ORDER
1. petitioner No. 1, is a Company within the meaning of Section 3 of the Companies Act, 1956. It carries on the business of manufacturing Cement at Beawar.
2. The cement manufactured by it is subject to excise duty at the rate set forth in the Schedule of the Central Excise Tariff Act, 1985.
3. The ‘MODVAT’ Scheme was introduced in the year 1986 under Central Excise Law, wherein manufacturers of finished excisable goods were allowed credit on any duty of excise or additional duty paid under Section 3 of the Customs Tariff Act, 1985, on the goods used in or in relation to the manufacturing of the said final product, referred to as ‘inputs’ which includes paint and packing material. This Scheme permitted utilisation of the credit so allowed towards the payment of the duty of excise leviable on the final product of such manufacturers.
4. Rule 57A permits the taking of credit of excise duty paid on ‘inputs’, by the manufacturer of such ‘inputs’ and its utilisation towards the payment of excise duty payable on the finished goods of manufacturers using such as ‘inputs’.
5. Under Rule 57G, a manufacturer intending to take credit of duty paid on ‘inputs’ under Rule 57A shall file a declaration with the Assistant Collector indicating the description of final product manufactured in the factory and the ‘inputs’ intended to be used in the said final product and obtain an acknowledgement of the said declaration.
6. During the period 30th July, 1990 to 30th August, 1990 the company availed ‘MODVAT’ credit amounting to Rs. 5,25,011.50 p. in respect of the duty paid by it on HDPE/Woven Sacks. This amount was utilised by the Company for the payment of duty in respect of the cement manufactured by it.
7. In respect of the credit availed by the company for the period 11th April, 1990 to 30th July/1990, a show cause notice was issued by the Collector, Central Excise & Customs on 5th October, 1990 requiring the petitioner to explain as to why the aforesaid ‘MODVAT’ credit availed by it on HDPE/PP Sacks, may not be recovered under Rule 57-I of the Central Excise Rules, 1944 and why penal action may not be taken against it under Rule 173Q(1)(bb) of the Central Excise Rules, 1944. A similar show cause notice was issued on 20th November, 1990 in respect of ‘MODVAT’ credit availed by the company during the period 30th July, 1990 to 30th August, 1990.
8. Another show cause notice was issued covering the period 8th April, 1989 to 2nd April, 1990 and the period 9th April, 1990 to 11th April, 1991 during which the petitioner had availed the ‘MODVAT’ credit.
9. The petitioner filed its reply contesting the show cause notices.
10. By two separate Orders No. 3/92 and 4/92 dated 16-3-1992 for different year, the Collector, Central Excise & Customs rejected the petitioner’s objection holding that HDPE/PP did not amount to ‘inputs’ inasmuch as they were used only for packing cement so as to ensure their proper transportation and that these Sacks were not used in relation to manufacture of cement.
11. Aggrieved by the Order dated 16-3-1992 passed by the Collector two separate appeals were not filed before the Central Excise and Gold Appellate Tribunal, New Delhi (Appeal Nos. E/3205/92 and 3274/92-NRD, Delhi) [1994 (70) E.L.T. 799 (Tribunal)]. The Tribunal allowed the appeals holding that the HDPE were ‘inputs’ within the meaning of the expression under Rule 57A of Central Excise Rules and the declaration in respect of the said product as ‘inputs’ also had been accepted. The penalty imposed was held to be unwarranted. This Order has become final as it has not been challenged by the Department so far. This fact is stated in paragraph 17 of writ petition which has not been denied by the respondents in their reply.
12. When this matter was heard on 16-8-1996, Shri Suresh Pareek appearing on behalf of the respondents, prayed for some time to verify the fact whether any appeal had been filed against the Order of the Tribunal dated 29-12-1993. Today, he made a statement in spite of his best efforts he could not get any reply from Department.
13. Under these circumstances, we have no option but to come to the conclusion that the Order of the Tribunal, holding that the HDPE/PP Sacks are ‘inputs’ used in or in relation to the manufacture of cement which is the final product, has attained finality. Thus, it was not open to the respondent to issue show cause notice or to pass a contrary Order.
14. For the reasons given above, the impugned Order dated 6-4-1994 passed by the Collector, Central Excise in Original case No. 72/94 and the Order dated 15-10-1995 in case No. 73/95 are hereby quashed. The petitioner is entitled to utilise ‘MODVAT’ credit on HDPE/PP Sacks which are ‘inputs’ used in relation to the manufacture of the cement.
15. The writ petition succeeds and is allowed.