HYDERABAD INSULATED WIRES P LTD Vs. COLLECTOR OF C EX

JUDGEMENT

(1.) THIS appeal is directed against the order of the Collector (Appeals), Madras, dated 18.9.1987 by which he had upheld the order of the Deputy Collector of Central Excise, Hyderabad, dated 31.3.1987 denying MODVAT credit to appellant on Aluminium rods used as raw material. The Collector (Appeals), while upholding the order, modified the same in respect of personal penalty, which he had set aside.

(2.) The appellant manufactured Aluminium conductors and double paper covered aluminium strips falling under Heading 8544.02 of Central Excise Tariff of 1985. The raw material is aluminium rods. The company had been availing the facility of proforma credit under Rule 56A. They opted for MODVAT Scheme, which came into being with effect from 1.3.1986. The officers found on a visit to the factory that during the period from 1.3.1986 to 31.7.1986 the company had availed credit of duty amounting to Rs. 62,979.01 under Rule 56A in respect of aluminium rods and this procedure was objected to on the ground that both proforma credit facility under Rule 56A and MODVAT benefit under Rule 57A cannot be availed of by a manufacturer simultaneously. It was further found by the Department that although the intermediate products are exempt from payment of duty in terms of Notification 217/86, dated 2.4.1986; the appellant had paid duty amounting to Rs. 64,145.91 on bare aluminium strips used for captive consumption and took notional credit in terms of Rule 57B of the MODVAT Scheme amounting to Rs. 1,06,909.97 during the period 2.4.1986 to 31.7.1986. This was also objected to by the Department on the ground that the appellants were not entitled to the benefit of notional credit under Rule 57B in this manner. Following further investigations, proceedings were instituted against the appellants for recovery of the erroneously availed MODVAT and for imposition of penalty, which resulted in the adjudication order of the Deputy Collector as upheld by the impugned order of the Collector (Appeals).

(3.) SHRI Subash Chander, the learned Senior D.R., appearing for the Department submitted that the facility of input relief is with reference to the manufacturer who has to opt for these facilities and obtain the necessary permission from the proper officer. The manufacturer has to make a choice between the facilities available and opt for either one of them. The fact that the Sub-rule (9) was inserted in Rule 56A in the same Notification as amendment to Sub-rule (8) would make no difference.