CCE Vs. U.T. LTD.

JUDGEMENT

(1.) The respondents were engaged in the manufacture of goods falling under Chapters 68, 84 and 87 of the CETA Schedule and availing the Modvat credit facility under Rules 57A and 57Q of the erstwhile Central Excise Rules, 1944. They stopped production of "self -propelled container pallet transporter" [SPCPT, for short] in October 1996 but continued production of other products including "High Pressure Water Jetting Pump and Accessories" [HPWJP, for short]. When they stopped production of SPCPT, they had in their Modvat account (RG 23A Part II) unutilized balance credit of Rs. 11,87,431.38 in respect of inputs used in the manufacture of that product, which credit they transferred to the Modvat account pertaining to HPWJP. In March 1998, they utilized this credit for payment of duty on HPWJP without taking permission from the jurisdictional Asstt. Commissioner of Central Excise. The department objected to such utilization of the credit which was allegedly barred by the proviso to sub -rule (12) of Rule 57F. The original authority sustained the department's objection and ordered recovery of the amount from the party under Rule 571. That authority also disallowed to the party another credit of Rs. 706.39 on polythene bags on the ground that the input had not been declared under Rule 57G. It, however, allowed yet another credit of Rs. 975.80 to the respondents in respect of lubricating oil (input). In the appeal preferred by the party against the order of the original authority, the Commissioner (Appeals) reversed the decision of the lower authority as regards the Modvat credits of Rs. 11,87,431.38 and Rs. 706.39 and allowed these credits to the respondents. In the present appeal of the Revenue, the challenge is only in regard to the credit of Rs. 11,87,431.38.

(2.) We have heard both sides and considered their submissions. The only ground raised in the appeal and reiterated by the SDR against the utilisation of the above credit for payment of duty on HPWJP in March 1998 is that, as the inputs had been received in the factory and used in the manufacture of one final product before 1.3.1997, credit of the duty paid on the inputs could not be utilized for payment of duty on another final product after the said date 3 on account of the bar contained in the proviso to Sub -rule (12) of Rule 57F. According to the Revenue, the credit would only lapse. The appellant, however, has not said anything, in this appeal, against the reliance placed by the Commissioner (Appeals) on the Tribunal's decision in the cases of Mahindra and Mahindra Ltd. v. CCE, 2001 (127) ELT 247 and Indian Aluminium Co. Ltd. v. CCE, 2001 (137) ELT 1092. The counsel for the respondents has also relied on these decisions. He has also pointed out that the appellant's challenge to the decision taken by the Commissioner (Appeals) following decisions of the higher appellate forum is not to be countenanced. In this connection, counsel has drawn support from the Tribunal's order in Indian Oil Corporation Ltd. v. CCE, 2003 (85) ECC 647 (T) : 2003 (152) ELT 128.

(3.) It was held in Mahindra and Mahindra (supra) that the Modvat Scheme did not envisage one -to -one correlation between input and final product and therefore credit of duty paid on inputs used in the manufacture of one specified final product could be utilized for payment of duty on another specified final product cleared from the same factory. The decision in Indian Aluminium Co.'s case (supra) was also to the same effect. It has been pointed out by Ld. DR that, in the above cases, any provision of law analoguous to the proviso to Sub -rule (12) of Rule 57F had not been considered.