V.P. Gulati, Member (T)
1. This appeal is against the order of the Collector of Central Excise (Appeals), Madras. Brief facts of the case as set out in para 2 of the lower appellate authority’s order is reproduced below :
The facts of the case are that the appellants had availed credit of duties paid in respect of countervailing duty paid earlier to 31-3-1986. Because of this, the Superintendent of Central Excise who is the proper officer under Rule 57(1) ordered them to expunge the credits taken because of the reasons mentioned above. Appellants complied with the direction of the Supdt. but subsequently wrote a letter to the AC stating that they were entitled to provisions of Rule 57H(2). In the impugned order appealed against, the AC rejected their claim under Rule 57H(2). In consequence, the present appeal has been filed.
2. The plea of the appellants before the lower appellate authority was that the appellants were entitled to the benefit of Modvat credit for countervailing duty paid by the appellants in terms of Rule 57H(2) of the Central Excise Rules, 1944 and that since they had taken Modvat credit, the order of the AC turning down their request for availing of this Modvat credit was hit by limitation as the AC’s show cause notice in this regard was beyond the period of six months. The learned lower appellate authority has held as under in this regard:
5. Coming to the other contention, I find that the appellants were ordered by the Superintendent to reverse the credit and they carried out the order without filing any appeal. Whether the order was passed correctly or incorrectly, compliance with the necessary formalities or not complying with such formalities, the order can be vacated only by an appeal. In the absence of any appeal, the order can be vacated at this stage. Further, the order of the Assistant Collector on the same issue was redundant and cannot be maintained. If the appellants had any reason to hold that the order of the Superintendent, which they carried out was wrong, they should have filed an appeal and taken the argument of availability of Rule 57H(2) before the appellate authority. Their writing to the Assistant Collector who is not an appellate authority over the Superintendent’s order and the Assistant Collector’s passing an order on the very same issue is extra-legal. Therefore, the order of the Assistant Collector is vacated. In the absence of any appeal filed even within a period of six months of the extended period, the Superintendent’s order cannot be touched and no appeal can be entertained at this late stage. Therefore, the present appeal is disposed of with the above grounds.
3. The learned Counsel for the appellants pleaded that there is no dispute that the countervailing duty in respect of the goods for which Modvat credit was taken by the appellants was paid prior to 31-3-1986, the cut off date prescribed for the purpose of Modvat credit under Rule 57H of the Central Excise Rules, 1944. He fairly conceded that the appellants may not have a good case so far as the eligibility to Modvat credit is concerned. He however, pleaded that since the appellants had taken Modvat credit the same can be ordered to be reversed only within a period of six months. He pleaded that the appellants originally took the Modvat credit and then reversed it as it was pointed out by the jurisdictional Supdt. that they were not eligible to take Modvat credit and the reversal was done during the period 25-2-1985 to 27-8-1987 and they informed the authorities so and sought for permission again to take this credit in terms of Rule 57H vide their letter dated 7-11-1987. A show cause notice was issued by the AC on 18-2-1988 putting them on notice as to why their request made in this regard should not be denied. The AC vide his order dated 2-9-1988 held that inasmuch as the duty on the goods for which credit was sought to be taken had been discharged prior to 31-1-1986, in terms of Rule 57H(2) the appellants were not eligible to take Modvat credit. He pleaded that it was against this order of the AC that the appellants went in appeal before the Collector (Appeals). The Collector (Appeals) instead of taking cognisance of this order of the AC misdirected himself into holding that the appellants’ grievance should have been against the order of the Supdt. under which he had asked the appellants to reverse the Modvat credit and which they did during the period 25-2-1987 to 20-8-1987 and that the AC was not competent to go into the same issue again. He pleaded that the learned lower appellate authority should have gone into the AC’s order which was an appealable order and entered his findings based on the details in the order.
4. The learned DR adopted the reasoning in the impugned order.
5. We have carefully considered the submissions made by both the sides. We observe that the appellants had earlier taken Modvat credit which the Supdt, felt was not available to them and asked them to reverse the same. The appellants thereafter reversed the Modvat credit and filed an application before the AC vide their letter dated 7-11-1987 for permission to take Modvat credit under Rule 57H(2) in respect of the inputs lying in stock before filing a declaration subject to the satisfaction of the other conditions set out in the rule. We observe that for granting permission to take Modvat credit under Rule 57H(2) only AC is the competent authority under the rule and the appellants’ request was turned down vide his order dated 2-9-1988. The Supdt.’s direction under which the appellants reversed the credit could not be considered as an order in terms of Rule 57H. Rule 57H is a separate provision for taking care of specific contingency and the appellant’s right under this section could not have been legally taken away by the direction of the Supdt. for reversal of the credit, which he felt was not available to the appellants. The appellants filed application on 7-11-1987 before the competent statutory authority for relief in terms of Rule 57H and the order which emerged in the proceedings under Rule 57H was legally appealable order and it is against this order that the appellants approached Collector (Appeals) and the Collector (Appeals) was required to dispose of the appeal taking cognisance of the order of the AC. We, therefore, hold that the learned lower appellate authority’s order is not maintainable in law. We, therefore, set aside the order and remand the matter to the lower appellate authority to pass an order afresh in the light of our above observations. The appeal is thus allowed by remand.