Cce Vs. Indian Organic Chemicals Ltd. - Court Judgment

Excerpt:
1. all these revenue appeals which arise from a common order-in-appeal no. 200 to 206 dt. 26.8.1994 are taken by this common order as the issues are common and are well covered by the decision of the tribunal and the hon'ble supreme court.2. we have heard ld. dr shri s. kannan for the revenue who reiterates the grounds in the revenue appeal and submits that he could not, locate any decision of the larger bench on this issue nor he has any information whether the issue is pending before the larger bench as was recorded in the note sheets earlier when this matter came for consideration.3. ld. consultant shri c. chidambaram for the respondents submits that there is no larger bench decision on this issue, nor to his knowledge any such matter is pending decision before the larger bench. he submits that the issue is well covered by the tribunal decision in the case of orissa synthetics ltd. - and reliance industries-1995 (59) ecr 395, wherein the ld. member had held that in respect of inputs used in the manufacture of final products claimed under bond for export purposes in terms of rule 191b/191bb, the benefit of proviso to rule 57f(3) was available for removing such goods for eventual use and thereafter export of the goods under these rules could not be considered to be used in final products which was exempted from whole of duty or chargeable to nil rate of duty and in such circumstances, mod-vat credit on the inputs could not be denied as has been contended by the revenue in these appeals.4. revenue has taken the plea that the case of orissa synthetics ltd. (supra) relied on by the collector (appeals) has not been accepted by the department and a reference application has been filed and the decision of m/s. hindustan aluminium corporation when read with ministry's letter f. no. 211/2/73 cx6 dated 3.4.1975 in the present case, the benefit as arrived at by the ld. collector (appeals) would not be available.5. the first proviso to rule 57f(3) provides that credit involved on final products cleared for export and goods removed under rule 57f(2) and subsequent export can be used for payment of duty and as per this proviso credit involved on final products cleared to 100% eou free trade zone can be similarly used. there is no provision in the said rule for similar usage in respect of goods cleared for home consumption under rule 191bb and therefore the credit involved should lapse/be expunged.6. as the goods have been cleared to an advance licence holder for procurement of duty free intermediate products and therefore no credit on the inputs used was admissible and the order of collector (appeals) to this effect that rule 191bb and notification issued thereunder laid down regress procedure was not relevant in this case. the board has instructed that intermediate advance licence holder would not be entitled for modvat credit on such indigenous raw material used by him and a trade notice has been issued to that effect and since the party themselves has expunged the credit, the dispute whether such proportionate credit was to be expunged now well settled and even assuming that clearances in terms of rule 191bb can be considered as clearances for export under rule 57f(3) credit involved can only be made for payment of duty on similar final products and cash refund cannot be possible.7. we have considered the grounds in appeal and submissions made by ld.dr and the ld. consultant and after considering the same find (a) the goods have been admittedly used in the manufacture of final product which has been eventually exported. there is no finding and or allegation or submission in grounds taken, that the goods cleared from the factory of manufacture, under rule 19ibb have been diverted elsewhere then eventual use in the product which has been exported. therefore, present appeal is found to be based on a presumption. when we find that in the case of orissa synthetics ltd. and reliance industries (supra), the matter has been settled. we find no reason to come to a different conclusion and would hold that the modvat input credit would be eligible for goods which are removed under rule 191b/191bb for eventual export from the premises where they were removed under the subject goods. for coming to this conclusion, we rely on hindustan paper mills ltd. wherein the supreme court had held that goods which are eventually exported are not exempt goods. we also rely upon the decision of the tribunal in the case of cce v. steelco gujarat ltd. reported at wherein the words "exempt from whole of duty of excise on goods chargeable to nil rate of duty within the meaning of modvat rules" has been examined and determined. we find that the above view has been reiterated in the case of reliance industries ltd. reported in 1999 (34) rlt 215 by the wzb relying on earlier decision of reliance industries ltd.- and orissa synthetic ltd and other case laws. therefore, we find that the issue is no longer res integra. (b) when we find that input credit cannot be denied, we cannot deny the same merely because certain advance licences under some other scheme have been obtained by the assessee. if those advance licences are impugned, the action would be available to deny them benefit under those licence. since we find that under the modvat rules credit in this case cannot be denied, therefore we do find any grounds as taken by revenue in this appeal to induce us to deny the benefit available to the assessee under the statutory rules.8. in view of our findings, the revenue appeals are rejected. the order of the lower authority is confirmed.

Judgment:
1. All these Revenue appeals which arise from a common order-in-appeal No. 200 to 206 dt. 26.8.1994 are taken by this common order as the issues are common and are well covered by the decision of the Tribunal and the Hon'ble Supreme Court.

2. We have heard Ld. DR Shri S. Kannan for the Revenue who reiterates the grounds in the revenue appeal and submits that he could not, locate any decision of the Larger Bench on this issue nor he has any information whether the issue is pending before the Larger Bench as was recorded in the note sheets earlier when this matter came for consideration.

3. Ld. Consultant Shri C. Chidambaram for the respondents submits that there is no Larger Bench decision on this issue, nor to his knowledge any such matter is pending decision before the Larger Bench. He submits that the issue is well covered by the Tribunal decision in the case of Orissa Synthetics Ltd. - and Reliance Industries-1995 (59) ECR 395, wherein the Ld. Member had held that in respect of inputs used in the manufacture of final products claimed under bond for export purposes in terms of Rule 191B/191BB, the benefit of proviso to Rule 57F(3) was available for removing such goods for eventual use and thereafter export of the goods under these Rules could not be considered to be used in final products which was exempted from whole of duty or chargeable to Nil rate of duty and in such circumstances, mod-vat credit on the inputs could not be denied as has been contended by the Revenue in these appeals.

4. Revenue has taken the plea that the case of Orissa Synthetics Ltd. (supra) relied on by the Collector (Appeals) has not been accepted by the department and a reference application has been filed and the decision of M/s. Hindustan Aluminium Corporation when read with Ministry's letter F. No. 211/2/73 CX6 dated 3.4.1975 in the present case, the benefit as arrived at by the Ld. Collector (Appeals) would not be available.

5. The first proviso to Rule 57F(3) provides that credit involved on final products cleared for export and goods removed under Rule 57F(2) and subsequent export can be used for payment of duty and as per this proviso credit involved on final products cleared to 100% EoU free trade zone can be similarly used. There is no provision in the said Rule for similar usage in respect of goods cleared for home consumption under Rule 191BB and therefore the credit involved should lapse/be expunged.

6. As the goods have been cleared to an advance licence holder for procurement of duty free intermediate products and therefore no credit on the inputs used was admissible and the order of Collector (Appeals) to this effect that Rule 191BB and notification issued thereunder laid down regress procedure was not relevant in this case. The Board has instructed that intermediate advance licence holder would not be entitled for modvat credit on such indigenous raw material used by him and a Trade Notice has been issued to that effect and since the party themselves has expunged the credit, the dispute whether such proportionate credit was to be expunged now well settled and even assuming that clearances in terms of Rule 191BB can be considered as clearances for export under Rule 57F(3) credit involved can only be made for payment of duty on similar final products and cash refund cannot be possible.

7. We have considered the grounds in appeal and submissions made by Ld.

DR and the Ld. Consultant and after considering the same find (a) the goods have been admittedly used in the manufacture of final product which has been eventually exported. There is no finding and or allegation or submission in grounds taken, that the goods cleared from the factory of manufacture, under Rule 19IBB have been diverted elsewhere then eventual use in the product which has been exported.

Therefore, present appeal is found to be based on a presumption.

When we find that in the case of Orissa Synthetics Ltd. and Reliance Industries (supra), the matter has been settled. We find no reason to come to a different conclusion and would hold that the modvat input credit would be eligible for goods which are removed under Rule 191B/191BB for eventual export from the premises where they were removed under the subject goods. For coming to this conclusion, we rely on Hindustan Paper Mills Ltd. wherein the Supreme Court had held that goods which are eventually exported are not exempt goods. We also rely upon the decision of the Tribunal in the case of CCE v. Steelco Gujarat Ltd. reported at wherein the words "exempt from whole of duty of excise on goods chargeable to Nil rate of duty within the meaning of modvat Rules" has been examined and determined. We find that the above view has been reiterated in the case of Reliance Industries Ltd. reported in 1999 (34) RLT 215 by the WZB relying on earlier decision of Reliance Industries Ltd.- and Orissa Synthetic Ltd and other case laws. Therefore, we find that the issue is no longer res Integra.

(b) When we find that input credit cannot be denied, we cannot deny the same merely because certain advance licences under some other scheme have been obtained by the assessee. If those advance licences are impugned, the action would be available to deny them benefit under those licence. Since we find that under the modvat Rules credit in this case cannot be denied, therefore we do find any grounds as taken by Revenue in this appeal to induce us to deny the benefit available to the assessee under the statutory Rules.

8. In view of our findings, the revenue appeals are rejected. The order of the lower authority is confirmed.