BHARAT PETROLEUM CORPORATION Vs. CCE

JUDGEMENT

(1.) The issue involved in this Appeal. Filed by M/s. Bharat Petroleum Corporation Ltd. is whether they were eligible to take the MODVAT Credit under Rule 57H of the Central Excise Rules, 1944 without obtaining of permission from the Assistant Commissioner.

(2.) Shri R. Nambirajan, learned Advocate, submitted that the Appellants manufacture lubricating oils to which MODVAT Credit scheme was made available with effect from 1.3.1994; that they filed a declaration dated 3.3.1994 and 11.3.1994 under Rule 57H(1) of the Central Excise Rules for permission to avail of MODVAT Credit of the duaty in respect of inputs lying in stock and also the inputs contained in the finished goods lying in stock as on 1.3.1994; that on 15.3.1994. 21.3.94, 23.3.1994 and 6.4.1994 they took credit of Rs. 60 lakhs towards the inputs contained in the finished products; that the Commissioner, under the impugned Order, has disallowed the MODVAT Credit and imposed a penalty of Rs. 1 lakh only on the ground that they had taken the credit without permission of the Assistant Commissioner. The learned Advocate, further submitted that in terms of Rule 57H(1) read with Rule 57H(4) they were eligible to take credit of the duty paid on the inputs contained in the finished product; that in the case of Aqueous Victuals Ltd. v. CCE, Kanpur the Appellate Tribunal has held as under: We are not inclined to accept the plea of the learned SDR that the language of Rule 57H, as it stood at the material time provided for the permission of the Assistant Collector. Such a view had been rejected by the Tribunal is several decisions. Though the language used in the said rule is that the Assistant Collector may allow credit as provided for therein. The expression "may allow" does not give that Authority the power to either refuse the said permission without valid reasons or for not deciding the matter within a reasonable time. In fact, in the present case it has to be stated by the learned Counsel that the permission applied for under Rule 57H vide their application dated 25.9.1987 has still not been granted. In the circumstances, if they avail the credit in anticipation of the grant of such permission that cannot be called into question particularly where no decision has been taken refusing the permission by the Assistant Collector. From the facts of the case as come out on record, there are no circumstances warranting the withholding of such permission or refusal. Accordingly and in line with the Tribunal decisions cited before us, we hold the view that the availment of credit in question which had been objected to by the authorities was in order and such denial in the impugned Order calls for no interference by us.

(3.) The learned Advocate, also relied upon the decision in the case of Bajaj Sevashram Ltd. v. CCE Jaipur and contended that in view of these decisions, the credit taken by the Appellant is allowable. He also submitted that the Commissioner has proceeded on the basis that Rule 57H(4) has been amended by Notification No. 18/94 -C.E., dated 6.4.1994 and prior permission is not required only in respect of the claim made under Sub -rule (IB) of Rule 57 -H; that said Sub -rule deals with the cases where credit is claimed in respect of inputs lying in stock as on the date of declaration filed under Rule 57G; that in the present case, they have filed the declaration under Rule 57G on 2.3.1994 and even if the provisions of Rule 57H(1B) apply, credit of duty on the inputs lying in stock is to be allowed. The learned Advocate finally mentioned that initially when the matter was decided by the Assistant Commissioner, he had imposed a penalty of Rs. 10,000/ - only which now in remand proceedings has been enhanced to Rs. One lakh without assigning any specific reasons: that no penalty is imposable as the Appellants, being a Government of India Undertaking, are not guilty of conduct contumacious or dishonest.