2003 (6) TMI 475

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....dvat credit procedure. On 1.8.97, it became mandatory for such manufacturers as the appellant to pay duty not on the assessable value of the goods but according to the installed capacity of value in terms of Section 3A of the Act. Simultaneously, by amendment to Rules 57F & 57S, it was provided that the credit of duty in terms of Rules 57A and 57Q "shall lapse and shall not be allowed and utilized for payment of duty on any excisable goods whether cleared for home consumption or export/' the assessee thereupon ceased utilizing the modvat credit on its account towards payment of duty on the finished goods. 3. Notice issued to the appellant proposed recovery, in terms of amendment of Rules 57F and 57S of the credit taken on the inputs ....

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....or repaid. 5. We do not see how this decisions assists the Commissioner (Appeals) to come to the conclusion expressed in the last paragraph of his order, that it is the credit taken on the duty paid on the inputs lying in the factory or contained in the semi-finished goods, the credit taken of the duty paid on the capital goods used to produce that must first be paid before the credit lapses, as provided in the amendment Rules 57F and 57S." The object of amending the rules simultaneously with the implementation of the procedure of compounded levy -- (as the system by which duty liability is decided not in relation to the quantity or value of the product that are manufactured but based on the capacity of the machinery before such manufact....