TaxTMI 
TaxTMI 
1997 (4) TMI 190
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.... from 1-3-1993, by issue of Notification 25/93-C.E., aforesaid belting with width not exceeding 15 cm got fully exempted. There was a stock of 41,119.30 meters of such belting as closing balance at the end of 28th February, 1993. Further 64,233 metres of belting were produced during the month of March, 1993 out of the Modvat suffered input grey canvas cloth received upto 28th February, 1993. It was therefore alleged that 31,820 metres of grey canvas cloth received as input and on which Modvat credit was taken was used in manufacture of 1,05,352 metres of belting cleared or to be cleared, without payment of duty. Consequently, a show cause notice was issued for reversal of modvat credit or recovery thereof to the tune of Rs. 3,13,109.00 (B.E....
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.... relies on the following judgments of the Tribunal :- (i) 1988 (33) E.L.T. 172 [M/s Collector of Central Excise v. Wipro Information Technology] (ii) 1994 (72) E.L.T. 916 [Collector of Central Excise v. Premier Tyres Ltd.] 2.2 Ld. advocate further urges that ratio of Tribunal's Five-Member Judgment reported in 1994 (73) E.L.T. 835 [M/s. Kirloskar Oil Engines v. Collector of Central Excise] would not be applicable in the facts and circumstances of this case because that judgment has held that credit would not be available to inputs used in manufacture of exempted goods if at the time of receipt of inputs in the factory such an exemption Notification was in force. In the present case, he submits that Notification 25/93-C.E., dat....
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....e of the final product. The Long Term Fiscal Policy had stated that the best solution would be to extend the present system of proforma credit to all exisable commodities with the exception of a few sectors with special problems like petroleum, tobacco and textiles. This scheme, which has been referred as Modified Value Added Tax (MODVAT) scheme - I shall stress MODVAT, not MADVAT - allows the manufacturer to obtain instant and complete reimbursement of the excise duty paid on the components and raw materials. 114. The MODVAT scheme provides a transparency which discloses the full taxation on the product and its introduction is an important measure of cost reduction. Amount of excise duty payable depends upon the value of the final produ....
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....stipulates as follows :- (i) Central Govt. may by notification, specify the following, (a) final excisable products, (b) duty of excise or additional duty under section 3 of the Customs Tariff Act., 1975 , (specified duty) paid on (c) the goods (inputs) used in or in relation to manufacture of such final product, for the purpose of allowing credit of specified duty paid on such `inputs' and for utilising the credit so allowed towards payment of duty of excise leviable on the final product (emphasis supplied). Rule 57A is subject to the provisions of other Modvat rule i.e. 57B to 57J. 4.3   It is thus apparent from Rule 57A that it would be applicable only if the final product is dutiable, because then only the credit ....
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....t will be liable to be recovered under Rule 57-I, subject of course to limitation of time spelt out therein. It follows from the premise that utilisation can be made only of a valid credit and not of credit wrongly allowed. 4.5   Rule 57F is an important rule in the Modvat scheme. It is to be noted that Rule 57F(1) has not been noticed either in Premier Tyres or East India (supra ), which is my opinion is very important because it speaks of the manner of utilisation of the input. Clause (1) of Rule 57F stipulates that the 'input' of which credit has been allowed under Rule 57A be used in, or in relation to, the manufacture of final products for which such inputs have been brought into the factory. Rule 57A, as already observed, envi....