MRF LTD. Vs. CCE

JUDGEMENT

(1.) By this appeal the appellants challenge the order in Appeal No. 160/20000 (M -I) dated 23.11.2000 passed by the Commissioner of Central Excise (Appeals), Chennai by which the Commissioner has upheld the order of the lower original authority and rejected the appeal of the appellants holding that demand of expunction of the excess credit amounting to Rs 34,211/ - being the 5% differential credit is correct.

(2.) The brief facts of the case are that the appellants are registered manufactures of Tyers, Tubes and Flaps falling under Chapter 40. They have availed Modvat Credit of the duty on the inputs used in the manufacture of the said final products and used them towards payment of duty on the said products. On scrutiny of the Modvat inputs documents for the period March 1999 to April 1999, the department noticed that the assessee had taken inter alia 100% Modvat Credit of the differential duty paid on the inputs received by them. between 2.6.98 and 27.2.99. In terms of Notification No. 5/94 CE (NT) dated 1.3.94, as amended by Notification No. 14/98 CE (NT) dated 2.6.98, availment of Modvat credit was restricted to 95% of the duty paid on the inputs with effect from 2.6.98. Subsequently another Notification No. 21/99 CE (NT) dated 28.2.99 was issued which superseded Notification No. 5/94 whereby the restriction to avail credit of 95% of the duty was removed. In the instant case, the appellants had originally availed 95% credit at the time of receipt of the inputs into the factory and had also received the said 57 -E certificate towards payment of differential duties on the said consignment of inputs availing credit on the said 57 -E certificate. As the subject goods were received during the period when the 95% credit restriction was in vogue, a show cause notice was issued denying credit over and above 95% under Rule 571 of the CE Rules, 1944 and the show cause notice culminated in the order of adjudication passed by the original authority whereby he has rejected the appeal of the appellants. Aggrieved by the said order the appellants preferred appeal before the lower appellate authority who by the impugned order rejected the appeal and confirmed the order of demand of expunction of the excess credit of Rs. 34,211/ - being the differential credit involved in the case. It is against the said order of the lower appellate authority the appellants have come in appeal.

(3.) Shri Ignatius, learned Counsel for the appellants referred to the grounds of appeal and submitted that the short point for consideration in the present appeal is whether the Modvat Credit of duty paid as per the certificate issued by the Department under rule 57E can be availed fully during the period subsequent to 27.2.99, even through the inputs relating to the said 57E certificate was received period to 28.2.99. he submitted that Notification No. 5/94 CE (NT) dated 1.3.94 was amended by Notification No. 14/99 dated 2.6.98 which restricted the modvat credit on inputs to 95%. This restriction was removed by Notification No. 21/99 CE (NT) dated 28.2.99. he submitted that inputs were received in to the factory during the period between 26.98 and 27.2.99 and they have availed the Modvat Credit to the extent of 95%. He has submitted that when the restriction was removed with effect from 28.2.99 there was no saving clause to protect the same 95% in respect of the inputs received prior to 28.2.99 in the event of differential duty paid on such inputs. he has submitted that the benefit on 5% of credit has been denied to the appellants by the authorities below on the strength of the Trade Notice No. 19/99 dated 28.2.99 issued by the Department. The learned Counsel submitted that Trade Notice cannot over rule the provisions existing at the relevant time inasmuch as there was no saving clause in the law in respect of availment of Modvat Credit on the inputs which were received prior to 28.2.99 and differential duty paid and availed subsequent to 28.2.99. He has also cited the following case laws in support of his plea for allowing the appeal :