Customs, Excise and Gold Tribunal - Delhi
Digambar Foundary vs Commissioner Of Central Excise on 30 March, 2000
Equivalent citations: 2000(118)ELT85(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. The matter referred to the Larger Bench in these group of appeals is as under :-
"Whether in view of the Ministry's Order No. TS/36/94 TRU, dated 1-3-1994 read with Notification No. 1/93-C.E. dated 28-2-1993, and the Chandigarh Central Excise Collectorate Trade Notice No. 81/94, dated 25-7-1994, the manufacturers were entitled, or were not entitled, to enjoy the benefit of deemed credit facility after they had crossed the prescribed limit of Rs. 75,00,000/- in terms of Notification No. 1/93- C.E."
2. The background leading to the present reference may briefly be stated. Under Order No. TS/36/94 TRU, dated 1-3-1994 (effective from 1-4-1994), issued in exercise of the powers conferred under the second proviso to Rule 57G(2) of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules'), the Central Government directed that the ingots and re-rollable materials of iron or steel purchased from outside and lying in stock on or after the first day of April, 1994 with the re-rollers, availing of the exemption under Notification No. 1/93-C.E., dated 28-2-1993 will be deemed to have paid the Central Excise Duty. The credit of duty under Rule 57A of the Rules in respect of such ingots and re-rollable materials used without undergoing the process of melting in the manufacture of goods falling under Chapter 72 or Chapter 73 of the Central Excise Tariff, was allowable. The credit at the rate of Rs. 920 per tonne was allowable in respect of such ingots and re-rollable materials, without production of documents evidencing the payment of duty.
Under Notification No. 1/93-C.E., dated 28-2-1993, the specified goods upto the aggregate value of clearances not exceeding Rs. 75,00,000/- enjoyed full/ concessional/slab exemption from the payment of Central Excise Duty subject to the various conditions and limitations as provided in that exemption Notification. The exemption under that Notification was not available if the aggregate value of clearances of all excisable goods for home consumption (a) by a manufacturer from one or more factories or (b) from any factory by one or more manufacturers, had exceeded Rs. 2,00,00,000/-, in the preceeding financial year.
Under Chandigarh Collectorate Trade Notice No. 8.1/94, dated 25-7-1994, the trade and other concerned were informed that the deemed credit on re-rollable materials and ingots as provided in deemed credit order issued under F. No. TS/36/94/TRU, dated 1-3-1994 by the Central Government, was not admissible to the re-rolling units whose value of clearances under Notification No. 1/93-C.E., was in excess of Rs. 75,00,000/-.
In the case of Collector of Central Excise, Coimbatore v. Sri Venkateswara Steel Industries -1996 (86) E.L.T. 446 (Tribunal), the Tribunal had taken a view that the deemed credit under Ministry's Order No. TS/36/94 TRU, dated 1-3-1994 continues to be admissible to small scale industrial units even after crossing the exemption slab of Rs. 75,00,000/-, when the unit starts paying duty at the applicable rate.
3. Under one of the impugned Order-in-Appeal dated 30-6-1997, the Commissioner of Central Excise (Appeals), Chandigarh, relying upon the Tribunal's decision in the case of Sri Venkateswara Steel Industries (Supra), and his earlier decisions, set aside the orders challenged before him. In those orders challenged before him, the manufacturers had been denied the benefit of deemed Modvat credit, as the credit had been taken without production of documents evidencing the payment of duty, after crossing the clearance limit of Rs. 75,00,000/- during the financial year 1994-95. The reason given in the orders appealed against before the Commissioner of Central Excise (Appeals) was that after the clearances of Rs. 75,00,000/- under Notification No. 1 /93-C.E., the manufacturers start paying duty at full rate as applicable to any other manufacturer. It had been held therein that the facility of deemed credit under Ministry's Order dated 1-3-1994 was not available because after clearances of Rs. 75,00,000/- the manufacturer no longer continued to avail any benefit of Notification No. 1 /93-C.E. The Commissioner of Central Excise (Appeals) however, held that the deemed credit will be admissible to the manufacturers even after crossing the clearance limit of Rs. 75,00,000/-.
When the matter came-up in appeal before the Tribunal, the Bench doubted the correctness of the decision in the case of Sri Venkateswara Steel Industries, and expressed the view that the benefit of deemed credit was available to the re-rollers while they were still availing of the exemption under Notification No. 1/93-C. E., and not after they had ceased to be so eligible to the benefit, and were not longer availing of the exemption.
In other group of appeals, the Commissioner of Central Excise (Appeals), Allahabad under Order-in-Appeal dated 31-12-1996 had taken a view that the benefit of deemed credit was available only to such manufacturers, who were availing the exemption of duty upto the value of clearances of Rs. 75,00,000/- only, and that the eligibility criteria of the value limit of Rs. 2,00,00,000/- had got nothing to do with the exemption from duty or the rate of duty applicable to a particular slab of clearances value.
In view of the Tribunal's earlier decision in the case of Sri Venkateswara Steel Industries, the matter had been referred to the Larger Bench.
4. The matter was heard on 28-2-2000 and 29-2-2000 when Shri G.S. Bhangoo, Advocate appeared for some of the manufacturers. On behalf of some, written submissions were filed. The Revenue was represented by Shri Sanjeev Srivastava, JDR.
5. We have carefully considered the matter and have given due thought to the submissions made by both the sides. The issue for our consideration is whether the re-rollers whose aggregate value of clearances in the current financial year had exceeded Rs. 75,00,000/- and who were paying full rate of Central Excise Duty as applicable to such re-rollers in respect of the clearances exceeding Rs. 75,00,000/- in the current financial year, could still avail of the benefit of Ministry's Order No. TS/36/94 TRU dated 1-3-1994. In other words, whether they could continue to avail of the benefit of deemed credit without production of documents evidencing the payment of duty even when they had ceased to avail of the benefit of Notification No. 1/93-C.E.
6. We have already summarised relevant provisions of Notification No. 12/93-C.E. We may analyse this Notification a little further.
Under Notification No. 1/93-C.E., dated 28-2-1993, the specified goods when cleared for home consumption on or after the first day of April in any financial year, by a manufacturer from a factory registered as a small scale industry, were exempt from the payment of Central Excise Duty as under :-
(1) In the case of first clearances of the specified goods upto an aggregate value no exceeding Rs. 30,00,000/-.
(a) If the manufacturer avails of the benefit of Modvat credit, then the exemption was to the extent of 10% ad valorem subject to the condition that a minimum of 5% ad valorem duty was payable.
(b) If the manufacturer did not avail of the benefit of Modvat credit then the exemption was from the whole of the duty of excise leviable thereon.
(2) For the further clearances of Rs. 20,00,000/- following the above clearances of Rs. 30,00,000/-, the exemption was to the extent of 10% ad valorem subject to the condition that a minimum of 5% ad valorem duty was payable.
(3) For the further clearances of Rs. 25,00,000/- following the clearances of Rs. 50,00,000/- as above [Rs. 30,00,000/- in Clause (i) and Rs. 20,00,000/- in Clause (ii)], the exemption was to the extent of 5% ad valorem subject to the condition that a minimum of 5% ad valorem duty was payable.
No exemption was available to the aggregate value of clearances in excess of Rs. 75,00,000/- [Rs. 30,00,000/- in Clause (i) + Rs. 20,00,000/- in Clause (ii) + Rs. 25,00,000/- in Clause (iii)].
While the extent of exemption was limited to the aggregate value of clearances not exceeding Rs. 75,00,000/-, no such exemption at all was available if the aggregate value of clearances of all excisable goods for home consumption had exceeded Rs. 2,00,00,000/- in the preceding financial year.
For the current year after limiting the exemption to the aggregate value of clearances of Rs. 75,00,000/-, there was no stipulation with regard to the value of clearances of payment of full excise duty as applicable. No benefit was however, available to the clearances in excess of Rs. 75,00,000/-.
For the next financial year, however, the benefit of small scale exemption was not to be available, if the clearances in the current financial year exceeded Rs. 2,00,00,000/- (Rs. 75,00,000/- exempted and rest not exempted).
The limit of clearances in the preceding financial year as not exceeding Rs. 2,00,00,000/- was for the eligibility and was not for the extent of exemption. Beyond Rs. 75,00,000/- worth of clearances, full duty was applicable and no exemption was available. The extent of exemption could not be confused with the eligibility criteria. A manufacturer whose value of clearances in the present financial year did not exceed Rs. 2,00,00,000/- was eligible for the benefit of exemption in the next year but the extent of exemption was only with regard to the aggregate value of clearances of Rs. 75,00,000/- only. It could not be said that he could avail of the exemption beyond Rs. 75,00,000/-.
7. It is thus clear from the provisions of the Notification that the exemption under that Notification was available only on the clearances of the specified goods upto an aggregate value not exceeding Rs. 75,00,000/-.
8. We may again refer to the Ministry's Order No. TS/36/94 TRU dated 1-3-1994 issued under Rule 57G(2) of the Rules. It was laid-down therein that the ingots and re-rollable materials of iron and steel purchased from outside and lying in stock on or after the first day of April, 1994, with the re-rollers availing of the exemption under Notification No. 1/93-C.E., dated 28-2-1993 will be deemed to have paid duty. It was further provided that the Modvat credit in respect of such ingots and re-rollable materials used without undergoing the process of melting in the manufacture of goods falling under Chapter 72 or Chapter 73 of the Central Excise Tariff was allowable at the rate of Rs. 920 P.T. without the production of documents evidencing the payment of duty.
It was a significant concession to the re-rollers availing of the exemption under Notification No. 1/93-C.E., dated 28-2-1993, as otherwise under Rule 57G, no Modvat credit was to be taken unless the inputs were received in the factory under the cover of one of the specified/prescribed documents evidencing the payment of duty on such inputs.
9. From the analysis of the scheme of exemption under Notification No. 1/93-C.E., it is seen that beyond the clearances of Rs. 75,00,000/-, no exemption is available to the re-rollers. The expression used in the Ministry's Order dated 1-3-1994 is "availing of the exemption".
In the case of R.S. Mani v. A. Palani Muthu Pillai - AIR 1967 Madras 16, the Madras High Court in para-6 of the judgment had observed that "in Funk and Wanall's dictionary 'avail oneself of is stated to mean "to take advantage of; utilise". The meaning given in Oxford Dictionary is also to the same effect. Webster's Dictionary makes 'avail' synonymous with benefit-profit, use and utility. A person can be stated to have availed himself of something only if he had taken advantage or profited by that thing or utilised it to his benefit.
The expression "availing of the exemption" signify "making use of " and "taking advantage of " 'currently'. After the period of availment of the benefit and advantage is over, it could not be said that one is availing of the benefit or advantages.
10. The eligibility criteria is different from the extent of exemption. In para-3 of the Notification, it is provided as under :-
"Nothing contained in this Notification, shall apply if the aggregate value of clearances of all excisable goods for home consumption;
(a) by a manufacturer from one or more factories or
(b) from any factory by one or more manufacturers, had exceeded Rs. 200 lakhs in the preceding financial year."
This aggregate value of clearances of all excisable goods for home consumption for the purpose of para-3 did not relate to the current financial year in which the benefit of exemption was being availed. In the financial year in which the benefit of exemption was being availed (once the manufacturer was otherwise eligible for the exemption, among others, based on past performance), the extent of clearances beyond Rs. 75,00,000/- had no role except for denying the benefit in the next year, if the clearances have exceeded Rs. 2,00,00,000/- in the current year. The benefit of exemption remains at Rs. 75,00,000/- in terms of the Second Proviso in para (1)(i) of the Notification which reads as under :-
"provided further that the aggregate value of clearances of the specified goods in terms of sub-clauses (a), (b) and (c), taken together shall not exceed Rs. 75,00,000/-".
11. This matter has been clarified by the Chandigarh Collectorate Trade Notice No. 81794, dated 25-7-1994, wherein it had been clarified that the deemed credit on re-rollable material and ingots as provided in the deemed credit order dated 1-3-1994 was not admissible to the re-rolling units, whose value of clearances under Notification No. 1/93-C.E. was in excess of Rs. 75,00,000/-.
The importance of trade notices had been emphasised by the Supreme Court in a number of decisions. The trade notices are required to be followed not only in the Commissionerate where they were issued but they were to be followed in other Commissionerates as well, as held by the Supreme Court in the case of Steel Authority of India v. Collector of Customs, Bombay - 2000 (36) R.L.T. 369 (S.C). Paras -2 and 3 from that judgment are extracted below :-
"2. This Court has consistently held that the authorities are bound by the trade notices that they issue and cannot argue to the contrary [See Ranadaey Micronutrients v. C.C.E. -1996 (16) R.L.T. 501 (S. C.)]. It was, therefore, not open to the Revenue to contend that the said Notification did not exempt refractory blocks.
3. Ld. Counsel for the Revenue submitted that this trade notice had been issued only by the Bombay Customs House. It is hardlyi to be supposed that the Customs authorities can take one stand in one State and another stand in another State. The trade notice issued by one Customs House must bind all Customs authorities and, if it is erroneous, it should be withdrawn or amended, which in the instant case, admittedly, has not been done."
12 . We may examine the Tribunal's decision in the case of Collector of Central Exise, Coimbatore v. Sri Venkateswara Steel Industries - 1996 (86) E.L.T. 446 (Tribunal).
The Bench had observed in that case that the facility under Notification No. 1 /93- C. E. has been accorded to a category or manufacturers and the character of their operations by virtue of Rs. 75,00,000/- limit does not change and they continue to be the same category of manufacturers as they were when they cleared the goods at slab rate upto Rs. 75,00,000/-. It was added;
"the wording used in the Notification viz. the facility available is to those who are availing the benefit of Notification No. 1/93 C. E. can be taken to be as identifying the category of manufacturers, who satisfy the criteria as set-out in Notification No. 1/93 C. E. and who actually avail of the benefit of this Notification during the year in question and continue to operate under this Notification throughout the year."
The Bench, in our view, has not correctly analysed the expression 'availing of the exemption'. During the current financial year, there is no availment of exemption beyond the limit of Rs. 75,00,000/-. No general exemption had been provided under Notification No. 1/93-C.E., and the extent of exemption and the value limit beyond which no exemption was available have been specifically and clearly provided in that exemption notification. No general view can be taken that any manufacturer, who availed of the benefit upto the given value limit, will continue to be categorised as one still availing of the exemption even when the above value limit is crossed.
The fact that in the next year if the value of clearances in the current year exceeds Rs. 2,00,00,000/-, the manufacturer will not be eligible for exemption from the very beginning, will not mean that he was availing of the exemption between the limit exceeding Rs. 75,00,000/- and not exceeding Rs. 2,00,00,000/-.
13. After carefully considering the matter, we are of the view that the re-rollers, whose aggregate value of clearances in the financial year had exceeded Rs. 75,00,000/- and when they were paying the applicable rate of excise duty on the clearances beyond the value limit of Rs. 75,00,000/-, were not eligible for the benefit of Ministry's Deemed Credit Order No. TS/36/94 TRU dated 1-3-1994.
Reference is answered accordingly.
As a result, the appeals filed by the Revenue against the Orders-in-Appeal, dated 30-4-1997/30-6-1997 passed by the Commissioner of Central Excise (Appeals), Chandigarh are allowed. The appeals filed by the assessees against the Order-in Appeal, dated 31-12-1996 passed by the Commissioner of Central Excise(Appeals), Allahabad are dismissed.
In the facts and circumstances of the matter, however, the personal penalties wherever levied are set aside. Order accordingly.