Allowed

M/s.oblum Electrical Industies Prt Ltd. v. Commissioner of Central Excise

Telangana HC5 Mar 2014CERC/15/2003

Case brief

AI extract

What is this about?

The Supreme Court allowed the central excise reference filed by the manufacturer to the Supreme Court on four questions of law pertaining to the prospectivity of Rule 57-G(2) amendments regarding Modvat credit. The Court relied on the Osram Surya judgment approving the Kusum Ingots precedent before directing the tribunal to refer the matter.

What did the court decide?

The Central Excise Reference case is allowed. The Tribunal is directed to refer the questions of law and forward necessary papers.

M/s.oblum Electrical Industies Prt Ltd. Vs Commissioner… — Customs and Excise | Telangana HC (2014)

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THE HON’BLE SRI JUSTICE G.CHANDRAIAH AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM

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C.E.R.C.NO.15 OF 2003

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O R D E R (Per the Hon’ble Sri Justice Challa Kodanda Ram)

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This central excise reference case filed under Section 35(H)(1) of the Central Excise Act, 1944 seeks reference of following four questions of law said to be arising from the orders of the Customs, Excise and Gold (Control) Appellate Tribunal, South Zonal Bench, Bangaluru (‘CEGAT’) :

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1. Whether the notification No.28/95-CE(NT) dated 29.6.1995 is prospective in operation so as to disallow the Modvat credit on the goods and documents received anterior to the said notification.

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2. Whether benefit of claiming Modvat credit available to the appellant can be restricted or taken away by imposing time limits by amendment to Rule 57-G(2) made under the aforesaid notification much after the goods and documents were received by the appellant.

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3. Whether the beneficial right of the appellant for availing Modvat credit accruing as per the law prevailing on the date of receipt of the goods and documents can be curtailed by imposing time limit or otherwise by subsequent amendments made to the rules.

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4. Whether the Larger Bench judgment of CEGAT in case of KUSUM INGOTS & ALLOYS [1] LTD v. COMMISSIONER OF C.EX.INDORE is not contrary to the other two Full Bench judgments of CEGAT, in the matter of TATA ENGG. LOCOMOTIVE COMPANY [2] v. COLLECTOR as well as in the matter of COLLECTOR OF CUSTOMS & [3] CENTRAL EXCISE v. J.K. SYNTHETICS LTD . , especially as the ratio of the said above two Full Bench judgments were not applied in the latest Full Bench Judgment.

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2. Brief facts of the case are that the appellant is the manufacturer of lightening arresters. In the year 1995, it had imported certain material and filed relevant bills of entry on 21.2.1995, 28.2.1995, 22.2.1995 and 24.3.1995 and had taken credit under Rule 57-G(2) of the Central Excise Rules, 1944 (for short ‘the Rules’) and the same were entered into RG 23A Part-I register on 15.3.1995, 17.3.1995 and 31.3.1995. However, it had utilised the credit in the year 1996 and made necessary entries in Part-II of 23A register on 27.7.1996. Show cause notice was issued for alleged wrongful availment of credit to the tune of Rs.8,00,760/-, on the ground that amended second proviso inserted to sub rule (2) of Rule 57-G of Rules, with effect from 29.6.1995, had prohibited taking of credit after six months from the date of issue of any of the documents specified in the first proviso to the said sub rule.

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3. The assessee appealed before the Commissioner and the Tribunal, which ended up in dismissal. Before the Tribunal, the assessee – appellant could

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not appear, but the Tribunal had refused to grant time and dismissed the appeal filed by the appellant recording that the matter is covered by judgment of the Larger Bench in the case of Kusum Ingots (1 supra).

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4. A close scrutiny of the above judgment, which now stands approved by the judgment of the Supreme Court in OSRAM SURYA (P) LTD. v. COMMISSIONER OF CENTRAL EXCISE, INDORE^[4] , would reveal that the amendment by insertion of second proviso to sub rule (2) of Rule 57, is held to be prospective. The Hon’ble Supreme Court in the case of Osram (4 supra), had categorically held that the operation of new inserted proviso to Rule 57 (G)(2) only restricts taking of credit after six months, but does not deprive availing of credit already earned.

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5. In the light of the authoritative pronouncement of the judgment of the Supreme Court approving Kusum Ingots case (1 supra), we deem it appropriate to direct the Tribunal to refer the questions of law and forward the necessary papers after duly complying with the procedure prescribed.

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6. The Central Excise Reference case is allowed accordingly. No costs.

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7. Miscellaneous petitions pending if any, stands closed.

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------------------------------------G.CHANDRAIAH,J

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-------------------------------------CHALLA KODANDA RAM,J

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Date:05—03—2014

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AVS