ORDER
V.K. Agrawal, Member (T)
1. M/s. P & B Pharmaceuticals (P) Ltd. have come in Appeal against the order in appeal, dated 22-4-1994 passed by the Collector (Appeals) in which the Collector (Appeals) has disallowed the higher notional credit in respect of bulk drugs.
2. When the matter was called none was present on behalf of the Appellants in spite of notice to them as well as their counsel.
3. We heard the ld. D.R. and perused records.
4. The Appellants manufacture pharmaceutical products and availed Modvat credit on bulk drugs. At the relevant time rate of duty applicable to bulk drugs was 5% under Notification No.31/88. The Appellants have purchased bulk drugs from SSI units availed and higher notional credit of 5% under Rule 57B read with the Notification No. 175/86. Both the Lower Authorities denied the higher notional credit on the ground that the effective rate of duty on bulk drugs was also 5% and in view of the specific provision of paragraph 5 of the Notification No. 175/86 higher notional credit was not admissble. The Appellants have contended in their appeal memorandum that the word “whichever is less” in paragraph 5 of the Notification No. 175/86 was for the purpose of providing the ceiling of Notional higher credit available to the assessee; that the paragraph 5 was an independent provision in Notification No. 175/86 issued under Rule STB which aimed at giving the Modvat credit of amount higher than the excise duty actually paid when the inputs were received from the small scale industries. They finally submitted that they had taken the credit amount equivalent to the actually paid duty that is 5% being the minimum there was nothing wrong in taking up the 5% notional higher credit.
5. After considering the submission of ld. S.D.R. and perusing the records we find that there is no substance in the submissions made by the Appellants in Appeal memorandum Rule STB of the Central Excise Rules provided for higher notional credit subject to the conditions mentioned in Notification No. 175/86. The relevant paragraph 5 of the Notification 175/86 reads as under the relevant time :
“Notwithstanding the exemption contained in this notification, in respect of the specified goods which are subjected to concessional rate of duty (other than those specified goods which are wholly exempted from the duty of excise leviable thereon), under this Notification, and received on or after the 1st day of April, 1998 in a factory where such goods are used as inputs or in relation to the manufacture of final products in terms of the provisions of Section AA of Chapter V of the said rules, the credit in respect of such inputs shall be allowed under Rule 57B of the said rules, at the .rate of duty applicable under this notification plus an amount calculated at the rate of 5% ad valorem, or at the rate of duty otherwise applicable but for this notification, whichever is less.”
6. It is evident from this that higher notional credit will be available at the rate of duty applicable under Notification No. 175/86 plus an amount calculated at the rate of 5% ad valorem or at the rate of duty otherwise applicable on the inputs, whichever is less. As in the present case the rate of duty applicable to inputs namely bulk drugs is only 5% the Appellants are not eligible to avail of any notional credit as it would become higher than the rate of duty applicable. In veiw of this the appeal is rejected.