V.P. Gulati, Member (T)

1. This appeal has been filed by the Collector of Central Excise, Bangalore, against the order of the Collector of Central Excise (Appeals), Madras, dated 22-5-1989. The appellant-Collector is aggrieved of the findings of the Collector (Appeals) holding that the respondents were eligible to take additional MODVAT credit after they discovered their mistake that they had taken a lower credit after the receipt of the goods in the factory. The learned Collector (Appeals) has held as under:-

"In the absence of restriction in the Central Excise Rules, the appellants are eligible to take credit as per specific provisions of Rule 57-B read with Notification No. 175/86. The credit of duty taken on receipt of the inputs, if not correct, the correct amount can be taken or balance amount taken subsequently, especially in the same month when the inputs were received by the assessee. I do not find any provision in Central Excise Rules, which forbids such taking of credit in RG. 23A account by the manufacturer. As such, the order of the Assistant Collector is set aside and the appeal is allowed for the reasons stated above."

2. The appellant-Collector has urged the following grounds in the grounds of appeal:-

"The order of the Collector of Central Excise (Appeals), Madras is legally incorrect as the decision is based on the ground that there is no restriction in the Rule 57B of the Central Excise Rules, 1944. Para 5 of the Notification No. 175/86-C.E., dated 1-3-1986 only extends the benefits of higher notional credit on the inputs, raw materials purchased from a SSI unit, to maintain the quantum of benefit that would flow to the manufacturers when purchased from a large scale manufacturer. It is wrong to state that there is no specific restriction in the Rule 57B read with para 5 of the Notification No. 175/86-C.E., dated 1-3-1986 to avail differential higher credit at a later date as the rules framed under the modvat scheme does not provide for such availment of credits at a later date. Hence the differential credit availed by the assessee at a later date, than the date of receipt of inputs is liable to be reversed/recovered under the provisions of Rule 57-I of the Central Excise Rules, 1944 framed under the Modvat scheme, since such availing of differential credit at a later date is irregular and without statutory authority. Trade Notice No. 222/88 dt/ 27-10-1988 has also, further clarified that taking of higher notional credit at a later date if not taken by the assessee at the time of receipt of input as incorrect."

3. The learned JDR for the Department reiterated the grounds of appeal.

4. We observe that while there is a provision under Rule 57-I under which in case an assessee has taken wrong MODVAT credit the authorities can ask him to reverse the credit to the extent the wrong credit has been availed of or they can make recovery in respect of the same, there is no specific provision providing for taking of the additional credit where a short credit has been taken by the assessee. The learned appellant Collector in the absence of this provision has urged that whatever credit is taken by the assessee cannot be varied with advantage on a later date in case a mistake is found. This, in our view, is not the correct approach in the case where by a benevolent legislation the assessees are given the benefit of set-off of duty paid on the inputs by way of a credit in respect of the said duty. As it is there are provisions for refund etc. where any amount which has been excess-paid the assessee can later claim that. Rule 57A mandates that the appellants are eligible to take the credit of duty paid on the inputs under Rule 57B notwithstanding anything contained under Rule 57A credit of specified duty on inputs in case paid under a notification issued under sub-rule (1) of Rule 8 exempting such inputs from the part of the duty leviable thereon on the basis of value of clearances of such inputs during any specified period