BILWARA SPINNERS LTD. Vs. C.C.E., JAIPUR

JUDGEMENT

(1.) In terms of provisions of Rule 57 A of the Central Excise Rules, 1944, the Govt. of India, Ministry of Finance issued Notfn. No.5/94 -CE (N.T) dt. 1.3.94, in which, they specified the inputs and the end products in respect of which the modvat credit of duty could be availed. this notification was further amended by Notfn. No. 14/98 -CE (NT) dt. 2.6.98, by virtue of which the modvat credit on the specified duties was restricted to 95% for utilisation or for payment of duty on the final products. This amendment further provided that the credit of the specified duty paid in respect of inputs, viz., naphtha, furnace oil, low sulphur heavy stock, light diesel oil, bitumen and paraffin wax falling under Chapter 27 shall be restricted in the case of input products produced or manufactured in India to the extent of amount of excise duty calculated @ 10% ad valorem and in the case of imported inputs to the extent of the amount of additional duty calculated by assuming as if the like input produced or manufactured in India is chargeable to excise duty @ 10% ad valorem. However, under Notfn. No. 60/97 -C.E (NT) dt. 27.11.97, a manufacturer of the excisable goods who imported the above stated petroleum products directly for his own use and received these products in his factory on or after the 27.11.97, was placed outside the purview of the latter provisions. Meaning thereby, that the restriction for availing the modvat credit on the imported petroleum products as specified was not made applicable to a manufacturer who had imported these products directly for his own use and had received them in his factory on or after 27.11.97.

(2.) In the present case, the appellants had directly imported 'Furnace Oil' and received it in their factory before the above date. They availed the modvat credit of Rs.92,411/ - which was equivalent to the full amount of additional duty of customs paid by them on the imported goods. The availment of the modvat credit equivalent to the entire amount of the additional customs duty paid on the imported furnace oil by the appellants is objected to by the Departmental authorities and they issued a Show Cause Notices calling upon them to show cause as to why the availment of the modvat credit should not be restricted to 95% of the additional duty of customs paid on the imported goods in terms of the general provisions of the aforestated notification. On considering the reply of the party, the Asst. Commissioner of Cental Excise, Ajmer vide his Order dt. 21.10.99 held that the proviso inserted vide Notfn. No. 14/97 -CE (NT) dt. 3.5.1997 which restricted the modvat credit on the inputs up to duty calculated @ 10% was amended by Notfn. No. 60/94 -CE (NT) and the specified inputs falling under Chapter 27 when imported directly by the manufacturer for his own use were excluded from the restriction of 10%. Thereby implying that the specific provisions restricting the modvat credit to the extent of 10% were not applicable to the furnace oil imported by the party for his own use. However, it is observed that the exclusion of furnace oil from these specific provisions does not imply that it was also excluded from the general provisions regarding restriction of modvat credit upto 95% of the duty paid. The Asst. Commissioner in his order has also relied on the Board's Circular No. 421/54/98 -CX dt. 10.9.98 which clarified that the specific provision in respect of petroleum products over -rides the general provision in respect of goods specified in the Table to the notification, but since the petroleum products imported directly by a manufacturer for his own use are not covered under the specific provision for petroleum products, therefore, the general provision regarding restriction of modvat credit on inputs to the extent of 95% of the duty paid on such inputs shall be applicable. Consequently, the Asst. Commissioner in his order has disallowed the modvat credit amounting to Rs.92,411.00 taken by the party on imported furnace oil as input during the period from 30.10.98 to 23.2.99 in excess of the credit that was admissable to them and he has further imposed a penalty of Rs.10,000.00 on them under Rule 1730(1) (bb) of Central Excise Rules, 1944.

(3.) The party filed an appeal but the Commissioner of Central Excise (Appeals), Jaipur vide his Order dt. 11.9.2000 rejected the appeal of the party upholding the findings arrived at by the original authority.