In the High Court of Judicature at Madras Dated:
19. 07.2013 Coram The Honourable Mrs.JUSTICE CHITRA VENKATARAMAN and The Honourable Ms.JUSTICE K.B.K.VASUKI C.M.A.Nos.3539 of 2005 and 3087 of 2009 Commissioner of Central Excise, Chennai 1 121 Uthamar Gandhi Road Nungambakkam Chennai 34 ... Appellant in CMA.No.3539 of 2005 SPIC Limited (Pharmaceutical Division) C/14 16, SIPCOT Industrial Complex Cuddalore 607 005. ... Appellant in CMA.No.3087 of 2009 Vs.
1. M/s. SPIC Heavy Chemicals Division Manali, Chennai 2. Customs, Excise and Service Tax Appellate Tribunal South Zonal Bench, Shastri Bhavan Annexe 1st Floor, 26, Haddows Road Chennai 6 ... Respondents in CMA.No.3539 of 2005 3. The Commissioner of Central Excise Pondicherry ... Respondent in CMA.No.3087 of 2009 CMA.No.3539 of 2005: - Civil Miscellaneous Appeal against the Final Order No.1050/2003 dated 5.12.2003 on the file of Customs, Excise & Service Tax Appellate Tribunal, Chennai Bench. CMA.No.3087 of 2009:- Civil Miscellaneous Appeal against the Final Order No.832/2009 dated 8.7.2009 on the file of Customs, Excise & Service Tax Appellate Tribunal, Chennai Bench. For Appellant : Mr.Vikram Ramakrishnan in CMA.No.3539 of 2005 Mr.N.Prasad for Mr.N.Inbarajan in CMA.No.3087 of 2009 For Respondent: Mr.N.Prasad for Mr.N.Inbarajan in CMA.No.3539 of 2005 Mr.Ravi Anantha Padmanabhan(SCGSC) in CMA.No.3087 of 2009 COMMON
JUDGMENT(Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) C.M.A.No.3539 of 2005 is filed at the instance of the Revenue as against the order of the Customs, Excise & Service Tax Appellate Tribunal, Chennai Bench, for the period March 1998 to June 1998 and September 1998 to January 1999, by raising the following substantial question of law:- ".Whether the duty debit made in Duty Entitlement Pass Book in respect of countervailing duty can be allowed as MODVAT/ CENVAT credit and is it not contrary to the Notification No.34/97 Cus. dated 9.4.97 and to the provision of Rule 3 of CENVAT Credit Rule, 2002?.".
2. C.M.A.No.3087 of 2009 is filed at the instance of the assessee as against the order of the Customs, Excise & Service Tax Appellate Tribunal, Chennai Bench, for the period July, 1998 to September, 1998. The said appeal was admitted on the following substantial question of law:- ".Whether the Customs, Excise and Service Tax Appellate Tribunal committed an error of law in upholding the denial of CENVAT credit to the appellants in respect of additional duty of customs paid by the appellant by debit to Duty Entitlement Pass book issued under paragraph 7.41 of the Export and Import policy?.
3. The assessee/appellant in CMA.No.3087 of 2009 is an importer and manufacturer of various pharmaceutical drugs such as Penicillin G, Potassium First Crystals, 6 APA etc., falling Chapter 2941.10 of the Central Excise Tariff Act, 1985. As an assessee under the provisions of the Central Excise Act, the appellant availed facility of MODVAT credit for inputs and capital goods under Rule 57A and 57Q of the Central Excise Rules. The assessee was granted Duty Entitlement Passbook as per the Export and Import Policy. As per the DEPB Scheme read with Notification No.34/97, the importers were permitted to clear the input or the capital goods without payment of basic customs duty or additional customs duty in cash, but by utilising the credit earned as an export benefit towards the payment of basic customs duty and additional customs duty. Admittedly, the assessee availed the credit earned for paying the additional customs duty to the tune of Rs.6,58,477/- during the period between July, 1998 and September, 1998. According to the Revenue, as per Rule 57Q(2)(i) of the Central Excise Rules, as the manufacturer of the final product had not paid the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 in cash, he could not avail the benefit under Rule 57Q(2)(I). Thus, on the capital goods, as the assessee had availed the benefit under the Duty Entitlement Passbook Scheme by debiting liability under additional duty as against the credit entry in the Passbook, there was violation of Rule 57Q(2)(i) of the Central Excise Rules. In other words, as the assessee had not paid the additional duty leviable under Section 3 of the Customs Tariff Act in cash, MODVAT credit was not available to the assessee. Thus proceedings under Rule 57Q of the Central Excise Rules were initiated against the assessee to deny the MODVAT credit. The assessee, however, countered the claim of the Revenue that adjustment of the entries on the debit side as regards the duty payable under DEPB scheme is, in effect of payment of duty. Consequently, the question of denying MODVAT credit did not arise. The Revenue, however, rejected the claim of the assessee by quoting the policy that unless the additional duty of Customs was paid in cash, the question of availing MODVAT credit did not arise. Thus, disallowing the claim of the assessee under Rule 57Q of the Central Excise Rules, 1944, the assessment was completed.
4. Aggrieved by this, the assessee went on appeal before the Commissioner of Central Excise, who allowed the appeal of the assessee, following the decision of the Tribunal reported in 2003 54 RLT572(CEGAT CHE) POLYHOSE INDIA PRIVATE LIMITED v. CCE. The said order was subjected to appeal by the Revenue before the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal, following the Larger Bench decision of the Tribunal in the case of ESSAR STEEL LIMITED v. CCE reported in 2004 (173) ELT239 allowed the Revenue's appeal by holding that mere debit in DEPB passbook was not sufficient for availing MODVAT credit and that the additional duty of customs should have been paid in cash to avail MODVAT credit. Aggrieved by the view taken, the assessee had preferred the above Civil Miscellaneous Appeal.
5. As far as the Revenue's appeal in CMA.No.3539 of 2005 is concerned, we find that the Commissioner of Central Excise dismissed the appeal of the assessee, holding that any credit made in the passbook for any amount of duty could not be used for MODVAT credit under the Central Excise Law. Thus, on going through the Notification relevant to the period under question, the appeal was rejected. Aggrieved by this assessee went on appeal before the Customs, Excise and Service Tax Appellate Tribunal, which allowed the appeal, following the decision of the Tribunal reported in 2003 (152) ELT361 POLYHOSE INDIA PRIVATE LIMITED v. CCE, CHENNAI. Aggrieved by the order of the Tribunal, the Revenue is on appeal, contending that after the Larger Bench decision, the Tribunal's view following the decision reported in 2003 (152) ELT361 POLYHOSE INDIA PRIVATE LIMITED v. CCE, CHENNAI, suffers flaw. Hence the present appeal.
6. As already pointed out, C.M.A.No.3087 of 2009 is at the instance of the assessee, relating to the period July, 1998 to September, 1998. Learned counsel appearing for the assessee took us through the Export and Import Policy for the period 1997-2002 and particularly to the Duty Entitlement Passbook Scheme and contrasted it with advance licence and pointed out that considering the whole objective of the Duty Entitlement Passbook Scheme to neutralise the incidence of basic customs duty on the import content of the export product and the credit available under the Scheme by taking into account the deemed import content of the said export product, the adjustment given by way of credit entry on additional customs duty being in the nature of duty paid, the assessee is entitled to avail MODVAT credit, available under Rule 57Q of the Central Excise Rules. In other words, according to him, the Scheme, as available under the Export and Import Policy, 1997-2002, gives an option to the assessee to have the adjustment of additional customs duty liability as against the credit available in the passbook. Alternatively, it permits the exporter to pay additional customs duty in cash as well, so that the credit in the passbook remains undisturbed. With the option thus available, Clause 7.41 of Export and Import Policy with Handbook of Procedures has to be read along with Clause 7.25 of Export and Import Policy with Handbook of Procedures and wherever the assessee had not exercised the option, the adjustment under MODVAT credit would nevertheless be available on the credit taken by the importer. He submitted that there is no express prohibition to the adjustment of additional customs duty liability against the credit available in the passbook so as to be eligible for MODVAT credit. Contrasting this to the subsequent amendment brought in from 1.4.2000, he pointed out that under the amended provision, when the additional customs duty is adjusted from DEPB, there is express prohibition on availing of CENVAT credit. This position remained so till 2004, where the amendment brought under Clause 4.3.2, it was specifically stated that the holder of DEPB shall have the option to pay additional customs duty, if any, in cash as well. Learned counsel appearing for the assessee submitted that even though the position in 2000 did not specifically negative the availing of any benefit of MODVAT on the adjustment of the additional customs duty under DEPB, in the absence of any express denial as is found in the 2000 Notification, the benefit of MODVAT credit on the additional duties of customs adjustment under DEPB credit entries, cannot be denied. He further pointed out that in the Foreign Trade Policy, upto 28.1.2004, the Government recognised payment in cash as well as adjustment under DEPB scheme, as available for CENVAT Credit. Thus, the sum and substance of the argument is that the credit given under the DEPB scheme is to be taken as cash payment for the purpose of availing MODVAT credit.
7. He submitted that Rule 57Q(2)(i) of the Central Excise Rules, 1944 merely stated that the credit will be allowed on the duty of excise or the additional duty leviable under Section 3 of the Customs Tariff Act, 1975, paid on the capital goods. Extending the first argument that credit taken is duty payment, he submitted that in the absence of any restrictive words in Rule 57Q of the Central Excise Rules, that this is relatable to cash payment alone, adjustment of the entries in the passbook has to be taken as payment of duty; consequently, the question of denial of credit did not arise. In any event, he submitted that there must be a harmonised reading of Rule 57Q of the Central Excise Rules, 1944 and Clause 7.41 of the Export and Import Policy with Handbook of Procedures to grant the relief to the assessee.
8. In this connection, learned counsel appearing for the assessee placed reliance on the decision of this Court reported in 2009 (240) E.L.T. 341 TANFAC INDUSTRIES LIMITED v. ASSTT. COMMR. OF CUS., CUDDALORE, wherein this Court had referred to the decision of the Apex Court reported in 2008 (229) ELT3 COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN RAYON & INDUSTRIES LIMITED and held that when a clearance is allowed in DEEC scheme, even if the duty is not paid in cash but only by way of credit, the same would tantamount to payment of duty in cash. Consequently, unlike the DEEC Scheme, the debit of additional customs duty liability under the DEPB scheme is a mode of payment of duty on the imported goods. He also took us through the decision of the Gujarat High Court reported in 2013 (289) E.L.T. 273 GUJARAT AMBUJA EXPORTS LTD v. GOVERMENT OF INDIA as well as the decision of the Supreme Court reported in 2008 (229) E.L.T. 3 COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN RAYON & INDUSTRIES LTD., to emphasize his submission that the duty credit under the Scheme has to be treated as payment in cash and that under no circumstances, benefit of MODVAT credit could be denied to the assessee. In this connection, he also placed reliance on Notification No.34/97 Customs dated 7.4.1997, on which heavy reliance was placed by the Revenue, only to contend that when the Notification spoke about the exemption, the exemption was only by way of payment in cash, which has to be adjusted as per the Export and Import Policy, prescribing DEEC to the eligible assessee. In the context of the Notification and in the context of relevant Clause 7.25 of the Export and Import Policy, he submitted that the Tribunal committed serious error in denying the relief to the assessee.
9. Learned counsel appearing for the assessee also referred to the decision reported in 1999 (106) E.L.T. 3 EICHER MOTORS LIMITED v. UNION OF INDIA, as to the meaning of the expression ".paid". occurring in the said Rule as meaning ".actual payment".. Thus, the purport of the Scheme as well as Rule 57Q of the Central Excise Rules cannot be lost sight of to deny the relief to the assessee.
10. Countering the stand of the assessee, learned Standing Counsel appearing for the Revenue, however, supported the order of the Tribunal, particularly in the face of the Larger Bench decision in the case of ESSAR STEEL LIMITED v. CCE 2004 (173) ELT239on the strength of Notification No.34/97 dated 7.4.1997. Learned Standing Counsel appearing for the Revenue submitted that in the face of Clause 7.41 of the Export and Import Policy on DEPB, unless and until the assessee had complied with the requirement of the Rules, viz., payment in cash, the question of granting relief under Rule 57Q of the Central Excise Rules did not arise. On the admitted facts of the case, no exception could be taken to the order passed against the assessee. Consequently, there is no necessity to interfere with the order of the Tribunal which went against the assessee, in the light of the decision of the Larger Bench reported in 2004 (173) ELT239- ESSAR STEEL LIMITED v. CCE. He further submitted that the decision of the Larger Bench has not been taken on appeal so far. In the circumstances, the view thus having attained finality, the same may be accepted by this Court. Hence, he submitted that the appeal filed by the Revenue merits to be allowed.
11. Heard learned counsel appearing for either side and considered the materials placed on record.
12. We do not agree with the submissions made by the Revenue. Before going into the issue raised herein, we may note the provisions contained in the Export and Import Policy (1997-2002) relevant to the period under consideration viz., March, 1998 to June, 1998 and September, 1998 to January, 1999. A reading of the Policy for the period 1.4.1997 to 31.3.2002 shows that the Government framed duty exemption scheme on Duty Free Licence and Duty Entitlement Pass Book. Duty Free Licence included advance licence granted to a merchant exporter or manufacturer exporter for the import of inputs required for the manufacture of goods without payment of basic customs duty. The case of the assessee falls under DEPB scheme. Paragraph 7.25 of the Export and Import Policy with Handbook of Procedures gives the object of DEPB Scheme as under: ". Duty Entitlement Pass Book The objective of Duty Entitlement Passbook Scheme is to neutralise the incidence of basic customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product. The duty credit under the scheme shall be calculated by taking into account the deemed import content of the said export product as per Standard Input Output Norms and determine basic customs duty payable on such deemed imports. The value addition achieved by export of such product shall also be taken into account while determining the rate of duty credit under the Scheme. Under the Duty Entitlement Pass Book (DEPB) Scheme, an exporter shall be eligible to claim credit as a specified percentage of fob value of exports made in freely convertible currency. The credit shall be available against such export products and at such rate as may be specified by the Director General of Foreign Trade by a Public Notice issued in this behalf. Any item except those appearing in the Negative List of Imports shall be allowed for import without payment of basic customs duty, special duty of customs as well as additional duty of customs, against the credit under a Duty Entitlement Pass Book (DEPB). The holder of Duty Entitlement Pass Book (DEPB) shall have the option to pay additional customs duty, if any, in cash as well.".
13. As is evident from the reading of the Scheme, it is an export oriented scheme. The objective of the Scheme is to neutralise the incidence of customs duty on the import content of the export product. A reading of the Scheme shows that although DEPB holder is allowed to import without payment of basic customs duty, credit is available as regards the additional customs duty payable and the Scheme further recognises that the holder has the option to pay additional customs duty, if any, in cash as well. A reading of paragraph 7.25 as extracted above thus shows that the scheme of DEPB, works on the adjustment of debit entry as against credit entry available. The credit entry includes basic customs duty as well as additional duty of customs. Thus, with the option available, Clause 7.41 provides that additional customs duty paid in cash on export made under DEPB Scheme shall be adjusted as MODVAT credit. Clause 7.41 of the Export and Import Policy with Handbook of Procedures dealt with the applicability of drawback, reads as under: ". Applicability of Drawback The exports made under the DEPB Scheme shall not be entitled for drawback. The additional customs duty paid in cash on inputs under DEPB shall be adjusted as MODVAT Credit or Duty Drawback as per Rules framed by the Department of Revenue. ".
14. Rule 57A of the Central Excise Rules, 1944 deals with the allowing of credit of duty of excise or additional duty under Section 3 of the Customs Tariff Act, 1975 paid on the goods used in the manufacture of the final products. The credit allowed shall be utilised towards payment of excise duty leviable on the final products as specified under the Act or any other Act specified in this behalf. Rule 57Q specified the eligible capital goods and the credit of duty paid on capital goods. Sub Rule (2)(i) to Rule 57Q of the Central Excise Rules, 1944, states that ".the manufacturer of the final products shall be allowed credit of the duty of excise or the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as ".specified duty".) paid on the capital goods.".
15. Given the above Rule, the question for consideration is as to whether Paragraph 7.41 has to be read in a restrictive way that the assessee who has not paid the additional duty of customs in cash would be disentitled to claim the benefit under Rule 57Q of the Central Excise Rules. Given the background of DEPB Scheme and the MODVAT Scheme in the Central Excise Act, we do not agree with the contention of the Revenue that unless the assessee pays the additional customs duty in cash, the benefit of MODVAT Scheme would not be available.
16. It is no doubt true that under the Scheme available from 1.4.2000, there is a specific prohibition that wherever the additional customs duty is adjusted from DEPB, the assessee would not be entitled to CENVAT/ Drawback. However, in the absence of any such specific prohibition for the period prior to 2000, considering the provision under Paragraph 7.25 that a holder of DEPB shall have the option to pay additional customs duty if any, in cash, the provision under Paragraph 7.41 could only be read as recognising payment in cash too available for adjustment under MODVAT Scheme. Thus, in the absence of any restrictive wording, we do not find any justification to deny the benefit of MODVAT credit available to a case covered by the credit taken under the Passbook Scheme.
17. In the decision reported in 1996 (106) ELT3(Eicher Motors Limited Vs. Union of India), the Apex Court had an occasion to consider the question as to whether the facility of credit under the Scheme is as good as tax paid. The said issue arose in the context of the modification of the Scheme on MODVAT, by the introduction of the amendment to Rule 57F (Rule 57F(4A)) of the Central Excise Rules, 1944, under which, any credit of specified duty lying unutilised as on 16.03.1995 with the manufacturers or contractors falling under Heading 87.01 motor vehicles under Heading 87.02 and 87.04 and Chassis under Heading 87.06 shall lapse and should not be allowed to be utilised for payment of duty on any excisable goods, whether cleared for home consumption or export. Thus, the amount sought to be lapsed related to inputs already used in the manufacture of the final products which were cleared before 16.03.1995.
18. It was pointed out by the Revenue therein that in the original Scheme introduced, the application of the Scheme gave rise to a situation where the nexus between input and output was lost, leading to an anamolous situation that though on the original item manufactured, a duty was liable to be paid, the ultimate product remained a duty-free product. Thus, this, according to the Revenue led to a situation, that where, on the item originally manufactured, used as an input, duty was paid only in order to avoid payment of duty on the ultimate goods manufactured by them. The Apex Court considered this issue and held that on the payment of duty on the input and thereby utilising the facility for carrying out the credit towards excise duty payable on the final products, right to the credit had become absolute when the input was used in the manufacture of final product. By the application of Rule 57F(4A) of the Central Excise Rules, 1944, the credit attributable to the inputs already used in the manufacture of the final products and which have been cleared from the factory is sought to be lapsed. The Supreme Court observed that when the assessee was entitled to take the credit of the input immediately on the input received in the factory on the basis of the existing Scheme, ".incidence following thereto must take place in accordance with the scheme under which the duty had been paid on the manufactured products.". In that context, the Supreme Court held that ".provision for facility of credit is as good as tax paid till tax is adjusted on future goods on the basis of the several commitments which would have been made by the assessees concerned.".
19. Reading the above to the case on hand in the background of DEPB Scheme and the purpose of MODVAT Scheme, we hold that availing of credit is as good as tax payment for the purpose of Rule 57Q of the Central Excise Rules.
20. Secondly, we may point out that in the decision of this Court reported in 2009 (240) E.L.T. 341 TANFAC INDUSTRIES LIMITED v. ASSTT. COMMR. OF CUS., CUDDALORE, this Court considered the question on the liability to pay interest under Section 61(2) of the Customs Act when adjustment of credit granted by the Government on export of goods as against the import duty payable under the scheme was there. This Court considered the following questions as to: (i) Whether Customs Circular No.26/07, dated 20.7.2007 is legally correct?. (ii) Whether the appellant is liable to pay the interest under Section 61(2) of the Customs Act, when no duty is paid in cash, as having been exempted as per Notification 5/2002 and 96/2004?. (iii) Whether, adjustment of credit granted by the Government on export of goods in the DEPB towards import duty payable but for the exemption is equivalent to payment of duty in cash?.
21. This Court referred to the DEPB Scheme and pointed out to the differences between DEEC Scheme and DEPB Scheme as explained in the decision of the Supreme Court reported in 2008 (229) E.L.T. 3 COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN RAYON & INDUSTRIES LTD. and pointed out to Circular No.26/2007 Customs dated 20.07.2007, wherein, it was specifically pointed out that goods cleared by debiting through DEPB are not to be treated as exempted, but as duty paid as per the Foreign Trade Policy, 2004-09. In considering the import of the circular, this Court pointed out that in the background of the decision of the Supreme Court referred to above, goods cleared under the DEPB Scheme could not be treated as exempted goods, but they could only be treated as duty paid goods. Therefore, the debit of any amount under the DEPB Scheme as a mode of payment of duty on the imported goods cannot be treated as exempted goods, unlike the goods under the DEEC Scheme. It may be noted that an appeal preferred against this judgment in Special Leave to Appeal (C) No.24638 to 24640/2009 was rejected by the Apex Court under order dated 09.10.2009. Extending this to the circular issued in Notification No.34 of 1997 dated 01.04.1997, on which heavy reliance was placed by the Revenue, we have no hesitation in holding that even though the said Notification, issued under Section 25(1) of the Customs Act was given as a general exemption under Section 84-J, the purport of the notification is not for exempting goods from payment of duty in stricto sensu. The said Notification reads as under: ". GENERAL EXEMPTION NO.84-J Signature Seal of licensing authoriity Date (Notification No.31/97-Cus., dated 1-4-1997 as amended by Notification No.95/97-Cus., dated 19-12-1997; No.10/98-Cus., dated 23-4-1998 and corrected by CorrigendumF.No.605/55/98-DBK, dated 25-5-1998; No.49/99-Cus., dated 29-4-1999 and No.121/99 -Cus., dated 4-11-1999, and corrected by M.F. (D.R.) corrigendum Drawback/P.N. 3/99, dated 29-6-1999.]. GENERAL EXEMPTION NO.84-J Exemption to Imports made under Duty Entitlement Pass Boom. -- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods imported into India from - (1) the whole of the duty of Customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); and (2) the whole of the additional duty leviable under section 3 of the said Customs Tariff Act where specifically claimed by the importer, subject to the following conditions, namely :- (i) That the importer has been issued a Duty Entitlement Pass Book by the Licensing Authority in pursuance of paragraph 7.25 read with paragraph 7.29 of the Export and Import Policy (hereinafter referred to as said Duty Entitlement Pass Book). (ii) The importer has been permitted credit entries in the said Duty Entitlement Pass Book at the rates notified by the Government of India in the Ministry of Commerce for the products exported or has been allowed a provisional credit in the said Duty Entitlement Pass Book by the Licensing authority to be set-off by the credits earned on exports to be subsequently effected; (iii) The said Duty Entitlement Pass Book is produced before the proper officer of Customs for debit of the duties leviable on the goods but for exemption contained herein: Provided that exemption from duty shall not be admissible if there is insufficient credit in the said Duty Entitlement Pass Book for debiting the duty leviable on the goods but for this exemption. .......... (vi) Where the importer does not claim exemption from the additional duty of customs leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975), he shall be deemed not to have availed the exemption from the duty specified in the First Schedule to the said Customs Tariff Act for the purpose of calculation of the said additional duty of customs. ".
22. A reading of Sub clause (iii) of Clause 2 shows that where the importer has been permitted credit input under the DEPB at the rate notified by the Government of India for the products exported and the book is produced before the Officer of Customs for debit of the duties leviable on the goods exempt from duty, the exemption from duty shall not be admissible if there is insufficient credit in the said Duty Entitlement Pass Book for debiting the duty leviable on the goods but for the exemption notification. Thus the Notification gives exemption from payment of customs duty leviable as specified under the first Schedule to the Customs Tariff Act, 1975 and the additional duty leviable under Section 3 of the Customs Tariff Act, subject to the condition that the importer was issued Duty Entitlement Pass Book in pursuance of Paragraph 7.25 read with Paragraph 7.29 of the Export and Import Policy and that the exemption would be available only when there is sufficient credit in the Duty Entitlement Pass Book for debiting the duty leviable on the goods, but for the exemption. The Notification issued, however, has no relevance to the case where the assessee pays the duty by way of credit entry, in which event, the question of exemption of the notification, does not operate.
23. Thus, in view of the limited scope of exemption, the Notification cannot be construed as a non-liability for the purpose of claiming MODVAT credit. Read in the context of the decision of the Supreme Court reported in 1999 (106) E.L.T. 3 EICHER MOTORS LIMITED v. UNION OF INDIA and the policy relevant to the period in this case, in the absence of any prohibition in Clause 7.41 of the Export and Import Policy with Handbook of procedures as well as under Rule 57Q of the Central Excise Rules, the assessee will be entitled to relief under Rule 57Q of the Central Excise Rules, irrespective of whether the duty is paid in cash or through credit entry in the passbook.
24. In the circumstances, we hold that the view of the Tribunal is contrary to the decision of the Apex Court as well as that of this Court stated supra. Consequently, we have no hesitation in setting aside the order of the Tribunal in so far as the assessee's case is concerned in C.M.A.No.3087 of 2009 and thereby allow the same. No costs.
25. In the light of the reasoning thus given in C.M.A.No.3087 of 2009, C.M.A.No.3539 of 2005, filed at the instance of the Revenue, is dismissed, thereby, the Tribunal's order stands confirmed. No costs. bg To 1. Commissioner of Central Excise, Chennai 1 121 Uthamar Gandhi Road Nungambakkam, Chennai 34 2. The Commissioner of Central Excise Pondicherry 3. Customs, Excise & Service Tax Appellate Tribunal, Chennai Bench