2001 (7) TMI 709

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....s allowed under the provisions of rule 57H in respect of goods received from small manufacturers, whether the benefit of higher Modvat Credit can be allowed or not at the same time under the provisions of Rule 57B" and the High Court after due consideration of the matter has passed the following order : 1. The question referred is as to whether Rule 57B of the Central Excise Rules as it existed in the year 1991 is applicable in respect of the inputs lying in stock at the time the manufacturer obtained acknowledgment of declaration made under Rule 57B. 2. The assessee is a manufacturer of paints and varnishes which fall under Chapter XXXII of the Central Excise Tariff, 1985. During the financial year 1991-92 after availing....

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....fication provides for grant of credit in respect of such inputs at such higher rates as may be specified therein." 4. The credit at the rate at which the duty would have been payable though not actually paid by the manufacturer on inputs by reason of the manufacturer being a small scale industry, is to be allowed to the purchase of such inputs, who uses the input in the manufacture of other excisable products, not withstanding the fact that under Rule 57A the duty allowable as credit, is the duty paid on the goods used in the manufacture of the final product. Rule 57H after giving it over riding effect in relation to 57G states the procedure to be observed by the manufacturer for obtaining Modvat credit and empowers the Asst. Collec....

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....cturers keeping in view, the time at which the inputs of manufactured by such small scale manufacturers were acquired by the assessee. In cases where the assessee had acquired the inputs even prior to the date of declaration, the fact that a higher rate of credit could be availed of under Rule 57B, subsequent to the declaration could not be regarded as having in any way affected the earlier acquisition of the inputs manufactured by such small scale industries. The assessee, prior to the filing of the declaration acquired inputs and at the time, the inputs were acquired, it could not have envisaged that at some point of time, in the future they would become entitled to the benefit by setting off the duty otherwise payable but not paid on tho....