TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 184
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....ch 1997 to August 2001, the respondents availed Modvat credit to the tune of Rs. 1,54,71,283/and utilized the same for payment of duty which was to the extent of Rs. 1,62,80,444/. Balance amount of Rs. 11,25,600/was paid by them through PLA. 2. A show cause notice dated 9th April 2002 was issued to the respondents calling upon them to show cause as to why the credit taken on the inputs and capital goods should not be denied on the ground that the same have been used in the manufacture of final products which were wholly exempted from duty in terms of Notification No.115/75. It was the case of the appellant-Revenue that the fixed vegetable oils account for approximately 99% of the total production and all other byproducts account for remaining 1%. It was alleged that even though the byproducts which account for 1% are exempted, the respondents have not availed the exemption and opted to pay duty on those products. The respondents availed Modvat credit on inputs and capital goods used for the manufacture of final products and utilized the same for payment of duty on the by-products. The show cause notice was replied by the respondents. Apart from merits, an issue of limitation was a....
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....ferred and relied upon by the CESTAT, could not have been applied to the facts of the case. He relied upon the decision of the Apex Court in the case of Escorts Ltd. v. Commissioner of Central Excise, Delhi-II 2004 (173) ELT 113 (SC). He pointed out that in the three cases, the Apex Court has dealt with the matters where revenue is neutral and has held that it is the option of the assessee to pay duty on the exempted products and avail Modvat/ Cenvat credit as it is revenue neutral. He submitted that the Apex Court has dealt with the cases where no revenue implications were involved. 5. He submitted that in the present case, the first respondent-assessee has paid excise duty only on byproducts i.e. soap stock, acid oil, distilled fatty acid etc. He submitted that the main final product of the first respondent is fixed vegetable oil which contributes 99% of the production. The submission is that the first respondent is otherwise required to pay 8% of the value of the main dutiable goods cleared by them under the CENVAT Rules. He submitted that the CESTAT has not even adverted to the facts of the three cases before the Apex Court to the facts of the present case. 6. The learned sen....
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....ase before the Apex Court which was decided by the same decision, the question involved was whether an assessee is bound to avail an exemption or can forgo the same in order to avail the Modvat credit. The trade notice dated 11th March 1988 stated that it was the option of the assessee either to avail of the full exemption available or to pay the duty leviable on the goods manufactured by him. It provided that if the assessee chose to pay the duty in spite of exemption, Modvat credit could not be denied on such duty paid inputs, if used in manufacture of final product. The show cause notice was issued for recovery of Modvat credit amount. The demand was confirmed by the Assistant Collector. It was also confirmed by the Collector of Central Excise. However, the Appellate Tribunal reversed the findings and held that the assessee had the option not to avail of exemption but to pay the duty and avail of Modvat credit. The appeal preferred by the revenue was dismissed by the Apex Court on the ground that it had no revenue implications. At this stage, it will be necessary to make a reference to the decision of the Apex Court in the case of Union of India v. M/s.IndSwift Laboratories Ltd.....
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....s to whether the aforesaid word "OR" appearing in Rule 14, twice, could be read as "AND" by way of reading it down as has been done by the High Court. If the aforesaid provision is read as a whole we find no reason to read the word "OR" in between the expressions 'taken' or 'utilized wrongly' or 'has been erroneously refunded' as the word "AND". On the happening of any of the three aforesaid circumstances such credit becomes recoverable along with interest. 4. We do not feel that any other harmonious construction is required to be given to the aforesaid expression/provision which is clear and unambiguous as it exists all by itself. So far as Section 11AB is concerned, the same becomes relevant and applicable for the purpose of making recovery of the amount due and payable. Therefore, the High Court erroneously held that interest cannot be claimed from the date of wrong availment of CENVAT credit and that it should only be payable from the date when CENVAT credit is wrongly utilized. Besides, the rule of reading down is in itself a rule of harmonious construction in a different name. It is generally utilized to straighten the crudities or ironing out the creases to make a statute ....
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....he crop, of course, without infringing the Constitution. For doing this, the courts have taken help from the preamble, Objects, the scheme of the Act, its historical background, the purpose for enacting such a provision, the mischief, if any which existed, which is sought to be eliminated .............................. ......... ................. .................... .................... .......... .................. ................... This principle of reading down, however, will not be available where the plain and literal meaning from a bare reading of any impugned provisions clearly shows that it confers arbitrary, uncanalised or unbridled power." (emphasis added) 9. We have carefully perused the order of the Commissioner of Central Excise, Pune which was challenged before the CESTAT. There are various findings of fact recorded by the Commissioner. One of the findings of fact recorded by the Commissioner is in paragraphs 26 and 27 which read thus: "26. .......... Obviously, M/s.Parekh Foods Ltd. had not maintained separate inventory and accounts of the inputs meant for use in the manufacture of fixed vegetable oil which was chargeable to nil rate of duty. M/s.Parekh ....
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....inputs and capital goods were used exclusively for the manufacture of the by-products on which they had chosen to pay duty. From the above, it is clear that M/s Parekh Foods Ltd. had given misleading and wrong information in the various declarations filed by them to give the impression that the inputs/ capital goods on which MODVAT / CENVAT credit was availed was for the manufacture of the byproducts such as soap stock, acid oil, fatty acids etc. There was no mention in any of those declarations that they were engaged in the manufacture of fixed vegetable oil attracting nil rat of duty and that the aforesaid inputs and capital goods were used for the manufacture of fixed vegetable oil. This was done intentionally to avoid payment of eight percent of the price of exempted goods in or in relation to the manufacture of such goods the credit availed inputs were used." (emphasis added) Now turning to the impugned order, we must note that it is a very cryptic. The first two paragraphs contain statement of facts. The third paragraph refers to three decisions of the Apex Court. The only finding recorded by the Tribunal reads thus: "The ratio of the above decisions is that in case the as....