Full Judgment
2. The facts are not much in dispute. The appellants are engaged in the manufacture of plastic films and plastic printed pouches, etc. They were availing the facility of Modvat credit under Rule 57-A, but vide their letter dated 17-6-98, they informed their jurisdictional range officer that they would be opting out of the Modvat scheme and shall be availing the benefit of Notification 5/98 dated 2-6-98. The Modvat credit involved on the inputs lying in stock and consumed in the finished products in stock, as on 18-6-98 was worked out to be Rs. 2,43,563/- and this amount was debited by the appellants in their PLA and RG 23A Part II register. But later on, the appellants found that their major product was covered by sub-heading 39.20 to which Notification 5/98 did not apply and they again vide letter dated 24-6-98 intimated the Range Office that they were opting to work under the Modvat credit scheme under Notification 9/98. They accordingly took back the credit of the amount previously debited of their own. They were accordingly served with the show cause notice for the recovery of that amount. After getting their reply wherein they alleged that they were competent to take Modvat credit of their own when they re-opted for the Modvat scheme. The Assistant Commissioner confirmed the demand.
The Commissioner (Appeals) has affirmed that order of the Assistant Commissioner.
3. The learned Counsel has contended that on re-option to continue under the modvat scheme, the appellants were entitled to take recredit of the Modvat amount which they initially reversed while, opting out of the scheme and no permission of any authority was required for that purpose. In support of his contention, the Counsel has placed reliance on Uni Deritend Precision Castings v. Commissioner of Central Excise and Customs, Indore - 1999 (112) E.L.T. 593 and Vishakapatnam Steel Plant v. CCES, Vishakapatnam - 2002 (149) E.L.T. 708 (T) = 2002 (52) RLT 818. On the other hand, the learned JDR has reiterated the correctness of the impugned order and relied upon the ratio of the law laid down in Collector of Central Excise, Ahmedabad v. Cadila Laboratories (P) Ltd. 4. I have heard both sides. Admittedly, the appellants of their own opted out of the Modvat scheme and gave intimation in that regard vide letter dated 17-6-98 to the jurisdictional Range Officer. They also of their own, reversed the credit, of the disputed amount which stood at that time in their statutory record. This option was given by them with intent to avail the benefit of Notification 5/98 dated 2-6-98. When they thought that the benefit of that Notification vis-a-vis availment of the Modvat scheme was much less, they again opted for the modvat scheme and sent intimation vide letter dated 24-6-98 to the Department.
Now at the time of exercising this option, they could not take the Modvat credit again by reversing the earlier debit entry of the disputed amount without following the proper procedure. They were required to file a declaration under Rule 57H giving the details of the inputs lying in stock, used in the final product and the inputs in the pipeline. They only filed a declaration under Rule 57G intimating the details of the raw materials and the final products. For availing the benefit under the Modvat credit scheme, they were required to follow the proper procedure. They could not claim the benefit of the Modvat credit without following the procedure. In this context, reference may be made to the ratio of the law laid down in CCE v. Cadila Laboratories P. Ltd. - 2002 (142) E.L.T. 297 (S.C.) (supra) wherein it has been observed that for claiming the benefit proper procedure has to be followed by the assessee.
5. The argument of the learned Counsel that on reoption for the Modvat scheme, the appellants could retake the credit which they reversed earlier cannot be accepted. The Counsel has not been able to point out any provision under which it could be so done by the appellants. The ratio of the law laid down in Uni Deritend Precision Castings v. CCE (supra) referred by the Counsel is not attracted to the facts of the present case. In that case, the assessee preferred two gate passes and debited Rs. 4,026/- in RG 23A Part II and Rs. 295/- in PLA. But both these gate passes were later on cancelled by them due to non-availability of transport. The assessee took the credit of the amount again in the PLA and RG 23A. The Department disallowed the credit. It was under these circumstances, the Tribunal observed that keeping in view the harmonious construction of Rules 57G, 57K, 57E and 57A, modvat credit could not be disallowed. The assessee could himself take the credit. But such is not the position in the present case.
Similarly, the ratio of the law laid down in Vishakapatnam Steel Plant v. CCE (supra) is of no help to the appellants. In that case, the excess credit than required under the amnesty scheme was reversed and on finding the error in calculation of the amount, the credit amount was corrected. In that situation, the Tribunal took the view that no prior permission was required to correct such mistakes. But in the case in hand, the position is quite different. When the appellants exercised the option second time, they were required to follow the proper procedure for taking Modvat credit. Their second option could not said to be in continuation of the first one as the first option of availing the benefit of Modvat credit scheme came to an end when they themselves opted out of it from 18-6-98. At the time of exercising second option, they were required to start afresh under the Modvat scheme and to follow the proper procedure. But they did not do so. They could not of their own take the credit of the amount which they reversed under the earlier option. Therefore, Modvat credit has been rightly disallowed to them. I do not find any illegality or infirmity in the impugned order of the Commissioner (Appeals).
6. Accordingly the impugned order of the Commissioner (Appeals) is upheld. The appeal of the appellant is dismissed.