Customs, Excise and Gold Tribunal - Delhi
Sae (India) Ltd. vs Collector Of Central Excise on 6 March, 1992
Equivalent citations: 1992ECR343(TRI.-DELHI), 1992(61)ELT726(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This is an appeal preferred against the Order-in-Appeal No. 1/CE/IND/91 dated 21-3-1991 passed by the Collector of Central Excise (Appeals), Indore.
2. The appellants had filed classification list No. 134/88-89 wherein they have classified M.S. angles of short length under Heading 7216.10 and M.S. defective Angles and plate under Chapter Heading 7216.10 but the same were approved under Chapter Heading 7216.90. The appellants had removed M.S. defective plates quantity 2.140 M.T. @ Rs. 365/- P.M.T., M.S. defective plates quantity 1.960 M.T. @ Rs. 385/- P.M.T. and M.S. Angles of short length @ Rs. 365/- P.M.T. Since higher rate of duty was in force at the time of removal, according to the department, duty was payable on these items in question at Rs. 500/- P.M.T. Rs. 600/- P.M.T., and Rs. 500/- P.M.T. respectively plus Special Excise duty as provided under Notification No. 64/89 dated 1-3-1989. The contention of the appellants that inputs on which credit was taken can be removed on payment of duty under Rule 57F(1) at the same rate of duty at which the credit was taken, was negatived by the authorities below and raised differential duty amounting to Rs. 19,778.11. Hence this appeal.
3. Shri Satya Sheel, learned Advocate, appearing for the appellants, submitted that Rule 57F(1) allows removal of inputs as such from the factory for home consumption on payment of appropriate duty of excise levied thereon. Once excisable goods have been cleared from the factory of the manufacture on payment of duty at the appropriate rate under Rule 9, the same cannot be subjected to any enhanced rate of duty when removed from the factory of the assessee who had kept the goods under Modvat Scheme since the Assessee is not manufacturer of the inputs. He drew my attention to Sub-rule (1) of Rule 57F of the Central Excise Rules, 1944 which reads as under :-
"The inputs in respect of which a credit of duty has been allowed under Rule 57A may
(i) be used in, or in relation to the manufacture of final products for which such inputs have been brought into the factory; or
(ii) be removed, subject to the prior permission of the Collector of Central Excise, from the factory for home consumption or for export on payment of appropriate duty of excise or for export under bond, as if such inputs have been manufactured in the said factory:
provided that where the inputs are removed from the factory for home consumption on payment of duty of excise, such duty of excise, shall in no case be less than the amount of credit that has been allowed in respect of such inputs under Rule 57A."
He emphasised on the wordings used under Rule 57F(l)(ii) and said that it follows therefrom that where the goods are removed from the factory for home consumption on payment of duty of excise, such duty of excise would not be more than the amount of credit that has been allowed in respect of such inputs under Rule 57A. He said that under Rule 9A(ii) of the Central Excise Rules, the rate of duty and tariff valuation, if any, applicable to any excisable goods shall be the rate of valuation in force on the date of the actual removal of such goods. The fiction of the words "as if such inputs have been manufactured in the said factory" occurring in Clause (ii) of Rule 57F(1) is not applicable to the excisable goods which have been manufactured and cleared from the factory of the original manufacturer on payment of duty at the rate in force on the date of the actual removal of the goods in terms of Rule 9A(ii). He referred to the decision of the Tribunal in the case of H.M.T. Ltd. v. Collector of Central Excise, Chandigarh, reported in 1990 (45) E.L.T. 579 (Tri.), wherein it was held that the goods obtained under Chapter X Procedure of the Central Excise Rules, 1944 and subsequently sold as such for home consumption, are liable to duty on the value declared by the original manufacturer of the goods. He also cited the decision in the case of Mahindera & Mahindera Limited, Bombay v. Collector of Central Excise, Bombay-II, decided by the Collector of Central Excise (Appeals), Bombay wherein it was held that assessable value of inputs cleared, as such, is the value on which credit was taken unless assessee taking credit is also himself manufacturer.
4. Shri Rakesh Bhatia, learned SDR, while reiterating the findings given in the impugned order, submitted that deeming provisions of manufacture has been provided under the text of the Rule 57F(l)(ii) and thus the rate of duty applicable will be the rate of duty as prevalent on the date of clearance of goods. He said that proviso clause also stipulates that the payment of duty on the inputs shall in no case be less than the amount of credit allowed. He also said that decision cited by the appellants' counsel in the case of M/s. H.M.T. Ltd. (supra) is not applicable to the facts of this case as it was dealt with the value of the goods and not with reference to claiming of Modvat credit.
5. I have carefully considered the submissions made by both sides and perused the records. The short point to be considered in this case is that what will be the rate of duty applicable in case inputs are removed under Rule 57F(1). In other words, whether the rate of duty which is applicable on the date of removal or rate on which credit was taken in terms of Rule 57A of the Central Excise Rules. I find that assessable value of purchased duty paid inputs on which credit is taken under Rule 57A was allowed to be cleared for home consumption on appropriate rate of duty under Central Excise Rule 57F(l)(ii) as if such inputs have been manufactured in the same factory. It is evident that the appellants are not manufacturer of the inputs but they purchased duty paid inputs which were cleared from the original manufacturer. If the assessee is also manufacturing the goods in question, the rate of duty applicable will be the rate of duty as prevalent at the time of clearance of the goods. Since the inputs in question were already cleared on payment of duty at the appropriate rate from the original manufacturer of the inputs, I feel that there is no justification for the recovery of higher rate of duty as it was rightly contended by the appellant's counsel. In the view I have taken, I set aside the impugned order and allow this appeal with consequential relief.