1. These two appeals are filed by the Revenue against the impugned order dated 21.11.1999 passed by the Commissioner Customs & C. Excise (Appeals), Bangalore.
2. The issue relates to Modvat credit on HSD oil. Whether HSD oil is an eligible input in terms of Rule 57A to avail Modvat credit is an issue to be considered herein. The Assistant Commissioner as per his order has disallowed the Modvat credit amounting to Rs. 3,40,507.78 availed on HSD oil during the period from September to November 1997 and ordered to reverse the same if credit is unutilised. He also held that if the credit had already been utilized, the same should be paid in cash. Against that order, the party has filed an appeal before the first appellate authority. The Commissioner (Appeals) has allowed the appeal filed by the party holding that the modvat credit availed by the appellants on HSD oil under Rule 57(B) cannot be denied to them, following the decision of the Tribunal in the case of M/s BPL Display Devices Ltd. v. CCE, Meerut reported in 1999 (34) RLT 546 (CEGAT). Not being satisfied with the said order, the Department has filed these appeals.
3. Shri Narasimha Murthy, Departmental Representative appearing for the Revenue/Appellant submits that the issue involved herein is no longer res integra in view of the Section 112 of the Finance Act, 2000 as well as the decision of the Tribunal in the case of Chemo Pulp Tissues v.Commissioner of Central Excise, Meerut .
He said that the Tribunal has been consistently following the ratio of the aforesaid decision and also referred to the decision of the Tribunal in the case of Birla Corporation Ltd. v. CCE, Raipur reported in 2001(135) ELT 175 (Trt-Del.) In the case of Chemo Pulp Tissues (supra) it was held that HSD oil is not admissible for benefit of credit for the period 16.3.1995 to 12.5.2000 in terms of Clause (1) of Section 112 of the Finance Act, 2000.
4. Shri Ravi Shanker arguing for the Respondents submitted that the appeal itself is not maintainable in view of the Clause 2(a) of the Section 112 of the Finance Act, 2000. Section 112 of the Finance Act, 2000 is as under: Section 112--"Validation of the denial of credit of duty paid on high speed diesel oil.--(1) Notwithstanding anything contained in any rule of the Central Excise Rules, 1944, no credit of any duty paid on high speed diesel oil at any time during the period commencing on and from the 16th day of March, 1995 and ending with the day, the Finance Act, 2000 receives the assent of the President, shall be deemed to be admissible.
(2) Any action taken or anything done or purported to have been taken or done at any time during the said period under the Central Excise Act or any rules made thereunder to deny the credit of any duty in respect of high speed diesel oil, and also to disallow such credit to be utilised for payment of any kind of duty on any excisable goods shall be deemed to be, and to always have been, for all purposes, as validly and effectively taken or done, as if the provisions of Sub-section (1) had been in force at all material times and, accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority-- (a) no suit or other proceedings shall be maintained or continued in any court, tribunal or other authority for allowing the credit of the duty paid on high speed diesel oil and no enforcement shall be made by any court, tribunal or other authority of any decree or order allowing such credit of duty as if the provisions of Sub-section (1) had been in force at all material times; 5. Emphasising the wordings in Section 112(2)(a), he said that no suit or other proceedings shall be maintained or continued in any court, tribunal or other authority for allowing the credit of duty paid on high speed diesel oil and accordingly appeal filed by the Department is not maintainable. He also said that it is only of academic interest since the party has already reversed the credit taken as ordered by the Assistant Commissioner and same cannot be claimed either by way of refund or it cannot be recovered by the Revenue irrespective of the outcome of the appeal in view of the wordings of Section 112 of the Finance Act, 2000.
6. Shri Narasimha Murthy, learned Departmental Representative on the other hand argued that it is not an academic interest as it was argued by other side and in case the appeal is dismissed it would result in upholding the impugned order to enable the party to take credit on HSD oil which is not permissible. He said that Clause 2(a) of the Section 112 of the Finance Act, 2000 is not in favour of the assessee. If Modvat credit was disallowed by the authorities below, the assessee could not have filed an appeal for allowing the credit of duty in view of the wordings of Section 112(2)(a) and the appeal filed by the assessee for availing the Modvat credit is not entertainable. Since this appeal is filed by the Revenue for disallowing the credit, appeal deserves to be allowed.
7. Shri Ravi Shankar submits that if a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee has got to be accepted in view of the decision of the Supreme Court in the case of Commissioner of Income-Tax, West Bengal-JIv. Naga Hills Tea Co. Ltd. reported in ITR 1973 Vol. 89 at Page 236.
8. I have carefully considered the matter. As per the Section 112 of the Finance Act, 2000 it is clear that HSD oil is not eligible input to avail Modvat credit and precisely this was the view taken by the Tribunal (Larger Bench) in the case of Chemo Pulp Tissues referred to above. I am not convinced with the argument advanced on behalf of the Respondents that the appeal filed by the Department is not maintainable in view of the wordings of the Section 112(2)(a) of the Finance Act, 2000. On the other hand, if the appeal was filed by the party for allowing the credit such appeal was not maintainable as it was pointed out by the Departmental Representative. In fact in the case of Chemo Pulp Tissues referred to above, since the appeal was filed by the party, the Tribunal has taken the view holding that "In view of this provision contained in the Finance Act, we do not find any justification for entertaining these appeals." Further I do not find any ambiguity in the provision to be held in favour of the Assessee. In the present case, the appeal is filed by the Revenue for reversing the order of the Commissioner (Appeals) and to disallow the credit and accordingly the appeal as such is maintainable in my view. Accordingly the appeal is admitted and following the ratio of the decision of Chemo Pulp Tissues, I hold that HSD oil is not eligible input to avail Modvat credit. In the result, the order passed by the Commissioner (Appeals) is set aside and the appeals are allowed accordingly.