K. Sankararaman, Member (T)

1. M/s. India Linoleums Ltd. have filed this Appeal aggrieved with the order dated 30-7-1991 passed by the Collector of Central Excise, Calcutta-I Collectorate saddling them with duty liability of Rs. 36,967.09. This amount has actually been specified in the impugned order as the amount of modvat credit of duty disallowed by him and they have been ordered to revert back the said amount in terms of Rule 57-I(1) of the Central Excise Rules, 1944 as it stood prior to 6-10-1988.

2. Shri P.R. Biswas, learned Counsel for the appellants opened his argument with the assertion that they have a good case on merits, apart from the fact that the demand is hit by limitation. The latter factor has been considered by the Bench while granting them the benefit of stay. On the merits aspect, he submitted that the relevant notification restricting the extent of modvat credit in respect of paper to Rs. 800 per Metric Tonne was applicable to paper used in the manufacture of final products. They did not use kraft paper in the manufacture of their final product Linoleum but used the same in relation to the manufacture of linoleum as packaging material. Hence they were entitled to avail the full amount of duty paid on the kraft paper and not the restricted amount of Rs. 800/- per Metric Tonne as per the Notification which, he emphasised, is applicable only for paper used in the manufacture of the final product. He contended that use in the manufacture (of final products) is different from use in relation to their manufacture. This difference would entitle them to the benefit of modvat credit for the full quantum of duty paid on their inputs kraft paper.

3. Apart from the above-mentioned question of interpretation of Notification 149/87 dated 28-5-1987 on the quantum of admissible modvat credit per Metric Tonne, Shri Biswas pointed out that the demand was hit by limitation. The notice was issued on 8-9-1989 and the period of availment of modvat credit being 21-5-1987 to 30-11-1988, it was time barred, being beyond a period of six months. The Collector has himself conceded in his order that there was no suppression of misstatement but he has remarked that there was no need for invoking the longer period under Section 11A(1) of the Central Excises and Salt Act as unamended Rule 57-I operated during the period when the credit of full duty on kraft paper was taken. He has relied upon the judgment of the Gujarat High Court in Torrent Laboratories Pvt. Ltd. v. Union of India reported in MANU/GJ/0068/1991 : 1991 (55) E.L.T. 25 (Guj.) wherein it had, inter alia, been held that the limitation under Section 11A cannot be read into unamended Rule 57-I. Shri Biswas handed over a list of cases where a contrary view was taken. These are as follows :-

Decisions holding that time limit prescribed under Section 11A would apply to proceedings under Rule 57-I even when there was no provision in Rule 57-I for limitation.

East Regional Bench

1. 1990 (47) (1) E.L.T. 132 - TELCO

2. 1990 (50) (1) E.L.T. 120 - Ashim Paper Products

3. 1991 (51) (1) E.L.T. 128 - Vikrant Television

West Regional Bench

1. 1990 (42) (4) E.L.T. 700 - S.M. Energy Teknik

2. 1990 (47) (4) E.L.T. 704 - Memory Steel

3. 1990 (48) (4) E.L.T. 520 - Bharat Container

4. 1990 (49) (3) E.L.T. 495 - Modern Induction & Alloys Ltd.

5. 1990 (49) (4) E.L.T. 541 - Jawandmal-Dhannamal

6. 1990 (50) (1) E.L.T. 55 - Mahindra & Mahindra

Karnatka High Court

1 MANU/KA/0274/1991 : 1991 (56) E.L.T. 340 (Kar.) - Tungabhadra Steel

He also referred to the citation in the Stay order of the decision of the larger Bench in Atma Steels case to the effect that the law applicable would be the one prevailing at the time of issue of the demand irrespective of the fact that the demand may pertain to an earlier period prior to the amendment. The Atma Steels decision has also been followed by the West Regional Bench of the Tribunal in Apar Limited v. Collector of Central Excise reported in MANU/CM/0013/1