MARDIA CHEMICALS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) APPELLANT is a manufacturer of S.O. dyes and clears the same for exports and availed the benefits of Customs duty free import of inputs under Value Based Advance Licence Scheme (VABAL) in terms Notification No. 203/92 -Cus. dt. 19.5.92 and under Quantity Based Advanced Licence Scheme (QBAL) in terms of Notification No. 204/92 -Cus. dt. 20.5.92. One of the conditions of VBAL Scheme is that the importer could not avail benefit of modvat credit of the CVD paid on the imported inputs. Inasmuch as the appellants was availing the modvat credit in respect of all the inputs brought in their factory and was not reversing the same in respect of goods exported under VBAL, investigations were started against them. In fact during relevant period, modvat credit was being availed by the exporters throughout the country. Subsequently, Govt. of India in or around July 1995 took a decision that modvat credit in all such cases should be got reversed on or before 15th July 1995. In view of the above directive, appellants jurisdictional Central Excise Authorities made the appellant reverse the credit amount of Rs. 1,82,88,375/ - (Rupees one crore eighty two lakhs eighty eight thousand three hundred seventy five only). However the appellant subsequently realized that the credit involved in respect of exports made under VBAL Scheme was only to the extent of Rs. 99,15,456/ - (Rupees Ninety Nine Lakhs Fifteen Thousand Four Hundred Fifty Six only) and they have reversed an extra amount of Rs. 83,72,919/ - (Rupees Eighty Three Lakhs Seventy Two Thousand Nine Hundred Nineteen only) which was in respect of exports made under QBAL and did not require any reversal. Accordingly, after writing a letter dt. 21.11.95 to the Assistant Commissioner, they recredited the excess amount in their R.G.23A Part II Account.

(2.) IT is this amount of credit, which is the subject matter of dispute. The matter was earlier remanded by the Tribunal with directions to the appellant to produce the evidence before the Commissioner showing co -relation of inouts to Value Based and Quantity Based exports. The Commissioner in his impugned order has observed that the appellant had not been able to demonstrate that the disputed amount of credit was in connection to quantity based exports and have expressed their difficulty to produce such documents. They have only produced chart of their value based exports and have claimed that the rest of the exports be assumed to be quantity based. As such, Commissioner has not found any reasons to hold that the credit pertained to quantity based exports. Accordingly, he confirmed the amount in terms of Rule 57I of Central Excise Rules read with Sub -section 11A of CEA, 1944, along with confirmation of interest. He also imposed penalty of Rs. 20 lakhs (Rupees Twenty Lakhs only) on the appellant under Rule 173Q. The said order is impugned before us.

(3.) SHRI Naresh Thacker Ld. Advocate appearing for the appellant fairly agreed that the appellant is not in a position to produce documentary evidence showing quantity based exports but submits that in any case and in any view of matter the modvat credit, which was otherwise due to them, cannot be asked to be reversed by the authorities. The reversal of the same was one of the conditions for availing the benefit of notification No. 203/92 -Cus. and if the credit has been availed, it is the exemption which could be denied. For the above preposition he places reliance on the Tribunal's decision in the case of Steelco Gujarat v. CCE, Vadodara .