BHOR INDUSTRIES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) HEARD learned counsel for the parties. By this writ petition, under Article of the Constitution of India, the petitioner has taken an exception to the Order -in -Original dated 18th June, 1993 passed by the Collector of Central Excise and Customs as well as the order dated 19th October, 1994 passed by the Customs, Excise and Cold (Control) Appellate Tribunal (for short CEGAT). With a view to appreciate the submissions made by the learned counsel appearing for the petitioner, a brief reference to the facts of the case will have to be made.

(2.) THE case of the petitioner is that the petitioner is in the business of manufacturing cotton/man made coated fabrics in its plant at Bhor. The case of the petitioner is that the petitioner has been using as one of the inputs PVC resins and Polyurethane (PU) resins of all grades. According to the petitioner, at any one time, only one grade of resin is used. The petitioner has been permitted to maintain a common combined account for crediting and debiting Resin duty paid on all grades of resins in statutory form RG -23A. According to the petitioner, the utilization of the said duty credit towards payment of duty on coated fabric is without one to one correlation in respect of different Resins. According to the case of the petitioner, it developed a new product of Lacquer based on synthetic polymer by use of PVC Resins in the year 1992. A classification list was filed with the sample. On 24th February, 1992 prescribed declaration of all inputs intended to be used in manufacture of the new product Lacquer based on synthetic polymer (LBSP) was filed. The said declaration provided that apart from other inputs, PVC Resins in different names, grades and numbers will be used as input. For clearance of LBSP manufactured with one grade of PU Resin as one of the inputs, Modvat credit of duty is utilized from common combined account.

(3.) THE learned counsel appearing for the petitioner has taken us through the impugned orders and other documents on record. The learned counsel submitted that the utilization of inputs was started at the end of February, 1992 and during the relevant period i.e. from 26th February, 1992 till 31st May, 1992, various inputs were utilized. He submitted that there was intention on the part of the petitioner to use the inputs of PU resin of various grades other than Grade 5702 and in any case, the said intention cannot be ruled out even though during the aforesaid period which was a short period, the said inputs were not actually used. He submitted that it is nobody's case that the said inputs cannot be used in manufacture of LBSP. He submitted that it is not the case that the inputs of various grades other than Grade 5702 cannot be used. He submitted that the provision of Rule 57F(3)(i) of the said Rules of 1944 could not have been applied. He pointed out that the CEGAT held that there is no bar on the a ailment of accumulated credit on inputs used in manufacture of one product if similar input has been used in manufacture of another product. He submitted that credit cannot be denied on the ground that PU Resin of a different grade has been used in manufacture of LBSP. He submitted that specified input has been used in manufacture of LBSP which is a specified final product and hence the accumulated credit on specified input is available for utilization of duty payable towards LBSP. He placed reliance on circular dated 8th August, 1988 issued by the Central Board of Excise and Customs. He submitted that there is no one to one co -relation of input and final product under the Modvat scheme for utilization of credit and, therefore, the Central Board decided that the excise credit accumulated, if any, can be utilized towards payment of duty on the same final products even if manufactured out of non duty paid inputs. The learned counsel relied upon a decision of the Apex Court in the case of Collector of Central Excise, Pune and others v. Dai Ichi Karkaria Ltd. and Others reported at : (1999) 7 SCC 443 : : 1999 (112) E.L.T. 353 (S.C.). He relied upon a decision of this Court in the case of Bharat Bijlee Ltd. v. Union of India reported at : 2003 (154) E.L.T. 564 (Bom.) which holds that denial of credit on the ground that declaration did not give specific description of the inputs was held to be improper as no format has been prescribed for declarations. He relied upon certain decisions of the Tribunal with a view to persuade the Court to take a view that the recovery ordered is illegal. The learned counsel appearing for the Respondent Nos. 1 and 2 supported the impugned judgment and orders.