K. Sankararaman, Member (T)

1. Stay allowed and appeal heard by consent of both sides, the issues involved lying within a narrow compass and being covered by a number of decisions of the Tribunal and different High Courts.

2. Shri B.K. Mohanty, learned Senior Advocate and S/Shri Sekhar Mukhopadhya and Madhusudan Dey, learned Advocates appeared for the appellants. Shri Mohanty submitted that they had taken Modvat credit in respect of inputs used in the manufacture of their final products viz., aerated waters and utilised the same for payment of duty on such final product before 1-10-1987. Some quantity of such inputs, however, remained in stock on 1-10-1987 and the impugned order seeks to recover duty equivalent to the Modvat credit corresponding to such inputs as were in stock on 1-10-1987 on the ground that aerated water was removed from the list of specified goods for the purpose of Modvat credit. Shri Mohanty contended that it had been held in several decisions referred to in their written submissions before the Collector that such credit taken and also utilised before 1-10-1987 cannot be reversed or recovered on the ground that the inputs themselves had not been utilised before 1-10-1987 and were actually used after that date in the manufacture of aerated waters which had then ceased to be specified goods. There is a direct decision on aerated water itself rendered by the South Regional Bench, covering an identical situation. There are other High Court decisions on similar situations covering other goods, which are to the effect that, notwithstanding the removal of items from the credit scheme, the credit taken and utilised when the scheme was in force, cannot be recovered. The Collector has not discussed their submissions in this regard. Further the notice was hit by limitation. The longer time limit has been applied by the Collector, mentioning collusion to justify the same. The facts of the case do not justify such a finding. There was no collusion or wilful misstatement or suppression involved. He, therefore, pleaded that their appeal be allowed. He also pointed out that there was discrimination involved, as in similar circumstances two manufacturers of the same Collectorate, namely, M/s. Mamata Drinks & Industries Ltd. and M/s. Nandi Ghosh Combines (P) Ltd. had been allowed the benefit which has been denied to them. He also distinguished the decision of this Bench in East India Pharmaceuticals v. Collector of Central Excise, reported in MANU/CK/0012/1991 : 1991 (54) E.L.T. 355 when his attention was drawn to it by us.

3. Shri A. Choudhury, learned Departmental Representative argued the case on behalf of the respondent Collector. He fairly conceded that the impugned order does not bring out the reasons why the decisions cited by the appellants were not considered applicable in the present case. He, however, supported the order and contended that the utilisation of credit for payment of duty on aerated waters had to be reversed as the inputs were actually used for manufacture of aerated waters when the product had gone out of the Mod vat scheme. He referred to the Collector's finding that the longer time limit will be applicable in this case and supported the order.

4. We have considered the submissions. We have perused the record and gone through the decisions cited by the learned Counsel which have been referred to in the appeal. We find, the South Regional Bench of the Tribunal had dealt with an exactly similar situation in Collector of Central Excise, Guntur v. Sri Sarva Ray a Sugar (Bottling Unit) Ltd., reported in MANU/CC/0005/1991 : 1992 (59) E.L.T. 125 (Tri.). It was held therein that there is no specific provision under Modvat Rules providing for recovering Modvat credit if, in respect of any particular commodity, credit allowed is utilised under Rule 57F and facility of Modvat is withdrawn and the inputs received prior to the date of withdrawal of the Modvat facility are still lying unutilised. Holding that c