disallowed the same. Thus he went beyond the scope of the show cause notice. Shri Dey conceded that this point ....
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....their plea that it was a bona fide lapse on their part due to the inexperience of their staff not to have made the entries up to date and debited the duty amounts from the respective accounts. The Collector (Appeals) had, it was contended by Shri Dey, wrongly held that they could not avail the credit in respect of inputs received in the previous year when the inputs in question when they opted for full exemption from duty from the next year. He had also wrongly referred to Question No. 22 in the Guide to Modvat published by the Central Board of Excise and Customs in support of his decision. The particular question does not at all support his finding. Shri Dey wound up his argument with the plea that their appeal be allowed. 3. Shri M.N. Biswas, learned Senior Departmental Representative appeared for the respondent Collector. He opposed the arguments advanced by Shri Dey. As regards the wrong reference to Question No. 22 in Guide to Modvat, Shri Biswas pointed out that the correct number of the Question is No. 36 in Guide to Modvat (2). It has been clearly stated therein that if a manufacturer who had taken Modvat Credit in a financial year opts for complete exemption from the be....
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...., Cal-1, Fodder Court, 18 Rabindra Sarani, Calcutta - 700 001. 26-6-1987 Dear Sir, We have received under mention (List enclosed) duty taken under Modvat scheme and whole Credit amounts were utilised towards payment of Central Excise duty when excisable goods were cleared before 31-3-1987 leaving inputs in stock in our factory on or after 31-3-1987. We are availing exemption benefit under Notification No. 75/87 dated 1-3-1987, up to clearance value Rs. 5,00,000/- from 1-4-1987. Now we intend to utilise the inputs lying in our stock since 31-3-1987, to manufacture the excisable goods which will be cleared on payment of C.E. duty after crossing the exemption limit (Rs. 5,00,000). Hence, you are requested to permit us to utilise the lying stock under Rule 57H to manufacture the excisable goods which will be cleared on payment of C.E. duty after crossing the exemption limit. Thanking you, Yours faithfully, For KWALITY REFRIGERATION CO. Sd/- A.K. Lamba Partner Enclose : List of Inputs. STOCK LYING AS ON 31ST MARCH, 1987 Item Model Sl. No. Qty. Condenser 10 x 12 x 3 row 31 Nos. 14 x l4 x 4 row &nb....
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.... next year requires that the credit on balance in the RG-23A, Part-II as well as the credit corresponding to the unutilised inputs in stock at the time of reversion to full exemption should be reversed or paid back in cash if already utilised. They should have followed such a course. If after taking such steps, they again start availing Modvat and if the same carried forward stocks of inputs are still available at the time of filing a fresh declaration at the time of their re-entry into the Modvat Club, they would be eligible for the benefits as available under Rule 57H(1), as stated above. Their declaration of June, 1987 about the availability of stocks as on 1-4-1987 cannot be easily verified, particularly where the inputs did not have any distinguishing identity or marks which could be verified with reference to the stocks themselves or the documentary evidence available. There is no discussions in the Deputy Collector's order as to why the duty involved on the inputs lying in stock as on 1-4-1987 (RG-23A, Part-I balance amounting to Rs. 34,980.45) should be paid by them. He has held that all the charges in the show cause notice had been established. The Collector (Appeals) had,....