R. Jayaraman, Member (T)

1. Both the aforesaid appeals are directed against the Common Order of the Collector (Appeal) bearing No. CSM-990/89-BRD) dated 12-5-1989, disposing of the two appeals from the appellants.

Facts of the case can be briefly stated as under :-

2. The appellants are the manufacturers of welding electrodes. They bring in Steel wire rods as inputs for the manufacture of the said products. They had availed of Modvat scheme in respect of the said inputs by filing the requisite declaration. During the period 1-3-1986 to 30-9-1986, they had received wire rods under G.P.ls evidencing payment of duty at 'NIL' rate because of the availment of exemption under Notification No. 208/83, by the manufacturer of inputs. However, subsequently, the input supplier appears to have paid duty on the inputs already cleared to the appellants during the aforesaid period and this duty payment is reportedly made on 6-4-1987. Thereupon the Superintendent in charge of the supplier's factory issued a certificate of payment of duty indicating the particulars of G.P.ls, against which duty was paid. On the basis of this certificate, the appellants sought for refund of duty paid on inputs by filing their claim in December, 1987 and their claim was in terms of Rule 57E, which rule came to be amended providing for variation of the credit allowed by adjustment of the credit in the account maintained in RG 23A, Part II, consequent on payment of duty on the inputs at a subsequent date. Since the Rule 57E also provides for grant of refund to the manufacturers availing credit under Rule 57A, they sought for cash refund. This refund claim was rejected by the Assistant Collector on the following grounds :-

(i) Inputs received were cleared at nil rate of duty under Notification 208/83. Hence the question of taking Modvat credit on them does not arise.

(ii) The question of granting refund of duty on wire rods does not arise because duty on these inputs was not paid by the appellants but by the supplier of the input.

(iii) Rule 57E, as it stood prior to amendment by Notification No. 117/87 dated 15-4-1987, did not provide for such adjustment.

3. When the matter was taken up in appeal before the Collector (Appeals), he virtually allowed the two appeals of the Appellants, holding that the inputs have been received against gate passes, in respect of which duty payments have been made subsequently and since the inputs are covered by declaration already filed by the appellants, the appellants are entitled to avail Modvat credit of the duty paid subsequently on the said inputs under Rule 57A. He also held that Rule 57E is not applicable in this case.

4. In the normal circumstances, one would accept the above order of the Collector (Appeals) because these appeals have been allowed and the Assistant Collector's order was set aside. However, the appellants herein have come in appeal against the decision of the Collector (Appeals) giving a finding to the effect that Rule 57E is not applicable to their case and their object, as stated by the Ld. Advocate, is to get the cash refund provided for under Rule 57E, sine the factories have been transferred to others by way of sale.

5. The arguments of the Ld. Advocate can be briefly summed up as below:-

Though variation in duty (payment of duty subsequently) on inputs has taken plea prior to 15-4-1987, adjustment of credit of duty on inputs is sought for after the amendment. Hence such an adjustment is permissible under Rule 57E. He referred to the "Principles of statutory interpretation" by Gura Prasanna Singh (V edition 1992) to support the arguments.

6. Mrs. Lipika opposed the prayer for cash refund in terms of Rule 57E, on the following grounds :-

(i) Inputs were brought under G.P.ls showing 'NIL' rate under Notification No. 208/83. Thus there was deliberate clearance under exemption, which was availed by the input manufacturer. Hence no credit can be taken against such Gate passes. The Department could have even