- (1.) Heard Sri Krishna Agrawal, learned counsel for the Department and Sri Nikhil Agrawal, learned counsel for the assessee.
(2.) This is a Central Excise Reference filed under Section 35G of Central Excise Act, 1944 in compliance of judgement and order dated 16-5-2007, passed in Central Excise Application No. 41-D of 2000. The questions of law sought to be answered are as under :- "1. Whether credit of Additional Duties of Excise can be utilised towards payment of Basic Excise Duty when Notification No. 5/94-C.E. (N.T.), dated 1-3-1994 specifically provides that AED shall be utilised only towards payment of duty of excise leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957? 2. Whether on the facts and circumstances of the case, the Tribunal has erred in law in overlooking the provisions of Notification No. 5/94-C.E. (N.T.), dated 1-3-1994 which specifically provides that credit Additional Excise Duties shall be utilized only towards payment of excise leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957?"
(3.) These very questions have been answered by the Karnataka High Court while interpreting Rule 57F(12) of erstwhile Central Excise Rules, 1994, which was amended by inserting the proviso, which reads as under :- "Provided that, notwithstanding anything contained ion Rule 57A and the notifications issued thereunder the credit of specified duty allowed in respect of any inputs may be utilized towards payment of duty of excise on any other final product, whether or not such inputs have actually been used in the manufacture of such other final product, if the said inputs have been received and used in the factory of production on or after the first day of March, 1997." 7. Therefore, by insertion of the said proviso, the effect of Rule 57A and the notification issued thereunder is clearly wiped out. It is no more the requirement of law that credit taken for additional duty paid should be utilised only for clearing the goods if additional duty is to be paid in respect of the said goods also. As is clear from the proviso not only such a duty could be used towards payment of basis excise duty even if the duty availed in respect of any input is not used in the manufacture of final product, the benefit is available to the manufacturer, the only condition being that inputs should have been received and used in the factory for production. In that view of the matter, the order passed by the Tribunal is in accordance with law. Hence, we answer the reference in favour of the assessee and against the revenue. All the references are answered accordingly." ;