COMMISSIONER OF CENTRAL EXCISE Vs. GOENKA WOOLEN MILLS

JUDGEMENT

(1.) THE brief facts of the case are that vide Order -in -Original No. 5/Commr/CH. 55/CE/2000, dated 3 -3 -2000, the Commissioner of Central Excise, Shillong, confirmed a duty -demand of Rs. 55,09,430.45 against the respondents herein, and also imposed a penalty of Rs. 1.00 lakh by denying the benefit of Notification No. 19/97 -C.E., dated 11 -4 -1997 vide which the earlier Notification No. 4/97 -C.E. (N.T.), dated 1 -3 -1997 was amended. The Commissioner's Order was appealed against before the Tribunal, which vide its Order No. A -2004/CAL/2000, dated 6 -12 -2000 [2001 (135) E.L.T. 873 (Tri.)] upheld the denial of the benefit of the Notification, but directed re -quantification of the demand by the Assistant Commissioner, after allowing the benefit of Modvat credit on verification of the fact of payment of duty on inputs. The Assistant Commissioner re -quantified the duty by allowing the Modvat credit only to the extent of 43,45,980.00 out of the assessees' claim for credit to the extent of Rs. 77.00 lakh, by observing that the credit of duty paid on the inputs received in the respondents' factory, when their final product was dutiable, but utilized in the manufacture of the final product, which subsequently became exempted, cannot be extended to them. The assessees came up in appeal to the Tribunal once again by filing Appeal No. EDM -258/2003 relying upon the Larger Bench decision of the Tribunal in the case of Ashok Iron & Steel Fabricators reported in 2002 (140) E.L.T. 277 (Tri. - LB), holding that credit availed when the final product was dutiable, is not required to be reversed when the final product subsequently becomes exempt. The decision of the judgment of Hon'ble Kerala High Court in the case of Collector of Central Excise & Customs, Cochin v. Premier Tyres Ltd. reported in 2001 (130) E.L.T. 417 (Ker.), was also relied upon. The assessees' plea was accepted by the Tribunal, which vide its Order No. S -423/A -576/Kol/2003, dated 8 -7 -2003 held that the authorities were not justified in disallowing the credit of duty in respect of inputs lying in stock as on the day of subsequent exemption of final product. Since it was not clear as to whether the quantum of credit claimed by the assessees on inputs received till 5 -6 -1997, had been reduced by the Revenue in respect of the goods lying in stock as on 6 -6 -1997, the Tribunal remanded the matter to the Assistant Commissioner for re -quantifying the demand in the present round of proceedings. The Deputy Commissioner held that the quantum of Modvat credit available to the assessees, had already been correctly computed, and demand so confirmed after appropriation of the pre -deposit, vide Order dated 16 -8 -2002 passed by the Assistant Commissioner, is legally tenable. In doing so, he relied upon the Tribunal's Order in the case of Albert David Ltd. v. Commissioner of Central Excise, Meerut, reported in , wherein it was held that credit taken on inputs utilized in the manufacture wholly exempted goods, is recoverable on application of Rules 57AD and 57AH of the Central Excise Rules (Tribunal's Order was upheld by the Hon'ble Supreme Court in the case reported in 2003 (158) E.L.T. A273 (S.C.). On this basis, the Deputy Commissioner confirmed a demand of Rs. 11,63,450.00, and also ordered appropriation of an amount of Rs. 5.00 lakh paid as pre -deposit, and ordered for recovery of the balance amount of Rs. 6,63,450.00. The Commissioner (Appeals) upheld the Deputy Commissioner's Order. Hence this appeal before this Tribunal.

(2.) ON hearing both sides, without going into the question as to whether, the Deputy Commissioner could apply the decision of the Hon'ble Supreme Court in the case of Albert David Ltd. cited supra, instead of following the Tribunal's Order No. A -576/03, dated 8 -7 -2003 , we find that it is possible to dispose of this appeal on the ground that the judgment of the Tribunal in Albert David is not applicable to the present case for the reason that in the Albert David's case, the period involved was after the introduction of Rules 57AD and 57AH with effect from 1 -3 -2000, whereas in the present case, the period involved is from April to June, 1997. Therefore, the authorities below have wrongly applied the Albert David's decision to this case, where the period was prior to the introduction of the Rules 57AD and 57AH considered by the Tribunal in the case of Albert David Ltd. We, therefore, set aside the impugned Order and remand the case to the adjudicating authority for correct quantification in the light of the above.