Per S.L. Peeran :

The short question that arises for consideration in this appeal which arises from Order-in-Appeal No. 48/2000 dated 29.2.2000 is to whether the assessee is eligible for modvat credit of 2,43,901/- taken of CVD paid by them covered under DEPB pass book and the same is reflected in the corresponding two Bills of entry dated 24.8.98. The Assistant Commissioner in his Order-in-Original noted that the assessee had manufactured and cleared PVC Plastics Flexible Hoses/pipes cum Rubber Hoses and pipes falling under CET Heading 39.17 and 40.09 respectively. They had availed SSI exemption under Notification No. 9/98 dated 2.6.98 as amended and availed modvat credit facility under 57A and 57Q of CE Rules. On 16.3.99 the Superintendent of the Division on inspection and on verification of records noticed that the appellant had availed irregular modvat credit on some inputs imported under DEPB scheme. He had noted that they had also availed irregular modvat credit to the extent of Rs. 2,43,901/- vide RG 23A Part - II and another amount of Rs. 1,48,593/-, Rs. 45,216/- and Rs. 50,092/- based on Bills of Entries dated 18.8.98; 21.8.98 and 15.10.98 even though the said Bill of Entries did not show any duty paid by the appellant in Col. No. 16 by virtue of Section 22 of Customs Act 1962 under DEPB Scheme.

2. The assessee's contention is that the amount paid has entries on the Bill of Entries. The amount had been paid in the pass book and there was no cash payment but the endorsements of the said payments in pass book have been indicated in the bill of entries. They contended that so long as the Bill of Entry reflects the payment they are entitled to avail the benefit of modvat credit notwithstanding the manner of payment. It is their contention that the revenue is not disputing the eligibility of modvat credit under DEPB scheme so long as the amounts are paid by cash. Since payment of duty was debited in the pass book and not by cash, therefore the modvat credit has been denied which is challenged.

3. Ld. Consultant contended that there is no provision to deny the benefit of modvat credit which has been made available to them under DEPB scheme. He submits that it is not necessary that only cash payments should be reflected in the DEPB pass book when credit is also debited that is equivalent to cash payment. He submits that the provisions of modvat credit under Rule 57A and 57G provides for availing modvat credit on any duty paid inputs and documents which are specified. He submits that the Bill of Entry is a specified documents and it reflects the debit amount towards CVD. Therefore modvat credit taken by them is as per law. He submits that the documents of invoices issued under Rule 52A by the manufacturer also reflects similar debit of duty both under PLA which is cash payment and RG 23A debits which are only debits and not cash payments. In such cases modvat credit is not denied and modvat credit is available for the entire payments as shown in the documents.

4. Ld. DR Shri C. Mani opposes the prayer and contended that the provisions of law has to be strictly looked into and so long as CVD has not been paid in cash then they cannot take the credit. The debits made under DEPB scheme is not sufficient for availing modvat credit.

5. Ld. Consultant submits that once debits are made in DEPB scheme it is equivalent to cash payment inasmuch as, to that extent they do not get benefit under the scheme and hence they are eligible for availing modvat credit.

6. On a careful consideration of the submissions and on perusal of the record I find lot of force in the Ld. Consultant's submission. Rule 57G lays down procedure for provision of availment of modvat credit in terms of the documents issued therein. One of the documents specified is Bill of Entry. In the present case there is no dispute that the Bill of Entry did carry the endorsement regarding the debit made in DEPB scheme towards CVD. The revenue's contention is that mere debits in