K.A.Puj, J. - (1.)At the instance of the Collector of Central Excise, Baroda, The Customs, Excise & Gold (Control) Appellate Tribunal, Bench -C has referred to the following questions of law for the opinion of this Court.
i. Whether on the facts and circumstances of the case, the Tribunal has erred in holding that Modvat Credit of duty paid on basic inputs used in the intermediate product (intermediate inputs) cannot be denied by applying Rule 57 C of the C. Ex. Rules, 1944, in respect of removal of inputs from one factory to another under the provisions of Notn. No. 217/86 CE, as amended by Notn. No. 97/89 -CE by following Chapter X procedure of the C. Ex. Rules, under which payment of duty on the ultimate final products is ensured.

ii. Whether on the facts and circumstances of the case, Rule 57C has to be strictly construed disregarding the fact that Notn. No. 217/86 is essentially based on Modvat scheme and the amendment carried out by way of Notn. No. 97/89 -CE was to facilitate such removal from one factory to another of the same manufacturer without payment of duty, so long as it is ensured that the ultimate final products pay duty ?

iii. Whether on the facts and circumstances of the case, removal under Notn. No. 217/85 -CE can be construed to be analogous to the removal of intermediate inputs under Notn. No. 217/86 -CE, for applying the ratio of the larger Bench decision of the Tribunal in Kirloskar Oil Engines reported in, 1994 (73) ELT 835(Trib.).

(2.)The brief facts giving rise to the present reference are that, M/s. Unique Chemicals, a Division of M/s. J.B. Chemicals and Pharmaceuticals, Ankaleshwar was engaged in the manufacture of Glyoxal 40%, part of which was transferred under Chapter X procedure to Belapur, which was then used within the factory at Belapur in the manufacture of Metronidazole attracting duty at the rate of 5% basic excise plus 5% special excise duty, so that modvat credit was not required to be reversed for the inputs used in the manufacture of Glyoxal 40%. On claiming exemption by the Company ' M/s. Unique Chemicals, the Assistant Collector found that when any goods are transferred under Chapter X procedure, modvat credit has to be reversed, as no duty is payable.
Being aggrieved by the said decision of the Assistant Collector the respondent Company filed an Appeal before the Collector of Customs and Central Excise (Appeals) Bombay. On adjudication, the Collector of Customs and Central Excise (Appeals) framed question whether modvat credit is required to be reversed in respect of the product Glyoxal 40% manufactured by the respondent Company and cleared by their unit at Thane, under Notification No. 217/86 -C, as amended, by following Chapter X procedure for the manufacture of final product cleared on payment of duty. It was the claim of the respondent Company that concessions available under Second Proviso to Notification No. 217/86 CE dated 2.4.1986, as amended, on following the procedure outlined in Chapter X of CCE Rules, 1944. The Collector of Customs and Central Excise (Appeals) came to the conclusion that the respondent Company was clearing their final product from both the factories on payment of duty and that wherever intermediate product was cleared under Notification No. 147/84, they invariably reversed the credit, and hence set aside the order of the Assistant Collector and allowed the Appeal in favour of the respondent Company.

(3.)Being aggrieved by the order of the Collector of Customs and Central Excise (Appeals), the Collector Central Excise, Rajkot filed an Appeal before the Customs, Excise and Gold (Control) Tribunal Bench at New Delhi and the Tribunal concurred with the view taken by the Collector of Customs and Central Excise (Appeals) and dismissed the Appeal filed by the Collector of Central Excise.