ORDER
S. Kalyanam, Member (J)
1. This appeal is directed against the order of the Collector Central Excise (Appeals), Madras, dated 28th July, 1989 confirming the order of Assistant Collector, Bangalore, dated 8-4-1989 and rejecting the appellants’ claim for transfer of credit from the appellants’ first factory at Bangalore as on 19-3-1987 after the same was shifted and another factory was started at Nanjangud.
2. Shri Sampath, the learned counsel for the appellants submitted that the appellants had their factory at Bangalore, which he wanted to shift to Nanjangud, and accordingly sought the permission of the authorities on 19-3-1987 and again on 8-2-1988 applied to the authorities for transfer of the credit that stood in balance at the Bangalore unit in the RG. 23 A/c. to Nanjangud, where the factory was shifted. Permission for shifting of the factory was accorded and the authorities also checked the raw materials and plant and machinery, but the authorities did not allow the transfer of the credit from the RG. 23 A/c. of Bangalore factory to Nanjangud. The learned counsel submitted that even though there was no specific provision of such transfer, Rule 57F(6), which came to be amended on 6-10-1988 by issue of Notification 28/88 permitting such transfer of credit, should be construed only clarificatory of the position which existed earlier. He placed reliance on the ratio of the ruling of the Bench in the case of
Indian Aluminium, 1988 (38) E.L.T. 369,
and urged that in that case Rule 57A was construed in a liberal way so as to take within its ambit the inputs captively consumed by the factory being eligible to MOD VAT credit even though the amendment in regard to the same came into operation from 15-4-1986. Finally, the learned counsel made a fervent plea that there is no change of the manufacturer except shifting of the place and that too with the consent of the authorities more for the technical requirement of jurisdictional control and, therefore, the credit available in the original factory should be permitted to be transferred intact and in toto into the shifted factory in the factual background of this case on grounds of law and also on grounds of equity and justice.
3. Heard Shri Jayaseelan, the learned D.R.
4. We gave our anxious consideration to the plea urged before us. Indeed we should confess the argument of the learned counsel prima facie is indeed arrestive and attractive too but Rule 57F(6) was amended only on 6-10-1988 by notification 28/88 expressly incorporating a provision permitting such transfer of credit from one factory to another factory whenever there is shifting. This cannot be construed to be a part of the procedural law to be made retractive. It would be seen that accumulation of credit is actually utilised in the discharge of the assessee’s duty liability and is almost akin to payment in cash. When the factory itself is shifted to some other place, a statutory authority functioning within the four corners of a statute, would not have jurisdiction to accord any permission for transfer of such unutilised credit which existed in the earlier factory unless a specific power is given under the statute or a source of such power is traceable in any provision of the statute. Transfer of credit deals with the substantive right of a person for discharge of duty liability and an amendment in the statutory provision in regard to such substantive right cannot be construed to be operative retrospectively in law unless it is made expressly clear or such an inference is irresistible by necessary implication. The ratio of our ruling in the Indian Aluminium case will not have any relevance in the context of the issue to be decided in this case, because in that case the Bench was concerned only with reference to the procedural aspect in regard to use of inputs for captive consumption and the input was notified under Rule 57A extending MOD VAT credit to the same. We, therefore, for the above reasons uphold the impugned order appealed against and dismiss the appeal.
V.P. Gulati, Member (T)
5. I observe that at the relevant time Rule 57F as it existed provided for the utilisation of the MODVAT credit by specific mention thereunder that the inputs had to be used in relation to the manufacture of the finished product in the factory into which these were brought under the MODVAT Scheme for the purpose of manufacture of finished product and the credit could be utilised for payment of duty in respect of the final products manufactured in the factory or for payment of duty towards the inputs taken out of the factory. It is seen the whole scheme as it existed at the relevant time provided for the operations within a factory and even the inputs which were brought within the factory on being taken out could not be removed without payment of duty for whatever purpose and these had to be treated as manufacture of the said factory even though these had been manufactured in other units. In this context, therefore, it would appear that there was no flexibility provided for transfer of the credit from a licensed unit to another unit. The learned counsel fairly concedes that in case where a manufacturer has more than one factory even though manufacturing the same goods with the same inputs, the credit cannot be transferred to one unit to the other unit. In this background, therefore, unless there was a exception provided under the Rules for the transfer of the MODVAT credit from a unit which was existing at once place to a unit if it was shifted to another place the MODVAT credit could not be transferred. For the purpose of Central Excise each factory is treated as a separate entity and it is this entity which has to be taken into reckoning for the purpose of operation of the MODVAT Scheme. In the present case, therefore, Rules did not provide, for the transfer of MODVAT credit as pleaded and the appellant’s prayer has to be disallowed.