TaxTMI 
TaxTMI 
2013 (2) TMI 162
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....lized for payment of duty on any excisable goods, whether cleared for home consumption or for export : Provided that nothing contained in this sub-rule shall apply to credit of duty, if any, in respect of inputs lying in stock or contained in finished products lying in stock on the 16th day of March, 1995." 3. The appellant had unutilized balance of Modvat credit amounting to Rs. 25,69,44,928.69, lying in their RG-23A Part II at the end of business hours on 16-3-1995. 4. A total Modvat credit claim of Rs. 25,30,20,225/- was filed by the appellants with the department vide three letters namely letter dated 28-3-1995, 6-4-1995 and 29-4-1995 relying on the proviso to Rule 57F(4A). Therefore, effectively the appellants believed that a sum of Rs. 39,24,703/- alone will lapse in view of Rule 57F(4A). 5. The Commissioner of Central Excise, Jamshedpur got the books of account audited by Cost Accountant who in his report dated 29-3-1998 stated that claim for Rs. 4,05,75,212.22 was inadmissible under following categories : Sl. No. Particulars Credit to be disallowed (Rs.) 1. Input lying in stock 1,70,69,939.00 2. Input contained in Wor....
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....d from and based on computer record. Therefore, the appellant's claim based on computer record should be accepted. (a3) We find force in the submissions to call for a re-consideration of this issue. (b1) Credit of Rs. 41,00,000/- attributed to inputs contained in Work-in- Progress has been disallowed. The appellants have computed total purchases in the year 1994-95 and total Modvat thereon. Then percentage of the same was worked out as 20.2%. This percentage was applied to value of WIP. The cost auditor took the value of closing stock as on 15-3-1995 and Modvat thereon. He arrived at a percentage of 18.69%. Cost auditor adopted this to compute Modvat available on WIP. These findings of Cost Accountant are not tenable. Cost Auditor has used percentage of Modvat which is lower. Modvat percentage has to be linked to the Modvat availed to procurements. He has applied the Modvat to the stock which is not correct. Further, it is not possible to quantify WIP accurately on a given day without any prior preparation. The Modvat credit as worked out by Cost auditor on theoretical basis. It is required to be reworked. The entire quantification of Rs. 41 lacs is li....
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....s are experimental in nature with minor variation and it was not possible to foresee the sudden and abrupt amendment in law like the one introduced on 16-3-1995. Computer system maintained by the appellants record is Modvat credit available per vehicle for 13 models, such data has been accepted by cost auditor. Therefore Modvat credit should be allowed for stock of finished vehicles of other models to the Appellant keeping in view the gigantic nature and volume of operation undertaken by them. Until it is otherwise ineligible. The appellants vide their letter dated 14-7-1995 have explained about such comparable models. There are minor variations, otherwise there is not much difference. Hence, for these 83 vehicles also, Modvat credit should have been computed based on comparative models for which figures are available and credit extended. (f) Credit of Rs. 114.03 lacs relating to input contained in shop made forgings and springs has been denied. Para 9.2 of the Cost Accountant's report recognizes that the appellants have produced statement of shop-made forgings and springs comprising of part number, description, unit in stock etc. In para 9.3, the C....
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....nner and in terms of money transactions and events which are, in part at least, of a financial character, and interpreting the results thereof..." Therefore the entire issue of "accounts for" is the proceedings have to be looked into with this background in mind and other submissions on specific realities raised and material to arrive at diversions, allegations. 3.1 Since the matter requires to be remitted back, in view of the findings for redetermination of quantum, the decision on other pleas of the appellants is not arrived at, they are kept open for the appellants to agitate at the de novo hearing, and the adjudicator to consider and arrive at a finding thereon and on liability to penalty interest, if any required to be imposed. The impugned order has been passed as per the directions of the Tribunal in the order cited above. The amounts of credit disallowed in the impugned order has been summarized by the appellant in a tabular form and submitted before us is reproduced below : Status of unutilized Credit at a glance, in the case of Tata Motors (Appeal No. 93/06) Rupees in Lakh Sl. No. Credit balance lying unutilized on 15/16-3-199....
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....y of excise on similar final products cleared for home consumption or for export on payment of duty and, where for any reason, such adjustment is not possible, by refund to the manufacturer subject to such safeguards, conditions and limitations as may be specified by the Central Government in the Official Gazette." 16.1 Rule 57F(4) grants a right to utilize the credit for payment of duty any of the final product in or in relation to which the input is intended to be used. The proviso to Rule 57F(4) grants an additional right in respect of input credit earned on exported final product and such additional right can be exercised in two ways by adjusting against duty payable on similar final product and where adjustment is not possible, by refund. 16.2 The restriction/bar created by Rule 57F(4A) introduced with effect from 16-3-1995 takes away the right granted by main provision of sub-rule (4) of Rule 57F. The additional right granted by proviso to sub-rule (4) has not been taken away by sub-rule (4A). 16.3 The above is clear from the amendments made in Rule 57F w.e.f. 1-3-1997. The main proviso of Rule 57F(4) was enacted as 57F(12) (see page 186-188 of V....
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....rified that if it is not possible to utilize credit for payment of duty on final product, refund is admissible under Rule 57F(13). "Freezing of credit lying in balance on 1-3-1997 will not act as a bar in this case". Circular, therefore, requested the field authorities to process the refund claim accordingly and allow the amount due which is otherwise in order. This circular now stands testified by the decision of Supreme Court in Samtel's case. Reasons given in the impugned order for denying, this relief are incorrect 20.1 The appellants contention in defence that accumulated credit is due to large exports and therefore refundable to the Appellant has been rejected by the ld. Commissioner on the basis of condition (4) as appended to Notification No. 85/87-C.E., dated 1-3-87 which calls for preparing an application in prescribed form and presenting the same to the jurisdictional Asst. Commissioner of Central Excise of the exporter for claiming a refund of Modvat which get accumulated on account of non-utilization due to export under Bond under Rule 13. It has further been pointed out that relevant extracts of Form 23A in original is required to be lodged before exp....
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.... inapplicable under the facts and circumstances of the present case." 9. The ld. Commissioner (A.R.) on the other hand submitted that Rule 57F(4) is to be considered along with Rule 57F(4A). Rule 57F(4A) reads as under : "Notwithstanding anything contained in sub-rule (4), or sub-rule (1) of Rule 57A and the notifications issued thereunder, any credit of specified duty lying unutilized on the 16th day of March, 1995, with a manufacturer of tractors, falling under heading No. 87.01 or motor vehicles falling under heading No. 87.02 and 87.04 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export : Provided that nothing contained in this sub-rule shall apply to credit of duty, if any, in respect of inputs lying in stock or contained in finished products lying in stock on the 16th day of March, 1995." The ld. A.R. submits that this is not a non obstante clause. This clause clearly provides that except modvat credit attributable to inputs contained in finished products lying in stock on the 16th day of March, 1995....
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....sult can be achieved by allowing the credit not to lapse since this would not involve any additional work. 11. We have considered the submissions made by the ld. Counsel. The ld. Commissioner (AR) strongly and vehemently argued that provisions as contained in Rule 57 of (4A) would come in the way of refund in view of the fact that the credit other than what is involved in the stock of finished goods, work in process would lapse. However as submitted by the ld. Counsel the non obstante clause would apply only to the provisions which are contrary. Where the non obstante clause has no specific provision and the original provision provides some relief and there is no contradiction between the two, the benefit has to be allowed. The benefit of refund is an alternative available to assessee when he finds that the credit cannot be adjusted in any other manner and therefore accumulated credit has to be claimed as a refund. The fact that the lapsing of credit was the result of an exercise and was introduced all of a sudden, the assessee may not be faulted with for entertaining a belief that they would continue to retain the cenvat credit available in their books of accounts and util....
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.... is dispensable, according to the peculiar facts and circumstances of the case, so as to avoid denial of a substantive benefit to a subject. In facts and circumstances of the case, when Appellants had a bona fide belief about availability of the credit for utilisation towards duty on similar final products as exported final products, limitation of six months in grant of refund would not come in the way of the Appellants. In certain facts and circumstances, Tribunal held in 1989 (44) E.L.T. 560 (Kothari Chemicals & Industries v. Collector of Central Excise) relying on the Bombay High Court's judgment in the case of Premier Automobiles Ltd. v. Union of India, that limitation would not come in the way of Kothari Chemicals for claiming refund when it paid higher amounts from P.L.A. while its application for availing proforma credit under Rule 56A was still pending. In the present case, the Appellants under a bona fide belief utilised credit earned in June-October 1990, but department objected to it in November 1990 by issuing a show cause notice, even though the department must have had become aware of the same on receipt of R.T. 12 returns along with copies of relevant R.G. 23A Pt.-II....
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....o any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid; (c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required when exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory; (d) in a case where a manufacturer is required to pay a sum, for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction; [(e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person;] [(ea) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of Section 5A, the date of issue of such order;] [(e....
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.... present appeal. Opinion is divided between the two members on this issue and the matter will reach a conclusion only when the final decision is taken as to whether Credit could or could not be utilised for payment of duty on final products cleared for home consumption. Before that stage, refund will be premature. Hence I am of the view that the period of limitation has not started to run and can be said to commence only when utilisation of Credit for payment of duty in this manner indicated in Rule 57F(3) is ruled out finally. For this reason, I hold that the second alternative of refund cannot be denied to them on the ground of limitation. It is specifically provided that refund under Rule 57F(4) is subject to the limitation under Section 11B, in the absence of any specific provision relating to relevant date under Section 11B. According to the ld. Counsel we have to follow the decision of the Tribunal in the case of Hindustan Motors Ltd. the relevant paragraphs of which have already been reproduced. In our opinion, the alternative remedy claimed by the appellants in their reply to the show cause notice submitted on 1998 itself cannot be considered as a refund claim and it has....
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....sues. Having regard to the fact that this dispute is already fifteen years old and it would be better to make an attempt to close the issue, he is proposing this. Therefore, we are required to consider the claim for the balance amount under three heads only viz. inputs lying in stock, inputs contained in work in process lying in stock and inputs contained in forgings and springs. Accordingly we will proceed to consider these items one by one. 16. As regards inputs lying in stock, the ld. Commissioner has disallowed an amount of Rs. 40.66 Lakhs in the second round. Ld. Counsel drew our attention to the combined stock statement of inventory codes submitted by the appellants to the Revenue on 15th March, 1995. He submits that a mistake was made while submitting the statement. He points out that total value of the inventory in respect of Sl. No. 5 of Annexure-II is total Rs. 4,08,86,466.93 and Rs. 15,539.00. A mistake has occurred and the total has been shown as Rs. 40,90,500.00. It is confirmed by the fact that quantity as per computer system which was accepted as the basis for arriving at the inputs lying in stock, was 2,00,19,057.00 in numbers and the unit price was Rs. 2.04....
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....odvat credit worked out by the cost auditor was on a theoretical basis and is required to be reworked. Therefore we are unable to agree with the arguments advanced by the counsel that this cannot be readjudicated. The Commissioner has taken a view that the cost auditor has worked out the amount correctly. We went through the report of the cost auditor. From the report it is noticed that in chapter 5 he has found that inputs are lying in work in progress. In para 5.5.1 the cost auditor has given the method followed by the company which takes the opening stock of WAP from 1-4-1994, quantity received upto 15-3-95 and on that cost, after taking the theoretical consumption vehicles and components arrives at the cost of WIP of 16.95 Crores. For applying the percentage, company took the total purchases during the year and on the basis of modvat credit involved, calculated the percentage. Thus what emerges is that the company did not make any selection but complied the total percentage of modvat credit on purchases made to the WIP. Whereas the cost auditor on the ground that it is not possible to check the total amounts of purchase and modvat credit availed, considered the total value of s....