TaxTMI 
TaxTMI 
2000 (6) TMI 44
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....s : Rule 57C. Credit of duty not to be allowed if final product are exempt - No credit of 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 exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty. 2. The words put in brackets in the above extracted rule were introduced in Rule 57C by the amendment, dated 1-3-1992. A simple reading of this rule before and after the amendment would indicate that whereas no Modvat credit was available in respect of the duty paid on the inputs if the final product was exempt from the whole of duty or was chargeable to nil rate of duty, an exception was created in the rule by amendment, dated 1-3-1992 by virtue of which even if the final product was exempt from the whole of duty or was chargeable to nil rate of duty, the Modvat credit could not be denied on the inputs if such final product was cleared either to a unit in a Free Trade Zone (FTZ) or to a hundred per cent Export Oriented Unit (100% EOU) . In other words w.e.f. 1-3-19....
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.... the absence of such a specific exclusion, the first proviso itself takes care of all such removals of final products under bond for export. Since credit earned by inputs used in such export product is permitted to be utilised for similar goods cleared for home consumption, sub-rule ( 5) of Rule 57F would not be attracted. 4. The ld. Advocate of the appellants further contends that though the goods supplied to the units in FTZ or to 100% EOU are exempt from payment of duty (in this case exemption Notification is No. 272/79, dated 18-10-1979 issued under Rule 8(1) for the goods supplied to the units in Kandla FTZ) this is not an exemption like that in other notifications. It is the contention of ld. Advocate that in this case the duty liability gets shifted to the unit in FTZ/100% EOU to whom the duty free goods are supplied and in case the conditions of the notification are not complied with, the duty is liable to be recovered from the receiving unit. It is also contended that the provisions of the Notification No. 272/79, dated 18-10-1979 are pari materia with those of Rules 191B and 191 BB and the ratio of the decision in respect of these rules will equally hold good for....
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.... that in respect of goods covered by other items in the Table of the notification, the exemption would be available despite the fact that the credit had been taken on the inputs thereof. With regard to the provisions of Rule 57C, their Lordships observed that it would appear that it is for this reason that the said proviso was included in the notification so that the provisions of Rule 57C would not apply in respect of goods not covered by the Items specifically mentioned therein. The exemption notification must be assumed to have consciously so worded and due effect must be given to the assessee thereunder. It cannot be held that the exemption notification will be inapplicale in so far as it is not in accordance with Rule 57C. 7. Shri M.P. Singh, JDR appearing for the Revenue/respondents has laid emphasis on general interpretation of law that all substantive amendments (as against procedural amendments) are prospective in effect unless otherwise provided. He stated that the amending Notification No. 4/92-C.E. (N.T.), dated 1-3-1992 was a part of the Finance Bill, 1992 which cannot have any retrospective application. He submitted that the Notification No. 4/92-C.E. (N.T.) ....
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...., have effect from 1-3-1992 - the date it bears. 9. The Ld. DR further relied on 1996 (86) E.L.T. 189 (Mad) Rex Trading Company v. Union of India. In this the Central Govt. issued a Public Notice No. 44-ITC(PN)/83, dated 17-10-1983 by which the import of item Isoborneol was prohibited by removing it from Open General Licence category to banned item and added as Item No. 61 of Appendix 3 whereby the import of this item were restricted to 90 days not only the prohibition of Isoborneol but for the earlier commitments made by irrevocable letter of credit. The Madras High Court relying on the rulings of the Supreme Court in the case of Cannanore Spinning and Weaving Mills Ltd. v. Collector of Customs and Central Excise, Cochin - 1978 (2) E.L.T. (J 375) (S.C.) and in M/s Bharat Barrel and Drums Manufacturing Co Pvt. Ltd. v Collector of Customs, Bombay - AIR 1971 SC 704 and in Union of India & Others v. Kanunga Industries - AIR 1990 SC 2190 held that notifications will have only prospective operation unless the enactment provides for a retrospective operation; that in view of the above, there is force in the contention of the Ld. Senior Counsel for the petitioners that the Public Notic....