Customs, Excise and Gold Tribunal - Delhi
Fedders Lloyd Corpn. Ltd. vs Collector Of Central Excise on 30 January, 1995
Equivalent citations: 1995(78)ELT207(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. M/s. Fedders Lloyd Corporation Ltd. have filed this appeal against the Order-in-Appeal No. 103 CE/DLH/91, dated 30-9-1991 passed by the Collector of Central Excise (Appeals), New Delhi, upholding the order-in-original passed by Asstt. Collector of Central Excise MOD V, New Delhi imposing the demand of duty raised in the show cause notice dated 1-1-1986 was concerned. The said demand was consequent to the finding by the Asstt. Collector that the appellants had misutilised proforma credit by clearing Airconditioners by paying duty by excess utilisation of proforma credit earned by them on component parts of Refrigerators. It was observed by the Asstt. Collector that credit could be utilised under Rule 56A for paying duty only on such finished goods for the manufacture of which the materials/component parts on which credit had been earned had been permitted to be brought to the factory and not on any other finished goods. Apart from upholding the Asstt. Collector's order to the above extent but setting it aside insofar as the demand corresponding to the corrigendum dated 7-2-1986 to the show cause notice was concerned and directing the Asstt. Collector to adjudicate that matter afresh, Collector (Appeals) reduced the penalty from Rs.10,000/- to Rs. 3,000/-.
2. In the appeal, it has been urged by the appellants that both their products, namely, airconditioners and refrigerators were classifiable under the same Tariff Item and they were accordingly maintaining combined RG-23 account from which they paid duty on both their products. Such a practice followed by them was known to the department and in fact even allowed by the Asstt. Collector vide his order dated 21-12-1983. In view of this, the issue could not be reopened as was done by the department by issue of fresh show cause notice culminating in the adjudication order dated 25-2-1991 passed by the Asstt. Collector and the impugned order-in-appeal dated 30-9-1991 passed by the Collector of Central Excise (Appeals), New Delhi upholding the said order-in-original insofar as it related to the show cause notice dated 1-1-1986. It has then been contended in the appeal that the Collector (Appeals) while holding that the corrigendum to the aforesaid show cause notice was not really a corrigendum but constituted a fresh show cause notice erred in remanding the matters to the Asstt. Collector for deciding the case with reference to the corrigendum. It has been contended that the notice was in any case barred by limitation.
3. The appellants have made further submissions vide their letter dated 21-1-1994 after this Bench had passed an interim order dated 17-1-1994. In this letter they furnished details of duty payment made by them on their two products from their RG-23 account and Personal Ledger Account. It has been submitted that by the alleged excess use of the credit amount earned on their component parts of refrigerators for payment of duty on airconditioners, they had to pay duty on their refrigerators by correspondingly paying more duty from their Personal Ledger Account. If they had not utilised the impugned credit amount for payment of duty on airconditioners they would have been able to utilise the same for payment of duty on the refrigerators instead of having to pay from Personal Ledger Account. The total duty amounts paid on either of their two products were more than RG-23 credits earned on the component parts of the corresponding product and the difference was paid by them from their Personal Ledger Account. In view of this position, the entire exercise involved in the impugned order was academic having no revenue effect. They relied upon the Tribunal decisions in Indian Tube Co. Ltd. v. Collector of Central Excise - 1991 (56) E.L.T. 596 [wrongly referred to by them as Hind Filters (P) Ltd. v. CCE] and in Ipitron Times Ltd. v. CCE - 1993 (67) E.L.T. 430. It was stated that as against a total demand of Rs. 74,23,696.40 on the ground that proforma credit amounting to the said sum was wrongly utilised by them for the payment of duty on airconditioners as the said credit pertained to component parts of refrigerators, they had paid a sum of Rs. 86,83,507.18 towards duty on refrigerators through Personal Ledger Account. If their utilisation of credit earned on components of refrigerators for payment of duty on airconditioners were to be taken as wrong and they were required to pay such duty from their Personal Ledger Account then the said amount would be available in their proforma credit account which they could have utilised for the eligible final product, namely, Refrigerators. It was, therefore, urged by them that the entire exercise was one of recomputing the credit and Personal Ledger Account, having no revenue effect. A copy of the above-mentioned note with enclosures showing the credit amounts and the amount paid as duty on refrigerators from their P.L.A. was submitted by them to the Assistant Collector of Central Excise, MOD V, New Delhi for verification of their contentions. The Assistant Collector submitted his report after such verification. It was admitted by the Asstt. Collector that they would have been able to meet the duty liability on refrigerators cleared during the period from 1 / 86 to 12/87 from the credit of duty earned on their component parts if they had not utilised the same for payment of duty on clearances of airconditioners during the period from 1-6-1985 to 26-12-1985. In that event they would not have been forced to pay duty on clearances of refrigerators from P.L.A.
4. With the above information on record the appeal was heard by us when the appellants were represented by Shri V. Sridharan, learned Advocate and the respondent Collector by Shri V.C. Bhartiya, learned Departmental Representative. Shri Sridharan submitted that their case is squarely covered by the Tribunal decisions in Ipitron Times Ltd. v. Collector of Central Excise reported in 1993 (67) E.L.T. 430. The said decision was also referred to and endorsed in a subsequent decision of the Tribunal in Konark Televisions Ltd. v. Collector of Central Excise, Bhubaneswar (Order No. A/506/CAL/94, dated 6-6-1994). It was a similar matter where credit of duty earned on component parts of Black and White Television sets was used for payment of duty on Colour Television sets in the manufacture of which they were not used. Adjustment of credit from the two accounts, namely, RG 23A Part II and P.L.A. was ordered to regularise the payment of duty on both varieties of the product which were classifiable under the same Tariff Heading. There was a single RG 23A account. Shri Sridharan pleaded that in view of the confirmation received from the Asstt. Collector that they had paid duty on Refrigerators through their P.L.A. to make up for the shortfall in the credit amount in their RG-23 with reference to the duty paid on the component parts of Refrigerators, their appeal may be allowed.
5. Shri V.C. Bhartiya, learned Departmental Representative supported the impugned order.
6. We have considered the submissions. Though, on merits the findings of the Collector (Appeals) that credit of duty earned on the materials and component parts taken in the RG 23 account can be utilised for payment of duty payable on the finished products in the manufacture of which they have been permitted to 'be brought into the factory and not for any other product made by them is' legally correct and the parts in question which are for Refrigerators were used for Refrigerators and not for airconditioners, the adjustment of credit sought by the appellants is permissible. The total amount of duty paid by them on their two products is more than the credit corresponding to the duty paid on their component parts and was made up by payment from P.L.A. Obviously the appellants cleared more Airconditioners initially from the combined credit account splitting up that account into two parts for the component parts for each of these products. In the process, they utilised more credit amount than what was available with reference to the component parts of Airconditioners. If they had restricted the credit utilisation to only the amount apportionable to such component parts, the alleged excess utilised credit amount would have remained in their RG 23 Part II account and they could have utilised the same when it was the turn of the Refrigerators to be cleared on payment of duty. When that eventuality arose, credit balance was correspondingly less which was made good by payment from the P.L.A. They did not gain any undue advantage by their mistake except that they did not have to deposit required money in their P.L.A. to pay the duty on Airconditioners but utilised their credit account. They gained the interest involved and the Government got the duty amount in question late to that extent. There has been no loss of duty in the ultimate analysis. Hence, we set aside the impugned order-in-appeal so far as the duty demand is concerned. The Collector's order remanding the matter to the Assistant Collector to adjudicate the case with reference to the corrigendum is also set aside as we have held on merits that the adjustment of credit utilisation and payment of duty from the P.L.A. to regularise the transaction is permissible. We, however, uphold the penalty as reduced by the Collector (Appeals) as the appellants have committed an irregularity by excess utilisation of the credit at the time they paid the duty on Airconditioners. The appeal is disposed on the above terms.