Raju, J. - (1.) This Reference under Section 35-H of the Central Excises and Salt Act 1944, (hereinafter referred to as 'the Act') came to be directly made at the instance of the Revenue to this Court by the Customs, Excise and Gold (Control) Appellate Tribunal, North Regional Bench, on account of conflict of views expressed in the decisions of the High Court of Gujarat, reported in Torrent Laboratories Pvt. Ltd. v. Union of India, (1991) 55 ELT 25, and that of the Karnataka High Court, reported in Thuungabhadra Steel Products Ltd. v. Supdt. of Central Excise, (1991) 56 ELT 340.
(2.) The factual details necessary to understand and appreciate the disputes between parties may be noticed, before adverting to the area and nature of dispute. The respondent is a holder of licence in Form L-4 and a manufacturer of vegetable products falling under Chapter 15-04 of the Central Excise Tariff, at the relevant point of time. The respondent, admittedly, filed a declaration under Rule 57-G of the Central Excise Rules, 1944, (hereinafter referred to as "the Rules"), on 10-3-1987 for adoption of MODVAT Credit in respect of certain inputs used by them in the manufacture of vegetables products and consequently became entitled to avail of the duty credit only on and after 10-3-87. But the fact is that the respondent availed of the credit facilities in question even from 1-3-87 and, therefore, the authorities were of the view that wrong credit had been availed of to the tune of Rs. 62,710.61 on the inputs received and utilised from 1-3-87 to 10-3-87. On being pointed out though they debited a credit of Rs. 20,828.93 relating to furnace oil and filter cloth, not covered under the MODVAT Scheme, the balance of Rs. 41,872.68, in respect of other outputs was not debited, in spite of the communication dated 10-8-87 and reminders dated 29-12-87 and 1-2-88 for the reversal of the credit, issued by the Range Officer.
(3.) As against the communication dated 1-2-88, the respondent filed an appeal before the Collector (appeals) who by his order dated 21-12-89 set aside the same and remitted the matter to the Assistant Collector, the competent Authority, for the purposes of Rule 57-G. In the meantime, the Assistant Collector, Central Excise, Jaipur, issued a show cause notice as to why the sum of Rs. 41,872.68 should not be recovered from the respondent under Section 11-A of the Act read with Rule 57-I of the Rules. After considering the submissions of the respondent, the Assistant Collector by his order dated 3-8-90 directed the reversal of the credit of Rs. 41,872.68 wrongly taken, in their RG-23-A. The said Authority held that filing of a declaration being a statutory necessity and condition precedent to avail of credit under the scheme, the respondent was not eligible to take credit for the period prior to the filing of the declaration. As a matter of fact, the respondent did not appear to have contested the case on merit but only raised a plea of limitation that notice has not been issued within a period of six months, as envisaged under Section 11-A. The plea based on limitation came to be also rejected on the ground that the Range Officer issued a letter dated 10-8-87 calling upon the respondent to debit the credit wrongly taken and this was well within the six months period. This was challenged on appeal and the Collector (appeals) by his order dated 12-12-91 rejected the appeal repelling the plea of limitation. The matter was further pursued before the Tribunal by way of an appeal, and by an order dated 3-2-94, it was held that the show cause notice issued by the Assistant Collector on 5-8-88 was beyond a period of six months and that even for demanding reversal of credit already taken, in exercise of Rule 57-I, the provisions of Section 11-A would get attracted necessitating the raising of the demand within six months. Thereupon, the Revenue moved the application for Reference and that is how the reference came to be made to this Court.;