2008 (10) TMI 493

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....allethrin', a chemical falling under Heading 38.08 of the First Schedule to the Central Excise Tariff Act. Prior to 2-6-1998, the entire amount of duty paid on the input (allethrin) was available as Modvat credit to a manufacturer of mosquito repellents in terms of Notification No. 5/94-C.E. (N.T.), dated 1-3-1994 issued under Rule 57A of the Central Excise Rules, 1944. With the amendment of this notification by Notification No. 14/98-C.E. (N.T.), dated 2-6-1998, the credit available on the input stood restricted to 95% of the duty of excise paid thereon. Accordingly from 2-6-1998, the appellants on receipt of the duty-paid input from its manufacturer, took 95% of the duty as Modvat credit. The appellants used to transfer the input from one....

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....aid on the input as Modvat credit, from 2-6-1998, by virtue of the amendment brought to Notification No.5/94-C.E. (N.T.) by Notification No. 14/98-C.E. (N.T.), dated 2-6-1998. The dispute arose when such Unit transferred the input to another Unit after reversing the credit and the recipient-Unit took equivalent credit in their Modvat account. According to the appellants, the restriction of 95% is not applicable where one Unit receives the credit-availed input removed as such by another Unit under the provisions of Rule 57F(2) and (3) of the Central Excise Rules, 1944. According to the Revenue, the restriction is applicable to such transfers of input also. The learned SDR has relied on CBEC Circular No. 421/54/98-CX., dated 10-9-1998. A Trad....

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....er was to the extent of 95% of the duty of excise paid on the input under the Central Excises and Salt Act, 1944. We have found nothing in the Notification (as amended) to indicate that the restriction was applicable where such input (on which Modvat credit to the extent of 95% of the duty paid thereon was availed) was removed as such after reversal of the Modvat credit to another manufacturer of final product under Rule 57F(2) & (3). On the other hand, it appears that the Notification (as amended) allowed utilisation of the Modvat credit (availed to the extent of 95% of the duty paid on the input) for payment of duty leviable on the input itself when cleared under Rule 57F. The Notification, apparently, did not even contemplate a situation....