GODAVARY ELECTRICAL CONDUCTORS Vs. COLLECTOR OF C. EX.

JUDGEMENT

(1.) THESE two appeals are against the order of Collector of Central Excise (Appeals) and involve common issue. They are therefore taken up together for disposal.

(2.) THE short question that falls for consideration in the appeal is whether the inputs which were cleared from the manufacturers' end under Notification 208/83 without payment of duty could be taken to be eligible for the benefit of MODVAT Credit under Rule 57G(2) in terms of Government of India order allowing deemed credit in respect of the goods falling under Tariff Heading 7213.90 purchased from the market. The learned Collector (Appeals) has held that inasmuch as the goods did not suffer any duty, in terms of this order under Rule 57G(2), no MODVAT Credit can be taken. Rule 57G(2) for the purpose of convenience is reproduced below :

(3.) THE learned Counsel pleaded that Rule 57G(2) proviso envisages that the goods should not have been paid nil duty for the purpose of availing the benefit of MOD -VAT Credit in terms of the instructions issued under the said Rule. He pleaded that in their case the goods which were brought as inputs had been cleared under an exemption notification and being wholly exempt can be taken to be duty paid goods and could not be taken to have been cleared on payment of nil rate of duty. In this context he relied upon the decision of the West Regional Bench in the case of Arun Auto Spring and Manufacturing v. Collector of Central Excise and Customs, Rajkot, reported in 1990 (48) E.L.T. 543 (Tri.). He referred to para 10 of the said order. He pleaded that the Tribunal in that order has clearly held that where the inputs were exempted, these were eligible for the benefit of MOD VAT Credit, as these could not be considered as having been cleared on payment of nil rate of duty. He also referred to order of this Tribunal in the case of Rapsri Engineering Industries Pvt. Ltd. v. CCE, reported in 1989 (43) E.L.T. 577. He pleaded that in the light of the decision of the West Regional Bench, the appeal has to be allowed.