Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs Ballarpur Industries Ltd. on 25 August, 1989
Equivalent citations: 1990ECR59(TRI.-DELHI), 1989(43)ELT602(TRI-DEL)
ORDER
G. Sankaran, Sr. Vice-President
1. M/s. Ballarpur Industries Limited, Chandrapur, the respondents herein, manufacture paper and paper board falling under Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 (the 'schedule', for short). Under the scheme of availment of Credit of excise duty paid on inputs for utilisation towards payment of duty on the final products as set out in Central Excise Rule 57A, the respondents had declared the inputs used in the manufacture of paper and paper board of several varieties. The declaration was in respect of inpurts lying in stock with the respondents as on 1-3-1987. The Assistant Collector of Central Excise while allowing the credit in respect of some inputs dis-allowed the same in respect of the following inputs i.e. (1)imported gum rosin; (11) dye direct brown 'MR'; (iii) dye bismark brown 'R'; (iv) sodium hexameta phosphate. In appeal this order was set aside by the Collector (Appeals). Hence, the present appeal by the Collector of Central Excise, Nagpur.
2. We have heard Shri A.S. Sunder Rajan, DR for the appellant-Collector. The respondents were not represented during the hearing but had furnished written submissions and regretted their inability to be present during the hearing.
3. We shall, at this stage, set out the factual position in respect of the input duty credit availment scheme popularly known as the MODVAT Scheme insofar as it is relevant to the present case. Though the scheme came into force with the 1986 Budget, it was only on 1-3-1987 that Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 (under which paper and paper board fell) was brought within its purview. In other words, on 1-3-1987, goods falling under Chapter 48 of the Schedule were made eligible for availment of credit of duty paid on the inputs used in their manufacture, for the purpose of payment of the duty leviable thereon. Central Excise Rule 57H provided for certain transitional matters. Sub-rule (1) set out two situations where such credit was allowable: (i) such inputs were lying in stock or were received in the factory on or after 1-3-1987 or (ii) such inputs were used in the manufacture of final products which were cleared from the factory on or after 1-3-1987. However, this was subject to the restrictions contained in Sub-rule (2) which read as follows:-
"Notwithstanding anything contained in Rule 57A, no credit of duty paid on the inputs used in the manufacture of a final product (other than those inputs in respect of which credit of duty was allowable under any rule or notification prior to the 1st day of March 1986, when used in the final products) shall be allowed if duty has been paid on the inputs on or before the 31st day of Jan., 1986." In other words, no credit was allowable if duty on the inputs (used in the manufactue of final products) was paid on or before 31-1-1986. However, this restriction was inapplicable to those inputs in respect of which credit of duty was allowable under any rule or notification prior to 1-3-1986. One more thing may be noted at this stage. In accordance with one of the provisos to Rule 56A(2), no credit of countervailing duty (additional duty of customs) shall be allowed in respect of any material or component parts used in the manufacture of finished excisable goods, if countervailing duty had been paid in respect of such material, or component parts, as fall under Item No. 68 of the First Schedule to the Central Excises & Salt Act, 1944 (the said first schedule to the Central Excises & Salt Act was in force till 28-2-1986 when the repealed Central Excise Tariff Act, 1985 came into force).
4. Now, gum rosin, one of the inputs in the present case, on import, paid additional duty of customs equivalent to Central Excise duty leviable under Item No. 68 of the repealed Central Excise Tariff Schedule. The import apparently took place prior to 1-3-1986 and the goods were lying in stock on that date. It is the appellants' contention that, in the circumstances, the mischief of Rule 57H(2) is attracted. The additional duty of customs on the imported gum rosin in question had admittedly been paid before 1-3-1986. But the additional duty had been paid in relation to its classifiability under Item No. 68 of the repealed tariff schedule. And, the proviso to Rule 56A(2), referred to earlier, expressly barred availment of credit of additional duty of customs paid on goods classifiable under Item No. 68 of the said schedule. Therefore, the appellants' contention that the gum rosin in the instant case was not an eligible input appears to be correct. The respondents' contention, on the other hand, is that the restriction in Sub-rule (2) of Rule 57H is not applicable to inputs lying in stock on 1-3-1987; it applies only to the credit of duty paid on inputs contained in the final products cleared from the factory on or after 1-3-1987. As such it would not matter whether duty on inputs was paid prior to or after 31-1-1986. We do not see how the above result flows from a plain reading of the proviso. The appellant's contention on the other hand, is the logical result of a plain reading of the proviso.
5. In respect of the other three inputs, the appellant's contention is that the respondents had paid central excise duty under Items other than 68 of the repealed schedule and that credit of that duty was not allowable under any rule or notification prior to 1-3-1986 and that excise duty on these inputs having been paid before 31-3-1986, the credit of such duty was barred under Rule 57H(2). This contention has not been rebutted by the respondents. No rule or notification prior to 1-3-1986 which would allow credit of excise duty paid on the subject three inputs has been placed before us by the respondents.
6. In the result, the appellant's contentions are upheld. The impugned order is set aside and the appeal allowed.