M/S. CHANDRAPUR MAGNET WIRES (P) LTD., NAGPUR versus COLLECTOR OF CENTRAL EXCISE, CENTRAL EXCISE COLLECTORATE,NAGPUR

Citation: [1995] SUPP. 6 S.C.R. 593 · Decided: 12-12-1995 · Supreme Court of India · Bench: A.M. AHMADI, S.C. SEN · Disposal: Appeal(s) allowed

Judgment (excerpt)

M/S. CHANDRAPUR MAGNET WIRES (P) LTD., NAGPUR 
A 
v. 
COLLECTOR OF CENTRAL EXCISE, CENTRAL EXCISE 
COLLECTORATE,NAGPUR 
DECEMBER 12, 1995 
[AM. AHMADI, 0. AND SUHAS C. SEN, J.] 
Central Excise Rules, 1944 : 
B 
Rules 57A and 57C-Manufacturer cleari11g various fi11al products C 
utilising duty paid inputs-E11titlement to MODVAT scheme and credit for 
the duty paid on the inputs utilised for ma11ufa~ture of fi11al product-Debit 
and credit entries in this regard made by the assessee-H eld, permissible and 
assessee entitled to the benefits. 
In this appeal against the judgment of the Customs, Excise and Gold D 
(Control) Appellate Tribunal, the appellants contended that if a manufac-
turer clears various final products utilising duty paid inputs, according to ' 
the Central Excise Rules, he was entitled to get credit for the duty of excise 
paid on the inputs which were utilised for manufacture of final product. 
Actually, the credit amounts were adjusted against the duty leviable E 
on the final product. As soon as the inputs were purchased, the duty paid 
on them were entered in a register which had to be maintained statutorily 
recording the amount of credit allowable to the manufacturer. 
The issue in these appeals arose because some of the goods manufac-
tured by the appellants were exempted from duty by notification dated F 
10.2.1986. The notification was amended on 1.3.1988 exempting copper 
winding wires from payment of the whole duty subject to the condition that 
the final products were manufactured from copper pans of over 6 mm. and 
that no credit of the duty paid on the goods used in their manufacture has 
been taken under Role 57 of the Central Excise Rules. 
G 
Allowing the appeal, this Court 
HELD : 1. The assessee is not entitled to remove the copper wires 
without payment of duty since credit of the duty paid on the inputs used 
in the manufacture of copper wire had already been taken in accordance H 
593 
I 
594 
' 
SUPREME COURTREPOR1S (1995] SUPP. 6 S.C.R. 
A with Rule 57 A of the Central Excise Roles. Once appropriate entries have 
been made in the register, there is no rule under which the process could 
be reversed. Since the credit has been taken for the duty paid on the inputs 
in the ledger maintained by the assessee, it cannot say that no credit of the 
duty has been taken by it under Rule 57A. [597-A-B] 
2. It is true that the assessee has not maintained separate account or 
segregated the inputs utilised for manufacture of dutiable goods and duty 
free goods, as should have been done. The circular by the Revenue deals 
with a case where the manufacturer produces dutiable final products an<! 
also final products which are exempt from duty and it is not reasonably 
C possible to segregate inputs utilised in manufacture of the dutiable final 
products from the final products whicb are exempt from du!J. In such a 
case, the manufacturer may take credit of duty paid on all the inputs used 
in the manufacture of final products on which dnty will have to be paid. 
This can be done only if the credit of duty paid on the inputs used in the 
exempted products is debited in the credit account before the removal of 
D the exempted final products. Thus, there is no reason why the assessee 
callJIOt make a debit entry in the credit account before removal of the 
exempted final producL If this debit entry is permissible to be made, credit 
entry for the duties paid on the inputs utilised in manufacture of the final 
exempted producl\'111 stand deleted in the accounts of the assessee. In such 
E a situation, it cannot be said that the assessec has taken credit for the duty 
pa!d on the inputs utilised in the manufacture of the final exempted 
product under Rule 57A. Tue claim for exemption of duty on t.'ie disputed 
goods cannot be denied on the plea that the a'5essee has taken credit of the 
duty paid on the inputs used in manufacture of these goods. 
G 
[597-C, H, 598-A-C] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7275 of 
1995. 
.· 
. 
' 
Froio the Judgment and Order dated 17.5.95 of the Customs, Excise 
and Gold (Control) Appellate Tribunal, New Delhi in A. No. E/3167/93-BI. 
A.N. Haksar, R. Sudhinder and Rajcsh Kumar far the Appellants. 
N.K. Bajpai, G. Prakash and V.K. Verma for the Respondents. 
The Judgment of the Court was delivered by 
H 
SEN. J, This is an appeal against an order passed by the .Customs 
CHAND RAP UR MAGNET WIRES (P) LTD. , .. COLLECTOR OP CENTRAL EXCISE [SEN. J.} 
595 

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