- (1.) At the instance of the Revenue the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi has referred the following questions of law under Section 35G(1) of the Central Excise & Salt Act, 1944 (hereinafter referred to as the Act) for opinion of this Court. "1.Whether the Tribunal was right in holding that in the absence of any provision at the material time against the availment, at the subsequent stage, of the amount of credit short availed originally at the time of receipt of the inputs, the respondents were entitled to take the differential higher notional credit under Rule 57B at a subsequent stage. In other words whether the full amount of admissible Modvat Credit has to be taken in a single transaction or it could be taken in instalments as done by the respondents in the present cases and allowed by the Tribunal? 2. Whether, even if, it is held that such subsequent taking of short availed is permissible, the Tribunal was correct in allowing such subsequent taking of credit beyond a period of six months from the date of the original taking of credit or the Tribunal should have restricted the credit so taken subsequently to the amounts relating to the immediately preceding six months period? 3. Whether subsequent taking of originally short availed Modvat Credit will constitute a refund claim and accordingly subject to the time limit restriction laid down under Section 11B of the Act? 4. Whether by filing the Gate Passes and RT-12 monthly returns the respondents can be said to have staked a claim at the original stage and hence the time limit of six months will not be applicable as held by the Tribunal -
(2.) Briefly stated the facts giving rise of the present reference are as follows: The respondents are manufacturers of excisable good using duty paid inputs and availing Modvat credit of such duty paid inputs. Under Rule 57A of the Central Excise Rules the manufacturers of excisable products are eligible to take credit of the specified duty paid on the inputs, which they can use for the payment of Central Excise duty on their products. However, in terms of Rule 57B ibid, where the inputs are manufactured by small scale industrial units availing of partial exemption from duty under notifications applicable to such small scale industrial units, the credit of duty available to the manufacturers using such inputs will not be limited to the partially exempted duty actually paid by the small scale manufacturer but the duty otherwise leviable on such input goods but for such small scale industry exemption. The respondents in the two cases initially took the credits only equal to the duty actually paid by the supplier-manufacturers who were small scale units and shown in the Gate Passes and not the higher amount they were actually entitled to take under Rule 57B. The respondents Ram Swarup Electricals Ltd. had received the inputs and taken credit in the months of April, 1992 and July 1992 to November, 1992. On 5th March, 1993 they took the short availed credit amount in their RG.23A Part II account. The other respondents, M/s Essel Mining Industries likewise had received their inputs and taken less credit initially while they took the short availed credit subsequently. After issue of show cause notices, the Assistant Collectors of Central Excise, Lucknow Division and Rae Bareli Division adjudicated the two cases and confirmed the duty demands, holding such subsequent taking of the short availed credits to be irregular. These orders having been upheld by the Collector of Central Excise (Appeals), the matter was taken to the Tribunal by both the respondents herein and the Tribunal by order No. A/884/96-NB dated 18th March, 1996 in the case of Ram Sarup Electricals Ltd. and order No. A/652/96-NB dated 29th February, 1996 in the case of Essel Mining Industries allowed the appeals holding that in the absence of any specific limitation in the relevant Rules for taking of Modvat credit, the differential credit amount can be taken without limitation and even if a reasonable period of six months were to be applied, as the claim for Modvat credit had been staked by submission of relevant Gate Passes along with the monthly R.T. 12 returns, the limitation period of six months will not be applicable.
(3.) We have heard Sri K.C.Sinha, learned Assistant Solicitor General of India appearing for the Revenue and Sri Pankaj Bhatia, learned counsel appearing for the respondents.;