UNION CARBIDE INDIA LTD Vs. COLLECTOR OF C EX

JUDGEMENT

(1.) THIS is an appeal against the order of the Collector of Central Excise (Appeals), Madras, dated 30-9-1987. Brief facts of the case are that the appellants filed a declaration under Rule 57G(1) of the Central Excise Rules, 1944 on 3-4-1986 for taking MODVAT credit in respect of the inputs lying in stock as on 1-3-1986 as also in respect of the inputs received between 1-3-1986 and 31-3-1986 in terms of Rule 57H of the Central Excise Rules. The Assistant Collector, while allowing the benefit partially, held that inputs in respect of which duty was paid prior to 31-1-1986 the credit could not be allowed in terms of Rule 57H(2) of the Central Excise Rules. On appeal, the learned Collector (Appeals) examined the issue in the light of the claim made in terms of Rule 57H(2) and held that the lower authority's order was maintainable. The issue that falls for consideration before us is whether the appellants are eligible for the benefit of MODVAT credit in respect of the products which had suffered duty prior to 31-1-1986.

(2.) The learned Advocate for the appellants submitted that the appellants obtained zinc ingots both indegenously manufactured as well as imported and manufactured zinc calots out of the same for the use in the appellants' other units for the manufacture of batteries. He pleaded that the appellants filed a declaration for availing of MODVAT credit under Rule 57G(1) and claimed the benefit in view of the transitional provisions incorporated in the Rule 57H in respect of the inputs zinc ingots lying with them as on 1-3-1986 as also those obtained from 1-3-1986 to 31-3-1986. He pleaded admittedly in respect of some of the ingots in respect of which the benefit of MODVAT credit was denied to the appellants, the clearances were made prior to 31-1-1986 on payment of duty. He pleaded that in view of the provisions of Rule 57H(2) the appellants were in fact eligible and the lower authorities had not appreciated the issue correctly. In this connection he drew our attention to Rule 57H, which for convenience of reference is reproduced below:

(3.) WE observe that there is no rebuttal of the appellants' plea that the appellants' products fall within the ambit of Rule 56A and all that has been pleaded by the Revenue is that since the appellants were not availing of this benefit and were in fact availing of the benefit under Notification 180/84 the question of benefit of Rule 56A credit being allowable to the appellants would not arise. WE observe that all that the Rule talks about is that the time-bar regarding the payment of duty on or before 31-1-1986 for the purpose of availment of the MODVAT credit would not be applicable where the inputs in respect of which credit was allowable under any Rule or Notification prior to 1st March, 1986. Once it is ascertained that this credit was allowable irrespective of the fact whether the appellants actually availed of the credit or not the appellants' case would fall within the exception of Rule 57H(2). WE observe that this aspect has not been examined in the impugned order. Notwithstanding that since it has been established and it is not contradicted by Revenue that the appellants products fall within the ambit of Rule 56A, we hold that the benefit as pleaded in terms of Rule 57H(2) would be available to the appellants. The appellants as it is have been allowed the benefit in respect of the inputs which were lying in stock as on 1-3-1986 and which were received till 31-3-1986 and the appellants' claim was turned down only in cases where duty had been paid before 31-1-1986. Since we have held that this cut off date will not vitiate the appellants' claim, we allow the appeal.