CCE, CHANDIGARH Vs. MODI SALES

JUDGEMENT

(1.) THE respondents availed modvat credit of Rs. 53,145/ - and Rs. 31,381/ - during the periods from 1.7.1998 to 31.10.1998 & 1.11.1998 to 24.2.1999 under Rule 57 -A of the Central Excise Rules, 1944. The modvat credit is availed on the input item viz., Residue Fuel Oil (RFO). On scrutiny of their records, the Central Excise authorities observed that they had taken/utilised the modvat credit on the RFO falling under sub -heading 2713.30 in excess by the aforesaid amounts and therefore these amounts were liable to be recovered from them under Rule 57 -I. Accordingly, the proceedings were initiated against them and the Asst. Commissioner of Central Excise, Ludhiana vide his two Orders both dated 17.11.1999 confirmed the demands of Rs. 53,145/ - and Rs. 31,381/ - on them. The Asst. Commissioner in his order observed that in terms of the proviso to Notfn. No. 5/94 -CE(NT) dt. 1.3.1994 as amended by Notfn. No. 14/97 -CE(NT) dated 3.5.1997, the credit of specified duty paid in respect of petroleum products namely Naptha, Furnace Oil, Low Sulphur Heavy Stock, Light Diesel Oil, Bitumen and Parafin Wax falling under Chapter 27 and used in the manufacture of final products has been restricted to the extent of amount of excise duty calculated at the rate of 10% adv. The Asst. Commissioner in his order has observed that the Residue Fuel Oil (RFO) is nothing but Low Sulphur Heavy Stock and the modvat credit in terms of the aforesaid notifications is restricted on this item to the extent of 10% Adv. The party filed an appeal and the Commissioner (Appeals), Chandigarh vide his Order dated 14.9.2001 observed that since RFO is not specifically covered under the notifications as mentioned above, the appellants are entitled to the modvat credit taken by them on full rate on payment of duty as shown in the relevant invoices on the strength of which the appellant availed modvat credit. He further observed that the same view was taken in an earlier order in Appeal No. 887/CECHD/98 dated 6.11.1998 and it had been accepted by the department.

(2.) THESE are the revenue appeals against the impugned order of the Commissioner (Appeals). I have heard Shri H.C. Verma, JDR for the appellants and Shri K.I. Mathew, an employee of the respondents authorised by them. In the revenue appeal, it is contended that in trade parlance LSHS is also known as RFO. It is contended that LSHS (Low Sulphur Heavy Stock) is covered under Notfn. No. 5/94 -CE(NT) dated 1.3.1997 as amended by Notfn. No. 14/97 -CE(NT) dated 3.5.1997 on which modvat credit to the extent of excise duty calculated at the rate of 10% Adv. alone is admissible. It is therefore contended that the modvat credit of Rs. 53,145/ - and Rs. 31,381/ - taken/utilised by the party in excess of amount of excise duty calculated @ 10% Adv. during the relevant periods is not admissible to them. I see no force in this submission. Firstly, there is no evidence relied upon by the revenue in their appeal which would support their contention that in trade parlance LSHS is also known as RFO. Secondly, even if it is so since it is only LSHS on which the modvat credit is restricted by virtue of the (sic) notifications, the RFO may not be brought within their scope since such notifications have to be construed strictly as per the well established dictum of law for the interpretation of statutory notifications. The appeals are thus dismissed.