Per Shri R. Jayaraman - This is an appeal against the Order-in-Appeal No. SKN4-156/90 B I (V-s(44CH)6/Bl/89) dated 6.2.1990 of the Collector of Central Excise (Appeals), Bombay, rejecting the appellants appeal.

2. The following facts are not disputed. The additional duty was paid in respect of the inputs received under Notification No. 225/86-CE dated 3.4.1986 which is a set-off notification exempting the final product from so much of the duty of excise leviable thereon under the Central Excises and Salt Act, 1944, as is equivalent to the duty paid on the inputs used. However, the appellants chose to avail of the is benefit in the form of taking credit in the set off register which they were availing previously, which, however, is not the legal requirement as per the said Notification. However, when the inputs were subject to demand for additional payment of duty, the payment was done by the manufacturer of the inputs and a certificate of duty payment was given to the appellants, on the basis of which they sought for credit in the Modvat account under Rule 57E, which has been rejected by the authorities below.

3. Shri JJ Bhat, the Ld Advocate mainly pleads that as per the decision of this Bench in the case of Apar Ltd - 1992 (61) ELT 742 wherein the inputs were received under Notification No. 208/83 as exempted at nil rate of duty. Subsequently duty was paid on the inputs and in that case, Rule 57E benefit has been extended. On query by this Bench, the Ld Advocate fairly agrees that there is no provision made in the Notification No. 225/86 allowing for adjustment of credit in respect of inputs, when the duty paid initially on the inputs is varied subsequently.

4. I find that in the case of Rule 56A and Notification No. 201/79, there is a specific provision for taking the credit of duty paid on inputs in a prescribed account and there is also a specific provision for varying the credit initially taken depending on payment of additional duty on the inputs subsequently or on account of grant refund of duty paid initially, for which credit was taken. No such provision is found in Notification No 225/86. Notification No. 225/86 is an exemption notification giving exemption on the final product to the extent of duty paid on the inputs, which can be availed of at the time of each clearance. No credit as contemplated under Rule 56A or Notification No. 201/79 is envisaged in this Notification. In the case of Rule 56A & 201/79, even provision for allowing credit in PLA is provided, if inputs suffer additional duty subseqeunts. Rule 57E is applicable only in respect of Modvat credit taken initially, where the duty paid on such inputs is varied subsequently either by way of demand or refund, in the absence of any legal provision prescribed either in Rule 57E or in the Notification, lower authorities are justified in refusing to allow credit in their Modvat account.

5. As regards the case law cited by the Ld Advocate, I am to observe that in that case of Apar Ltd, they had filed Modvat declaration for the inputs steel wire rods for use in the manufacture of welding electrodes. During the period 1.3.86 to 30.9.86, when Modvat scheme was availed by the party, they received certain wire rods at nil rate of duty, cleared under Notification No. 208/83. Consequent on denial of the exemption to the inputs, duty was paid subsequents on these inputs, which duty was claimed as credit in terms of Rule 57E. Treating the subsequent duty payment as variation in duty, the Tribunal allowed the benefit of Rule 57E and remanded the case to consider extending benefit under the said Rule.

In this case, the facts are totally different. Notification No. 226/86 is an exemption Notification granting exemption from duty on the final products to the extent of duty paid on inputs used in the manufacture of final product. This exemption is to be availed of at the time of clearance of final products by setting off the duty paid on inputs used in their manufacture.