Case: Commnr. Of Central Excise, Bhavnagar Vs. M/S. Saurashtra Chemicals Ltd

the Act. (iii) Penalty should not be imposed upon the Noticee under Rule 173Q(1) of the Rules. Cause was shown. The matter was determined by the Assistant Commissioner of Central Excise, Junagadh in terms of an order dated 13.9.2001 holding that the respondent was entitled to CENVAT credit only to the extent of 50%. An appeal preferred thereagainst by the respondent aggrieved by and dissatisfied therewith before the Commissioner (Appeals), Customs and Central Excise, Rajkot was allowed by an order dated 31.12.2001. An appeal preferred by the Revenue thereagainst was dismissed by the Tribunal. An appeal by the Revenue under Section 35G of the Central Excise Act, 1944 has been dismissed by the High Court by reason of the impugned judgment dated 12.1.2006. 6. The High Court in its judgment opined that as the previous notification did not contain any restrictive clause in regard to the availability of 50% of entitlement, the Commissioner as also the Tribunal did not commit any error in applying the notification effective as on 1.3.2000. The Revenue is, thus, before us. 7. Sub-rule (1) of Rule 57AC of the Rules refers to inputs. It is not relevant for our purpose. Clauses (a) and (b) of Sub-rule (2) of Rule 57AC of the Rules governs the receipt of the capital goods in a factory. It does not restrict grant of credit in a given financial year. Whereas 50% of the credit can be taken in one financial year, the balance may be availed in the subsequent years, subject to the condition that the capital goods are still in possession and use of manufacturer of the final products in subsequent years. Clauses (a) and (b) of Sub-rule (2) of Rule 57AC of the Rules, therefore, provide for a composite scheme. We are not concerned even therewith in this appeal. Clause (c) of Sub-rule (2) of Rule 57AC of the Rules is relevant for our purpose inasmuch as in this case, we have noticed hereinbefore, that the second generator set was received on 24.10.1998, but was not installed prior to 1.4.2000. Applicability of Grasim Industries Ltd. (supra), vis-a-vis Rule 57Q(3) of the Rules has now become irrelevant. Clause (c) of Sub-rule (2) of Rule 57AC of the Rules deals with a situation with which we are concerned. By reason of the said provision, the credit sought to be given by reason of Rule 57Q(3) has not been taken taken away in its entirety, but merely postulates that if the credit had not already been availed, the same merely be obtained but limited only to the extent of 50% thereof. 8. A beneficient statute may have to be considered liberally but where a statute does not admit of more than one interpretation, literal interpretation must be resorted to. The provision allows taking of credit but the same is circumscribed by the condition as is apparent from the use of the words subject to which is limited to an amount not exceeding 50% of the duty paid on such capital goods. The term subject to in the context assumes some importance. In Ashok Leyland Ltd. v. State of Tamil Nadu & Anr., II (2004) SLT 5=(2004) 3 SCC 1 , this Court held : Subject to is an expression whereby limitation is expressed. The order is conclusive for all purposes. This Court further noticed the dictionary meaning of subject to stating : Furthermore, the expression `subject to must be given effect to. In Blacks Law Dictionary, Fifth Edition at page 1278 the expression subject to has been defined as under : Liable, subordinate, subservient, inferior, obedient to; governed or affected by; provided that; provided, answerable for. Homan v. Employers Reinsurance Corp., 345 Mo. 650, 136 S.W. 2d 289, 302. [See also S.N. Chandrashekar and Another v. State of Karnataka and Others, II (2006) SLT 336=(2006) 3 SCC 208 ]. 9. Illustration appended to Sub-rule (2) of Rule 57AC of the Rules on its plain reading governs Sub-rules 2(a) and 2(b) of Rule 57AC and not Sub-rule 2(c) thereof as it refers to a situation where the machinery has been received on April 16, 2000 and not prior thereto. Capital goods received after 1.4.2000 are governed by Clauses (a) and (b) of Sub-rule (2) of Rule 57AC whereas if received prior thereto, the same would be governed by Clause (c) thereof. 10. We, therefore, are of the opinion that the High Court was not correct in opining that CENVAT credit to the extent of 100% could be allowed in terms of Rule 57AC of the Rules. 11. Mr. Ramesh Singh, learned Counsel appearing on behalf of the respondent, however, submitted that credit had been given only to 50% of the total amount of duty paid, as would appear from the order of the Commissioner dated 31.12.2001 which is in the following terms : On going through the Sub-rule 2(c) of Rule 57AC it is very much patent that the items of capital goods which have not been installed (emphasis supplied) before 1st day of April, 2000 would be entitled to the credit for an amount not exceeding fifty per cent of the duty paid on such capital goods. I find that in the instant case also, it is uncontrovertible fact that the said Generator was not installed in the appellants factory prior to 1.4.2000, and therefore, they rightly availed of the credit of Rs. 7,80,036/- (50% of Rs. 15,60,072.28). But, what was done was that while granting relief to the extent of 50% in the relevant year, it purports to hold that the credit of balance 50% can be availed in subsequent years. The Commissioner in arriving at the said finding did not notice the distinction between Clauses (a) and (b) of Sub-rule (2) of Rule 57AC, on the one hand, and Clause (c) thereof, on the other. It also failed to notice that the illustration will have no application in the instant case. It is furthermore now a well-settled principle of law that an illustration cannot control the main provision.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. We, therefore, are of the opinion that the High Court was not correct in opining that CENVAT credit to the extent of 100% could be allowed in terms of Rule 57AC of the RulesBut, what was done was that while granting relief to the extent of 50% in the relevant year, it purports to hold that the credit of balance 50% can be availed in subsequent years. The Commissioner in arriving at the said finding did not notice the distinction between Clauses (a) and (b) ofe (2) of Rule 57AC, on the one hand, and Clause (c) thereof, on the other. It also failed to notice that the illustration will have no application in the instant case. It is furthermore now ad principle of law that an illustration cannot control the main provision.