TaxTMI 
TaxTMI 
2017 (1) TMI 350
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....idity thereof to quash and set aside the Impugned order dated 28.12.1994 (Exhibit 'D' hereto); c) that this Hon'ble Court be pleased to issue a Writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ order or direction, ordering and directing the Respondents, their officers, subordinates, servants and agents to forthwith withdraw the demand of duty amounting to Rs. 29,88,435/-; ....." 2. At the hearing of this writ petition, the petitioners' counsel does not press the relief in terms of prayer clause (a), by which, a declaration is sought to declare Rule 57C of the Central Excise Rules, 1944 as unconstitutional and ultra vires Article 14 of the Constitution of India and/or Rule 57A of the Central Excise Rules, 1944. This petition pertains to the old MODVAT, now CENVAT regime. 3. The writ petition is filed by a company, which is engaged in the business of manufacturing of castings of aluminium. The Assistant Collector of Central Excise and Customs, Pune Division- respondent no. 3 to the writ petition, along with respondent no. 2- Collector of Central Excise and Customs (Appeals) have been impleaded on account of the ....
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.... Section 11A of the Act. Annexures 'A', 'A1' and 'A2' are the copies of the notices. By letter dated 11th October, 1993, a reply was filed by the petitioners to these notices, but not being satisfied with the explanation, a demand came to be confirmed on 18th February, 1994. Thereafter, an appeal was preferred to the second respondent, who dismissed it on 28th December, 1994 relying upon an order passed by the tribunal in the case of Kirloskar Oil Engines Ltd. vs. Collector of Central Excise, Pune 1997(73) ELT 835. 5. The respondents to this writ petition have supported the impugned order. 6. The learned counsel appearing for the petitioners Mr.Bharucha would submit that Rule 57A and which was brought to the notice of the respondents, confers a substantive right to avail the credit of duty paid on inputs in or in relation to the manufacture and clearance of final product. Upon receipt of inputs, there are clearances of final product, on payment of duty. The manufacturer acquires a vested right to take credit of duty paid on the inputs as against payment of duty on final products. Such credit of duty can be utilised on clearance of other final product a....
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....not appreciated the facts in their proper perspective. The castings manufactured by the petitioners are neither exempted from excise duty nor are they chargeable to nil rate of duty. The expression "chargeable at nil rate of duty" means that as per the charging section of the Act read with the Schedule to the Central Excise Tariff Act, 1985, the goods are chargeable at nil rate of duty. The word "exemption" means the goods attract the duty, but are exempt by virtue of the power conferred in that behalf. It is in these circumstances and when neither eventualities are satisfied or attracted that the demand cannot be sustained. It is submitted that the difference as noted and highlighted above has been completely missed. Hence, the impugned order be quashed and set aside. 9. Heavy reliance is placed on not only the rules, but the decision of a larger bench of the tribunal in the case of Kirloskar Oil Engines (supra), which, in turn, is based on the judgment of the Hon'ble Supreme Court of India in the case of Collector of Central Excise, Pune vs. Dai Ichi Karkaria Limited 1999 (112) ELT 353. It is submitted that there is a decision of the High Court of Kerala in the case of Col....
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....ary, 1993. It provides all the details of the MODVAT Credit availed of. Then, there is a show cause notice, copy of which is at Annexure 'A-1' dated 24th May, 1993 with identical allegations, but for a distinct period, namely, from December, 1992 to April, 1993. Finally, there is another show cause notice, copy of which is at Annexure 'A-2' and with identical allegations, but for the period commencing from May, 1993 to September, 1993. 12. The reply to the show cause notice by the assessees was that they are not liable to reverse any MODVAT Credit of inputs gone into those final products, which were cleared under nil duty gate passes by following Chapter X procedure. The petitioners stated that estimation basis is the quantum of inputs which could have gone into the manufacture of the final product which were subsequently cleared under nil duty gate passes by following Chapter X procedure. However, in the month of August, 1992 they came across a tribunal decision in the case of Collector vs. Premier Tyres Limited 1992(20) ETR 67, wherein, it was held that even though some portion of the inputs is used for manufacturing and clearing finished goods under various ex....
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....was dismissed. 15. The relevant rules have been placed for our perusal by the counsel appearing for the petitioners. The Chapter X procedure, which is highlighted, would denote that therein falls Rule 192, which speaks of an application for concession. The concession can be granted provided an application is made as contemplated by this rule. The argument is that there is a difference between a remission and an exemption from payment of duty. Rule 57A reads as under:- "Rule 57A. Applicability - (1) The provisions of this section shall apply to such finished excisable goods (hereinafter referred to as the "final products"), as the Central Government may, by notification in the Official Gazette, specify in this behalf, for the purpose of allowing credit of any duty of excise or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereinafter referred to as the "specified duty") paid on the goods used in or in relation to the manufacture of the said final products (hereinafter referred to as the "inputs") and for utilising the credit so allowed towards payment of duty of excise leviable on the final....
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....hat the parties are relying upon is Rule 57C, which reads as under:- " Rule 57C. Credit of duty not to be allowed if final products are exempt. - No credit of the specified duty paid on the inputs used in the manufacture of a final product (other than those cleared either to a unit in a Free Trade Zone or to a hundred per cent Export Oriented Unit) shall be allowed if the final product is exempted from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty." 17. A bare perusal of this rule would indicate as to how no credit of the specified duty paid on the inputs used in the manufacture of a final product shall be given if the final product is fully exempt from duty or is chargeable to nil rate of duty. 18. Since heavy reliance is placed on the judgment of a Division Bench of the High court of Kerala [Premier Tyres Limited. (supra)], we ought to note facts therein. The Premier Tyres Limited, who was the assessee before the High Court, a manufacturer of tyres, filed a declaration under Rule 57G of the Central Excise Rules and took MODVAT Credit in respect of the inputs specified under Rule 57A. After the finished goods were manufactured....
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....AT Credit if at the time of taking the MODVAT Credit, products are not exempted. Thus, it is not necessary to reverse the entry immediately. It is enough if it is utilised later. In the case before the High Court, exemption notification was subsequently issued. The exemption notification was not there at the time when the credit was taken. Thus, on facts the question of law was answered in favour of the assessee and against the Revenue. 20. In the case of Kirloskar Oil Engines Limited (supra), the larger bench of the tribunal was deciding the correctness of a view referred for its opinion. The tribunal found that the facts in that case and several cases covered by the referring opinion need not be gone into in detail. However, it referred to a case of Wipro International Technology. In that case, the Assistant Collector demanded an amount of proforma credit, which was taken by the assessee under Rule 56A and subsequently utilised it against payment of duty on the computers manufactured by them. On 17th March, 1985, the Central Government issued Notification No.67/85 exempting computers from duty. Consequently, the benefit of Rule 56A became inapplicable to component parts to be ....
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....pted final product. There, the argument that stage of utilisation is different from the stage of giving credit is not relevant. Once there is an existing notification on the statute book at the time of receipt of inputs for use in the manufacture of such final products, it cannot be stated with any element of correctness that the manufacturer was not aware of availing of the said exemption notification in the absence of any order in his hand for clearing the final product under the said notification. 21. Therefore, the observations in para 17.1 would apply to cases which are of the nature found by the tribunal. The allegations and the demand is clear. Petitioner no. 1 clear their final product, castings. The aluminium ingots were inputs for the manufacture of castings. The castings were cleared following the Chapter X procedure referred above. The argument that the duty was remitted and not exempted has been rejected by holding that the petitioners rightly understood the later part of Rule 57C, namely, the castings are chargeable to nil rate of duty. In the present case, the petitioners state that there is a substantive right conferred by Rule 57A. What they have referred to is ....