ORDER
V.K. Asthana, Member (J)
1. In this Miscellaneous petition from the revenue it is prayed that the operation of the Order-in-Appeal Nos. 107 to 110/98 dated 14.9.1998 is stayed till the issue is decided when the main appeals come up for consideration.
2. Heard Sri R. Victor Thyagaraj, learned SDR, who submits that since the duty was paid on by the SSI units after their production was clubbed and the SSI exemption denied to them by the department, therefore, this is not a case where the credit is sought on any differential duty variation, as against this no duty was paid initially. He submits that Rule 57E provides only for adjustment of differential duty and its scope cannot be extended to cover cases when duties were paid on account of evasion detected by the department. He submits that this is clear from the following wordings of Rule 57E:
If duty paid on any inputs in respect of which credit has been allowed under Rule 57A, is varied subsequently due to any reason….
The learned SDR submits that in this case there was no duty paid on the inputs initially and no credit had been allowed under Rule 57A and, therefore, any payment of duty subsequently after the detection by the department would not qualify to be covered as a subsequent variation under Rule 57E, as the rule clearly stipulates that it covers only those cases where duty is varying, when some amount of earlier credit had been allowed for those consignments. He further submits that originally no duty was paid to the extent that these two units M/s. Metafab and M/s. BKN Metafab were not even registered with the excise authorities.
3. Heard Sri R. Vijayaraghavan, learned consultant for the respondents, who submitted that the issue is already decided by this Tribunal in the case of Ultramarine & Pigments Ltd. v. CCE as which has not been appealed against and, therefore, good law. In the said decision, it has been held as follows:
5. I have given a careful thought to the pleas made by both the sides. There is no dispute that the goods have suffered duty. There is also no plea of limitation. The short point that falls for consideration is whether in terms of the Modvat scheme the appellants would be eligible to take credit when the goods were cleared at nil rate of duty and the duty was subsequently paid as evidenced by the certificate issued by the Range Superintendent. I observe that Rule 57E provides for variation of the credit. In my view, this would also cover the contingency where the goods were originally cleared at nil rate of duty and subsequently the duty is paid in respect of that before the receipt of the goods in the appellants’ factory. At the time when the goods were received in the appellants’ factory. The duty had already been paid. Under the Modvat scheme, the appellant is entitled to take the credit subject to satisfaction of other conditions set out under the Rules. In any case, the goods have suffered duty and there is evidence of payment of duty in the present case, the goods originally were cleared from the factory for export under a gate pass indicating that no duty had been paid for the reason that the same were intended for export. The original gate pass therefore could not have carried the necessary endorsement regarding payment of duty made subsequently. The payment of duty made subsequent to the clearance of the goods from the factory could therefore only be vouchsafed by the certificate of the Range Supdt. and which has been done in the present case. There is also no averment from the revenue that the appellants are not otherwise eligible for the benefit of Modvat credit by reason of any omission regarding compliance with any of the other Modvat Rules incorporated in the Modvat scheme. In view of the above, I hold agreeing with the learned Counsel that the appellants would be eligible to the benefit of Modvat credit as they have established beyond any doubt that the goods had suffered duty and at the time when they were received the evidence of payment of duty existed. In this view, I set aside the order of the learned lower appellate authority and allow the appeal with consequential relief.
The learned Consultant submits that the said decision is clearly applicable in their case inasmuch as that the goods were originally cleared at nil rate of duty and that however, duty was paid subsequently.
4. The learned Consultant also cites the decision of the Tribunal in the case of West Coast Engineering Works v. CCE as , wherein it was held that in a similar circumstance Rule 57E would cover variation in respect of duty paid on flats, consequent on the demand made by the department the matter therein was remanded for consideration of the lower authority.
5. We have carefully considered the rival submissions and records of the case and we find that at this prima facie stage, we need not go into all the details of the rival claims. We are satisfied that in view of the decision contained in the case of Ultramarine & Pigments Ltd. cited supra, wherein the Tribunal has clearly stated that Rule 57E would also be covered by the contingency where the goods were cleared at nil rate of duty, therefore, the similar decision contained in the Order-in-Appeal impugned does not suffer from any serious infirmity, which would compel us to interfere with the same at this prima facie stage. In view of this, we are inclined to reject the stay applications of the revenue. Ordered accordingly.