ORDER
K. Sankararaman, Member (J)
1. The appellants are manufacturers of aerated waters falling under Chapter 22 of the Central Excise Tariff Schedule. Modvat credit was admissible to the said goods during the period 1-3-1987 to 30-9-1987. They had claimed three refund claims as follows :-
(1) claim for credit of Rs. 1,05,519.20 under Rule 57H on empty glass bottles held on stock on the date of filing the declaration vide their application dated 4-2-1988 which was not included in the first claim;
(2) a claim filed on 19-2-1988 , under Rule 57H for an amount of Rs. 26,250/- representing a consignment of essence received in the factory on 4-3-1987; and
(3) a claim filed on 6-12-1989 for transfer of an amount of Rs. 38,019.74 from RG 23 Part II (held under Rule 56A) and RG 23 A Part II (kept under Rule 57A).
The claim were rejected by the Assistant Collector of Central Excise, Jaipur division. Their appeal to the Collector of Central Excise (Appeals), New Delhi was rejected by that authority with the observation that apart from other grounds for rejection of the credit claims, the Assistant Collector had held that as, with effect from 1-10-1987, aerated water falling under Chapter 22 had been taken out of the purview of Modvat Scheme, transfer of balance from RG 23 to RG 23A Part II as well as two claims under Rule 57H are not admissible. He had then held that the Assistant Collector had correctly disallowed the credits the sanction of which would have been meaningless after the finished product was taken out of the Modvat scheme.
2. We have heard Shri M.P. Dev Nath, learned Counsel and Shri Mewa Singh, learned Senior Departmental Representative and perused the record. We find that, as recorded above, the Collector (Appeals) has not passed a speaking order disposing of the matter on merits. He has only stated that the Assistant Collector had correctly disallowed the credits and gone on to observe that the sanction would have been meaningless after the finished product was taken out of the Modvat Scheme. The last observation does not represent the correct legal position. Though aerated water became excluded from the Modvat Scheme with effect from 1-10-1987 the effect of that could only be that from that date credit could not be earned on inputs received after that date. Such a view was taken in the case cited in the appeal as Collector v. Shri Sarvaraya Sugar (Batting Unit) Ltd. -1992 (59) E.L.T. 125 (Tribunal) as also other cases e.g. Triply Drinks v. Collector of Central Excise -1993 (63) E.L.T. 101 and Pearl Drinks (P) Limited v. Collector of Central Excise -1993 (68) E.L.T. 209. Further, as regards the credit of duty which was due to them for the receipts of inputs in the period prior to the said date and which had been received prior to their filing of declaration it was to be decided on merits with reference to the provisions of the relevant sub-rules of Rule 57H of Central Excise Rules. The Assistant Collector had disposed of the matter against the appellants taking the stand that they should have claimed the credit under Rule 57H at the time of their filing of their first claim. He took the view that Rule 57H refers to transitional provisions which apply when the assessee files the claim for the first time and not for a subsequent claim. While we agree with the contention raised in the appeal that the said Rule itself does not contain any such condition, it nevertheless provides that credit may be allowed by the Assistant Collector in respect of duty paid on inputs received by a manufacturer immediately before obtaining the dated acknowledgement of the declaration if he (the Assistant Collector) is satisfied that such inputs are lying in stock or are received in the factory on or after 1-3-1987 or that such inputs are used in the manufacture of final products cleared from the factory on or after 1-3-1987 and that no credit had been taken by the manufacturer in respect of such inputs under any other rule or notification. We find that though the Assistant Collector has rejected the claim on grounds which are not valid, the admissibility of the claim has to be decided subject to their establishing that the conditions referred to above and contained in Rule 57H were satisfied. As regards the Modvat credit on the bottles used for filling the aerated waters, we note that there was some doubt in this regard and the clarification that it was admissible for bottles used for aerated waters assessable on specific rate of duty came to be issued only after a few months after the extension of Modvat credit to aerated waters in March 1987. Because of this also, the delayed submission of their application under Rule 57H for the glass bottles has to be condoned and their claim considered on merits. We also find from the Assistant Collector’s order that the glass bottles had been sent by manufacturers thereof, not to the appellants, but to M/s. Glass and Ceramic Decorators who affixed ceramic labels thereon and supplied them to the appellants after making an endorsement on the Gate Passes. Such endorsements in Gate Passes in favour of Manufacturers availing goods covered by the Gate Passes are made by the party in whose name the Gate Passes are issued if they transfer the goods in their entirety. Here the bottles which were sent to the other party had been unpacked by them for affixing the ceramic labels and thereafter they were sent to the appellants. It was really a case which required to be regulated under Rule 57F(3) and the affixing of the labels was by way of a jobwork. Necessary permission should also have been applied for by the appellants for the receipt of the goods directly by the job-worker for applying the ceramic labels and despatching labelled bottles to them. The Assistant Collector had not made that ground the basis of his decision for rejection of their claim. No such plea had also been raised by the department in a cross objection while resisting the appeal by the assessee. The objection had been raised only on the ground that the application under Rule 57H for credit of duty in respect of bottles had not been filed along with their original application under that Rule and that the bottles were not received in original packing. The former objection has got no statutory support as has been held by us already. As regards the latter objection such a course is not possible when the bottles have to be unpacked for the purpose of affixing the ceramic labels. In the circumstances of the case, we are of the view that these aspects are to be ignored and the case regulated with reference to the requirement of Rule 57H. We accordingly allow the appeal by remand to the jurisdictional Assistant Commissioner for de novo decision on merits after hearing the appellants afresh taking note of our aforesaid observations.