- (1.) We have heard Shri Bharat Ji Agrawal, Senior Advocate assisted by Shri Piyush Agrawal for the applicant. Shri S.P. Kesarwani appears for the Respondents.
(2.) On the directions issued by this Court, calling for a reference, the Custom, Excise and Gold (Control) Appellate Tribunal, New Delhi has referred the following questions to be considered by this Court: (1) Whether, for the purpose of taking credit of duty paid on inputs under Rule 57-A read with Rule 57-C of the said Rules, the relevant stage is when credit of duty paid on inputs is taken i.e. when the inputs are brought into the factory, at which stage MODVAT Credit can be lawfully taken if the end product becomes exempt from the payment of duty? (2) Whether the extended period of limitation under the Rule 57-I (1) (ii) can be invoked when there is not even an allegation of fraud, misstatement, collusion or suppression with an intent to evade duty the show cause notice?
(3.) The statement of facts, as given by the Tribunal, are quoted as follows:- M/s Brooke Bond Lipton India Ltd. ., are engaged in the manufacture of packet tea falling under Chapter-9 of Central Excise Tariff Act, 1985 and took credit on the inputs for use in the manufacture of final product till 27.2.1993 as tea was exempted from paying central excise duty with effect from 28.2.1993 under notification No. 2/93 dated 28.2.1993. A show cause notice dated 5.8.1993 was issued to the Assessee under Rule 57-I and 57-E for reversal of credit amounting to Rs. 31, 28, 267/-on the ground that the final product has been exempted from payment of duty. The party had submitted their defence reply vide their letter dated 7.9.1993. They had pointed out that MODVAT Credit amounting to Rs. 31, 28, 267/-in respect of input lying un-used and in packed stocks represent credits taken by them prior to 27.2.1993 when final product v.z. tea was liable for duty and therefore they had correctly availed MODVAT Credit in terms of provision of Rule 57-A. They had also submitted that the demand is time barred under Rule 57-I as the Show Cause Notice was issued beyond the period of 6 months from the date of taking the credit. Commissioner of Central Excise, Kanpur vide order in original dated 22.11.1995 confirmed the demand. Tribunal dismissed the appeal of the Assessee vide order No. A/833/99/NB dated 6.9.1999 holding that MODVAT credit taken in respect of inputs will have to be reversed when final product becomes exempt at a date subsequent to the receipt of inputs. In coming to this conclusion Tribunal relied to the decision of the Larger Bench of the Tribunal in the case of Khan Bhai Esoof Bhai and Ors. reported in, 1999 (30) ELT 519 which in turn, was based upon the judgment of the Allahabad High Court in the case of Super Cassettes Industries Ltd. reported in, 1997 (94) ELT 302 (All.). The second issue of time bar was also answered against the Assessee in the light of Tribunal's judgment in the case of Calcom Electronics Pvt. Ltd. v. Commissioner of Central Excise New Delhi reported in,1999 31 RLT 461 in which it has been held that credit of duty utilised in the manufacture of exempted goods is required to be returned without any reference to time limit and the show cause notice issued after six months is not time barred having regard to the language of Rule 57-I (2) which is applicable in such a situation.;