COMMISSIONER OF CENTRAL EXCISE Vs. PRESTIGE WIRES

JUDGEMENT

(1.) HEARD both sides.

(2.) THE respondents herein were availing of Modvat credit on certain inputs for utilisation in their final product, super enamelled wire and bare copper wire prior to 1 -4 -1996. They intended to avail of the benefit of full exemption under Notification 1/93 -C.E., dated 1 -4 -1996. Therefore, they surrendered their licence to the Central Excise authorities which was kept hanging by the authorities stating that they would have to verify the position. Consequently, a letter dated 25 -6 -1996 was issued to the respondents herein on the strength of the provisions of Rule 57H(5) stating that the credit taken by them on inputs lying in stock with them or on inputs contained in finished goods lying in stock with them on 31 -3 -1996 to the tune of Rs. 17,558.64 should be paid first by them through PLA. Then alone their registration certificate shall stand cancelled otherwise it will not be cancelled. The respondents herein did not follow the direction in the said letter dated 25 -6 -1996. Hence a show cause notice was issued asking the appellants to show cause as to why the recovery of credit of duty paid on inputs lying physically in stock as also contained in finished goods lying in stock on 31 -3 -1996 to the tune of Rs. 17,034.58 be not recovered from them. The adjudicating authority on adjudication confirmed the aforesaid amount of recovery. The respondents herein, however, succeeded before the lower appellate authority. The said authority has observed as follows : -

(3.) CONTENTION of the Revenue is that the credit of duty availed of by the respondents and lying in stock as also the credit of duty paid on inputs contained in finished goods lying in stock as on 31 -3 -1996 is required to be paid by the respondents on opting out of the Modvat scheme to the full exemption scheme. Contention of the Revenue is not incorrect so far as the credit of duty paid on the aforesaid inputs is required to be retrenched on opting out of Modvat scheme and switching over to the full exemption scheme. Question in this appeal involved is whether this retrenchment of credit has to be done from the credit account if any balance is lying in the said credit account in the RG23A/Pt. II or it is required to be paid by the appellants from PLA alone. On this point there can be no two opinions. If there is a balance lying in the credit account, credit of duty on the inputs lying in stock or on the inputs contained in finished goods is to be retrenched from the RG23A/Pt. II if there is sufficient balance. In case sufficient balance is not available then the assessee would have to pay the amount from the PLA. In the present case there is no dispute that sufficient balance was available in the credit account of the respondents herein. Therefore, to force the respondents to pay the amount on retrenchment of credit on such inputs, as aforesaid, is totally against the provisions of law as contained in Rule 57H(5). Consequently, there is no substance in Revenue's appeal. Hence, I dismiss the same.