R. JAYASIMHA BABU, J.

The full Bench of CEGAT having held that Rule 57E of the Central Excise Rules, as it stood on 01-04-1987 is merely clarificatory and procedural and would not affect the substantive rights of the manufacturer of a specified final product to claim Modvat credit for the duty paid on the inputs subsequent to the date of the receipt of those inputs under the cover of a specified document at the instance of the Revenue, the correctness of that decision has been referred to us for our opinion.

2The . respondent is a manufacturer of motor vehicles which is a specified final product. It had received inputs under the cover of specified documents between 21-4-1986 and 2-4-1987. After receipt of those inputs and the entries required to be made in Register having been made, the price for those inputs was revised by the manufacturer of the inputs and consequently additional duty that had become payable on the enhanced price which was paid during the period from 19-12-1986 to 28-10-1987. The credit for the amount so paid was taken by the assessee in the relevant registers between 16-8-1987 and 30-12-1987. The differential duty in respect of which credit was so taken was in the sum of Rs. 6, 43, 994.47.

3The Modified . Value Added Tax Scheme was introduced from 1-3-1986. Prior to its introduction, the scheme prevailed was Proforma Credit Scheme. Under the Proforma Credit Scheme in the 3rd proviso under Explanation 2 to Rule 56A(2) it was provided that if the duty paid on the material or on the components parts for which credit has been allowed under the sub-rule be varied subsequently due to any reason resulting in the payment of refund, to or recovery of more duty from the manufacturer or importer as the case may be of such material or component parts, the credit shall be varied accordingly by adjustment in the credit account maintained under sub-rule (3) or in the account current maintained under sub-rule (3) or Rule 9 or Rule 173G(1), or, if such adjustment be not possible for any reason, by cash recovery forms or, as the case may be, refund to the manufacturer availing of the prqcedure contained in that rule. A corresponding provision had been omitted to be incorporated in Rule 57A, which deals with applicability of the Modvat scheme, and which rule is part of the rules set out in Chapter AA titled "Credit of duty paid on excisable goods used as inputs." 4Rule 57E as . it stood when the Modvat scheme was introduced provided for adjustment in duty credit, and it read thus :

"If duty paid on any inputs in respect of which credit has been allowed under Rule 57A, is varied subsequently due to any reason resulting in payment of refund to the manufacturer or the importer of the inputs, the credit allowed shall be varied accordingly by adjustment in the credit account maintained under sub-rule (3) of Rule 57G or in the accounts maintained under Rule 9 or sub-rule (1) of Rule 173G or, if such adjustment is not possible for any reason, by cash recovery from the manufacturer availing of the credit under Rule 57A."

That Rule was amended on 1-3-1997 to read as under :-

" If duty paid on any inputs in respect of which credit has been allowed under Rule 57A, is varied subsequently :

(i) due to any reason resulting in payment of refund to the manufacturer or the importer of the inputs; or

(ii) due to change in the classification of the inputs on the basis of instructions issued by the Central Board of Excise and Customs constituted under the Central Board of Revenue Act, 1963 (54 of 1963) resulting in recovery of more duty from the manufacture or the importer of the inputs,

the credit allowed shall be varied accordingly by adjustment in the credit account maintained under sub-rule (3) of Rule 57G or in the accounts maintained under Rule 9 or sub-rule (1) of Rule 173G, and if such adjustment is not possible for any reason, by cash recovery from or, as the case may be, refund to the manufacturer availing of credit under Rule 57A.

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