Gujarat High Court
C.M.C. (India) Pvt. Ltd. vs Union Of India on 27 June, 1991
Equivalent citations: 1994(71)ELT11(GUJ)
JUDGMENT Majmudar, J.
1. In this petition, a short but an interesting question arises for our consideration. It is to the effect as to whether an exemption notification issued under Rule 8 of the Central Excise Rules, 1944 ('the Rules' for short) in connection with synthetic organic dyes ('S.O. dyes' for short) manufactured by the petitioner has got stultified on account of operation of the provisions of Rule 56A of the rules. In order to appreciate this controversy, it is necessary to note a few relevant facts.
2. The petitioner is a company registered under the Companies Act as a private limited company. It is engaged in the manufacture of S.O. Dyes falling under T.I. 14D of the First Schedule to the Act as was applicable at the relevant time. The petitioner was utilising duty paid dye-intermediates falling under T.1. 68 of the Schedule as basic raw material of both the kinds viz. imported as well as indigenous in the manufacture of the aforesaid dyes. We are told that now the petitioner has discontinued manufacturing of the aforesaid items. The Central Government in exercise of its powers under Rule 8(1) of the rules had issued notification dated 20-4-1961 which was subsequently amended from time to time granting certain exemptions. That notification is at annexure D to the petition. It is captioned 'Exemption notification relating to set off of Countervailing duty'. It deals with dyes made from countervailing customs duty paid intermediates and states that they are exempted from excise duty equivalent to the duty already paid. The notification then proceeds to recite that in exercise of the powers conferred by Rule 8(1) of the Rules, the Central Government hereby exempts synthetic organic dyestuffs manufactured wholly or partly out of the imported intermediates, from so much of the duty of excise leviable thereon as is equivalent to the amount of the countervailing customs duty paid on such imported intermediates. This notification underwent an amendment on 16-6-1980 by amendment Notification No. 109/80-C.E. By the said amendment, a proviso was inserted in the said exemption notification which read as under :-
'Provided that in relation to the exemption under this notification, the procedure set out in rule 56A of the aforesaid rules is followed.' The controversy in the present proceedings centres round the interpretation of the words 'procedure set out in Rule 56A' as employed in the said proviso. At this stage, it is necessary to refer to Rule 56A. The said rule deals with special procedure for movement of duty paid materials or component parts for use in the manufacture of finished excisable goods, sub-rule (1) of the said rules as applicable at the relevant time provided as under :-
"Notwithstanding anything contained in these rules, the Central Government may by notification in the official gazette, specify the excisable goods in respect of which the procedure laid down in sub-rule (2) shall apply."
So far as sub-rule (2) of rule 56A is concerned, alongwith relevant two provisos, the same read as under :-
"56A(2). The Collector may, on application made in this behalf and subject to the conditions mentioned in sub-rule (3) and such other conditions as may from time to time be prescribed by the Central Government, permit a manufacturer of any excisable goods specified under sub-rule (1) to receive material or component parts or finished product (like asbestos cement) on which the duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1976) (hereinafter referred to as the 'countervailing duty') has been paid, in his factory for the manufacture of these goods or for the more convenient distribution of finished product and allow a credit of the duty already paid on such material or component parts of finished product, as the case may be :
Provided that no credit of duty shall be allowed in respect of any material or component parts used in the manufacture of finished excisable goods -
(i) If such finished goods produced by the manufacturer are exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty, and
(ii) unless -
(a) duty has been paid for such material or component parts under the same item as the finished excisable goods, or
(b) remission or adjustment of duty paid for such material or component parts has been specifically sanctioned by the Central Government;
Provided further that no credit of countervailing duty shall be allowed in respect of any material or component parts used in the manufacture of finished excisable goods, if countervailing duty has been paid in respect of such material, or component parts, as fall under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944)."
The petitioner's contention is that benefit of the exemption notification at annexure 'D' is not lost by the finished product viz. S.O. dyestuffs manufactured by the petitioner even though the material or components parts used in the manufacture of this finished excisable goods fell under T.I. 68 of the First Schedule. In short, it is contended that the proviso to exemption notification at Annexure D only imports procedural provision of Rule 56A but did not attract substantial provision in connection with no credit rule as envisaged by the second proviso of Rule 56A (2).
3. The aforesaid contention of the petitioner was not found favour with the departmental authorities, the respondents herein who have taken the view that after insertion of the aforesaid proviso to exemption notification at annexure D from 16-6-1980, the final product manufactured by the petitioner viz. S.O. dyestuffs became disentitled to get benefit of the said exemption notification as the second proviso to Rule 56A(2) which was inserted in Rule 56A on 3-3-1979 started operating in the case of the petitioner and under the said proviso no credit of such countervailing duty would be available to the finished product manufactured by the petitioner by utilising such raw material or component parts as they admittedly fell under T.I. 68 of the Second Schedule. The stand of the department was conveyed to the petitioner by the impugned communications at annexures B and C which have in terms pointed out to the petitioner that with effect from 1-8-1980, no set-off of C.V. duty paid under T.I. 68 can be taken since it is inconsistent with provisions of Rule 56A had the procedure laid down therein. These communications are addressed to the petitioner by the Assistant Collector of Central Excise and the Deputy Collector, respondents Nos. 1 and 2 respectively. It is in these circumstances that the petitioner has filed this petition under Art. 226 of the Constitution praying for a relief for quashing and setting aside the communications at annexures B and C and for directing respondents Nos. 1 and 2 to allow the petitioner to take the benefit of set-off of countervailing duty on the finished goods falling under T.I. 14D. It is also prayed for a direction to respondents to refund the excise duty paid by the petitioner from 1-1-1980 to 30-6-1981 representing countervailing duty. The said prayer is made in view of the fact that this petition was moved in this court on 2-7-1981. This petition was admitted to final hearing on 8-7-1981 and it has reached final hearing today before us.
4. We are told that in the meantime the petitioner has continued paying excise duty under protest for clearing finished products viz. S.O. dyestuffs during the currency of exemption notification annexure D which itself has got rescinded on 16-10-1984. The petitioner's claim for refund, therefore, would be for the period from 1-9-1980 to 15-10-1984.
5. Rival contentions : Mr. H. B. Shah for the petitioner vehemently contended that exemption notification issued under Rule 8(1) cannot be whittled down or stultified by the substantive provision of Rule 56A. Both the provisions operate in separate fields. Exemption notification under Rule 8(1) seeks to grant partial or full exemption from payment of excise duty subject to the conditions laid down therein and if these conditions are satisfied, the finished goods would earn exemption as provided therein. That, insertion of the proviso to the said notification on 16-1-1980 would make no difference. All that the proviso has provided is that in relation to exemption, the procedure set out in Rule 56A has to be followed by the concerned parties. That procedure deals with the method and manner of application and the competent authority before whom such application has to be moved. It has nothing to do with the substantive provision laid down in Rule 56A for earning benefit of the proforma credit separately under Rule 56A. The petitioner does not claim any benefit under Rule 56A at all. All that the petitioner claimed is the benefit of exemption notification. It was further submitted that the Central Tribunal in two decisions in the case of Sandoz (India) Ltd. v. Collector of Central Excise, reported in 1988 (37) E.L.T. 299 and between the same parties reported in 1990 (50) E.L.T. 403 has in terms taken this view in connection with this very product in the light of this very exemption notification read with Rule 56A. He submitted that the reasoning of the tribunal in this connection deserves to be accepted. Our attention was also invited to other decisions of the tribunal reported in the case of C.C.E. v. Hindustan Wire Products, 1985 (19) E.L.T. 141 and Vikrant Tyres v. C.C.E. Bangalore, 1988 (38) E.L.T. 301 wherein two other Benches of the Tribunal have also taken similar view. Reliance was also placed on the decision of a Division Bench of this court in the case of Swishflow Pvt. Ltd. v. N.R. Jadav reported in 1979 (4) E.L.T. 153 for contending that if benefit under any exemption notification issued under Rule 8(1) was to be rescinded, the Central Government could have expressly withdrawn such notification but that was not done and, therefore, by merely engrafting a proviso to the exemption notification, it cannot be said that benefit of the notification was sought to be withdrawn so far as the petitioner's product was concerned.
6. Mr. Raval for the respondents on the other hand submitted that the exemption notification at annexure D itself recites that it seeks to grant set-off on countervailing duty and, therefore, it envisages a scheme of set-off of countervailing duty in connection with imported intermediates that might have been utilised for manufacturing S.O. Dyes and the scheme of set-off as laid down by Rule 56A being a well knit composite scheme gets attracted in such cases by virtue of express provisions in the proviso to the exemption notification at annexure D at least from 16-6-1980 and when the proviso has laid down that the procedure set out in Rule 56A has to be followed, the entire procedure as contemplated by Rule 56A alongwith provisos gets attracted and this procedure cannot be bifurcated into the procedure for clearance of goods under the Act and the eligibility for proforma credit procedure as laid down by the proviso to Rule 56A(2). In this connection, our attention was invited to a division bench judgment of this court in the case of Digvijay Cement v. U.O.I. 1986 (25) E.L.T. 879 and also to a judgment of the A.P. High Court in Hyderabad Asbestos Cement Products Ltd. v. U.O.I. 1987 (32) E.L.T. 28 which had followed the aforesaid decision of this court. It was submitted on behalf of the respondents that exemption notification under Rule 8(1) will have to be read with entire Rule 56A which is incorporated by reference as per the proviso to the said exemption notification and from 16-6-1980 onwards, therefore, the petitioner's product S.O. dyestuffs lost the benefit of exemption notification issued under Rule 8(1) as it did not answer the requirements of procedure laid down by Rule 56A inasmuch as the second proviso to Rule 56A(2) disentitled the petitioner from getting credit of countervailing duty for the simple reason that countervailing duty was paid by the petitioner in respect of the raw material and component parts which fell under T.I. 68 and hence on the express language of the said proviso, no credit of countervailing duty would be available to the petitioner by the thrust of the said proviso to Rule 56A(2). It was also contended that as provided by Rule 56A(1), the said provision operated notwithstanding any other rule and hence notification issued under Rule 8 also got superseded by the provision of Rule 56A(1). It was, therefore, submitted that the stand taken by the respondent department while issuing the impugned communications at annexures B and C was quite justified and called for no interference.
7. We shall now proceed to deal with the moot question which has been posed for our consideration in the light of these rival contentions. It must be kept in view that the exemption notifications are issued by the competent authority viz. the Central Government in exercise of its powers under Rule 8(1) of the rules. As per the said rule, the Central Government is empowered to issue notifications from time to time for exempting subject to such conditions as may be specified in the notification any excisable goods from the whole or any part of duty leviable on such goods. It is pertinent to note that the said rule has now stood deleted but at the relevant time, it was fully operative and it is in exercise of the power under the said rule that the notification was issued by the Central Government. A mere look at the notification shows that the Central Government had decided to exempt S.O. Dyestuffs manufactured wholly or partly out of the imported intermediates from so much of the duty of excise leviable thereon as is equivalent to the amount of the countervailing customs duty paid on such imported intermediates. It is true that it is styled as set-off of countervailing duty, but in substance, it had provided for exemption under Rule 8(1) in connection with S.O. Dyestuffs manufactured by the concerned parties. It is not in dispute that the petitioner had manufactured S.O. dyestuffs and had utilised imported intermediates in the manufacturing process. Once that remained undisputed, it becomes clear that the exemption from excise duty on the manufactured goods i.e. S.O. Dyestuffs became operative being equivalent to the amount of the countervailing customs duty paid on such imported intermediates. There is no dispute between the parties on this aspect. But the question arises as to what is the position in connection with the said exemption after the enactment of the proviso to the said notification on 16-6-1980. When we turn to the said proviso, it becomes clear that the procedure set out in Rule 56A was to be followed by the party claiming such exemption. It is pertinent to note that the authority issuing the exemption notification had used the words "procedure set out in Rule 56A" in the said proviso and not the words 'procedures set out in Rule 56A'. Hence, the entire scheme of Rule 56A was not made applicable as a condition for continuing the exemption granted under the exemption notification which was holding the field earlier. We have already seen the scope and ambit of Rule 56A. It is true that under Rule 56A(1), S.O. dyestuffs are mentioned as specified excisable goods and consequently the special procedure laid down under Rule 56A for proforma credit has to be available for such products subject to the requirements of sub-rule (2) being complied with. A mere look at sub-rule (2) Rule 56A shows that it consists of two parts, the first part deals with procedure to be followed by a party claiming benefit of the said procedure. An application has to be made by the manufacturer of excisable goods concerned. Application has to be made to the Collector. On the permission being granted by the Collector, the manufacturer will be permitted to receive material or pass on which countervailing duty has been paid. He could receive such goods in his factory. This is the procedure to be followed by the concerned manufacturer. When we turn to the proviso to Rule 56A(2), we find engrafted certain prohibitions against grant of such proforma credit in the circumstances covered by the proviso. These two provisos have been interpreted by the Division Bench of this court in Digvijay Cement (supra) as laying down no credit rule and being substantive provisions by themselves. The Division Bench of this court speaking through one of us (S. B. Majmudar, J.) made the following observations in this connection :-
"The proviso to Rule 56A(2) mandates that no credit of duty shall be allowed in respect of any material or component parts used in the manufacture of finished excisable goods in the contingencies contemplated by sub-paras (i) and (ii) of the proviso. Consequently, sub-paras (i) and (ii) of the proviso will have to be read together to get a complete picture about the 'no credit rule' enacted by the proviso. If sub-para (i) is read in isolation as a separate scheme only a truncated picture of the proviso will emerge and the real intent of the rule making authority underlying the proviso will not become highlighted."
It is also observed that :-
"The entire scheme of proforma credit procedure and the benefit available to specified excisable goods mentioned therein is a well-knit and composite scheme as reflected by Rule 56A(1) and (2) read with proviso with both its sub-paras (i) and (ii). All these provisions operate in the same field and not in separate water tight compartments or field nor would they reflect different fact situations as contended by the petitioners."
Mr. Raval for the respondents learned heavily on the aforesaid observations of the Division Bench and submitted that once the scheme of Rule 56A is brought in by the proviso to the exemption notification, the entire scheme alongwith the provisos will get attracted and not only the procedural part thereof. It is not possible to agree with the contention of Mr. Raval for the obvious reason that the observations of the division bench in the aforesaid case proceeded in connection with the interpretation of Rule 56A alone and not in connection with any exemption notification under Rule 8. The question before the Division Bench was as to whether a party who claims proforma credit benefit under Rule 56A can be said to be entitled to the said benefit without complying with the requirements of the proviso. The answer was obviously in the negative as held by the Division Bench. Consequently the aforesaid observations in connection with the well knit scheme of Rule 56A cannot be of any assistance to the respondents. On the other hand, the observations made by the Division Bench in this very case in para 19 of the report would be more relevant. They read as under :
"It is contended that once the Central Government specifies excisable goods for the purpose of benefit of Rule 56A as per sub-rule (1) thereof, the Collector, on the mandate of sub-rule (2) has to make available the benefit of the proforma credit procedure to such specified commodity subject to the conditions mentioned in sub-rule (3) of Rule 56A. Consequently, the fetters imposed by the proviso to sub-rule (2) cannot be projected in the working of sub-rule (2) of Rule 56A. It is not possible to agree with this contention for the obvious reason that the conditions mentioned in sub-rule (3) are all procedural conditions indicating how a manufacturer of specified excisable goods can apply for being given the benefit of proforma credit. But the proviso to sub-rule (2) of Rule 56A enacts substantive 'no credit rule' and cuts across the general sweep of sub-rule (2) of Rule 56A. Consequently, even though the provisions laid down by the proviso may not be imposing any procedural conditions, as these provisions impose substantive fetters on the rights to earn benefit of proforma credit procedure qua any specified excisable commodity, these fetters enacted by the rule making authority in its wisdom cannot be by-passed or ignored otherwise the scheme of proforma credit be denuded of its real content and substance".
It becomes obvious that Rule 56A(2) and for that matter any other sub-parts of the said rule partly consist of procedural provisions to be followed by a manufacturer for earning benefit under the said rule while in part they consist of substantive conditions which have to be complied with before benefit of Rule 56A itself can be made available to the concerned party by the competent authority. So far as the exemption notification at annexure D is concerned, it has in terms exempted S.O. Dyestuffs manufactured by the petitioner from excise duty equivalent to the amount of the countervailing customs duty paid on the imported intermediates which have gone in the manufacture of these dyestuffs. The proviso engrafted on 16-6-1980 to the said notification has not in any way whittled down or diluted or rescinded the exemption notification by the said proviso. But all that it has sought to do is to import the machinery of the procedural provisions of Rule 56A which is to be followed by the concerned manufacturers who want to get benefit of the exemption notification qua finished product viz. S.O. Dyestuffs manufactured by them. The procedure set out in Rule 56A as mentioned in the proviso to this exemption notification cannot mean eligibility condition for earning proforma credit as laid down by provisos to Rule 56A(2) as these conditions and provisions are substantive provisions by themselves as held by the aforesaid Division Bench decision and these substantive provisions were not invoked by the proviso to the exemption notification. It is had intended to include them, the proviso would have referred to provisions of Rule 56A and not procedure of Rule 56A. It is not possible to agree with the contention of the learned advocate for the respondents that the exemption notification is in fact incorporating the entire set-off provision and is parallel to Rule 56A. It has to be kept in view that so far as S.O. Dyestuffs manufactured by the petitioner are concerned, even though the said commodity is specifically covered by notification under Rule 56A(1), the benefit of the said provision would not be available to the petitioner as the very first proviso in the light to both of its sub-parts would disentitle the petitioner from claiming any benefit of Rule 56A for the said product and no credit rule laid down by both the said parts of the first proviso would apply to the facts of the present case. Mr. Shah for the petitioner also conceded to this position and submitted that he cannot claim and does not claim any benefit directly under Rule 56A and his only contention is that benefit of the exemption notification which was available to his product all throughout had not stood withheld or rescinded only because the proviso was added to the said notification under which a manufacturer like the petitioner had to follow the procedural provision of Rule 56A for continuing to get benefit of the exemption notification during its currency till 1984. We find considerable substance in the aforesaid stand of the learned advocate for the petitioner. No proforma credit would ever be available to the petitioner's product under Rule 56A as the 2nd part of the very first proviso ruled out such benefit on the facts of the present case. It has been laid down by the first proviso to Rule 56A(2) that no credit of duty shall be allowed in respect of any material or component parts used in the manufacture of finished excisable goods if such finished excisable goods produced by the manufacturer are exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty. Of course, that part does not apply to this petitioner as it finished product is excisable. However, the second part of the first proviso to Rule 56A(2) will apply to the petitioner's product. It runs as under :-
"No credit of duty shall be allowed.
Unless -
(a) duty has been paid for such material or component parts under the same item as the finished excisable goods or
(b) remission or adjustment of duty paid for such material or component parts has been specifically sanctioned by the Central Government."
It is not in dispute between the parties that finished excisable goods manufactured by the petitioner attracted duty under T.I. 14D at the relevant time while the raw material or component parts which were imported for utilising them in the manufacturing process attracted duty under T.I. 68. Thus by the provision of no credit rule as per the first proviso, part (ii) of Rule 56A(2) the petitioner's product would not remain entitled to benefit of proforma credit. It is not disputed that no remission or adjustment of duty on such component parts is specifically sanctioned by the Central Government. Thus, proforma credit under Rule 56A by itself is admittedly not available to the petitioner's S.O. dyestuffs. However, exemption given under Rule 8(1) to such product would stand on its own and it would operate in entirely a different field. So far as this exemption is concerned, in our view, no adverse impact can be said to have been made by the second proviso to Rule 56A(2) which cannot get telescoped into exemption notification under Rule 8 by virtue of its proviso as seen earlier. The said provision would have been of relevance if any benefit was claimed directly under Rule 56A as a specified commodity by the petitioner de hors the first proviso to Rule 56A(2) and on the assumption that the said proviso would not disentitle the petitioner from claiming such direct benefit. Only under these circumstances, it could have been urged by the respondents that as per second proviso to Rule 56A(2), no set-off of countervailing duty in any case would be available to the petitioner on materials or component parts as countervailing duty paid on these intermediates would fall under T.I. 68 as it is not in dispute that these components if not imported and were manufactured indigenously, would have attracted duty under T.I. 68. The petitioner claims no such benefit directly under Rule 56A. Consequently, it is not possible for us to read the provisions of the proviso to the exemption notification in the way the learned advocate for the respondents wanted us to read. In this connection, we may mention that the Tribunal in the case of Sandoz India Ltd. v. Collector of Central Excise, 1988 (37) E.L.T. 299 has taken the same view which we are inclined to take on the interpretation of the exemption notification in the light of the proviso engrafted therein on 16-6-1980. The said decision is rendered in connection with an identical commodity produced by the concerned manufacturer. In connection with the said product, it has been observed as under :
"The only proviso to the notification relates to the Rule 56A procedure to be followed as aforesaid. The procedure provides for the mechanics of availing of the exemption and the extent of exemption given cannot be reduced or nullified by reading the prohibition of Rule 56A into it unless it was specifically warranted by the wording of the notification. It the present case, no such meaning can be read in the wording of Notification No. 103/61-C.E. as amended. The procedural compliance in terms of Rule 56A can only be read to mean the manner in which the benefit of exemption can be availed of, but it has nothing to do with the extent of exemption that is available under the notification".
The same view was reiterated by a later decision of the Tribunal between the same parties reported in 1990 (50) E.L.T. 403. The learned advocate for the respondents submitted that the aforesaid reasoning of the Tribunal would be no longer goods law in view of the Division Bench judgment of this court reported in 1986 (25) E.L.T. 879 (supra). We have already dealt with the said decision in earlier part of this judgment. As observed earlier, observations in that decision will have to be read in the light of the question posed for consideration of the said Division Bench viz. whether the direct benefit under Rule 56A can be available to a party which does not comply with all the substantive requirements of the proviso. Therefore, these observations made in a different context and for resolving a different controversy cannot be pressed in service while considering the interacting of the exemption notification and the procedural provisions of Rule 56A. Consequently, it cannot be said that the observations of the Division Bench of this court in the aforesaid case in any way run counter to the reasoning of the Tribunal in cases when it considered the very question with which we are concerned. The interpretation which has appealed to us in this connection is the very same interpretation which has been adopted by the Tribunal for deciding an identical question and we fully concur with it. Hence, no fault can be found with the reasoning of the Tribunal as employed in the aforesaid two decisions. We may also mention that there is yet another judgment of the Tribunal in Vikrant Tyres v. C.C.E. Bangalore, 1988 (38) E.L.T. 301 wherein a similar view is taken of the words 'procedure set out in Rule 56A' as found in the exemption notification. It has been observed in this connection by the Tribunal :
"This does not mean that all the provisions of the said rule are applicable. It is enough if the procedure under the rule is followed".
This takes us to the consideration of the submission of the learned advocate for the respondents to the effect that the non obstante clause in Rule 56A(1) overrides Rule 8. It is not possible to agree with this contention. All that this clause ensures is that if under any other rule a provision is made for a specified commodity to the effect that benefit of set-off will not be available to it on duty paid on inputs, such a provision will stand superseded by notification under Rule 56A(1). The purport of such a non obstante clause is to avoid otherwise head-on conflict between the two on competing and contradictory provisions operating in the same field. Such a clause cannot cover provisions operating in different fields. As seen earlier, Rules 8 and 56A operate in independent fields of their own. They do not overlap. Hence provisions of Rule 56(A)(1) cannot be said to have by themselves overridden Rule 8. It is not the contention of any one that Rule 8 notification has ever suggested that benefit of Rule 56A procedure will not be available to the petitioner's product which is specified under Rule 56A(1). Hence, the non obstante clause therein has no role to play on the facts of this case. Before parting with the aforesaid discussion, it is also pertinent to note that in the explanatory notes in connection with Budget changes which had brought about the concerned amendment to the exemption notification and which are brought on record at annexure F, it has been observed in connection with rationalisation of input duty relief scheme as under :-
(i) Where the inputs and the finished product fall under the same tariff item, and where the finished product is already notified under Rule 56A, the respective set-off notification under Rule 8(1) are being rescinded.
(ii) Similarly, finished products which are not presently notified under Rule 56A but which are eligible for set-off under specified notification under Rule 8(1) are being suitably notified under Rule 56A.
(iii) Where the inputs and the finished product fall under the different Tariff Item, but the finished product is already notified under Rule 56A, the exemption notification under Rule 8(1) are being made conditional by making observance of the procedure contained in Rule 56A compulsory for availing of the input concession. For this purpose, either a suitable clause is being added in the existing set-off notifications or the inputs and the finished product are being included in Notification No. 95/79, dated 1-3-1979."
A mere glance at the aforesaid para (iii) leaves no doubt that in cases covered by the said para and it is not in dispute that the petitioner's case would be covered by the said para, the exemption notifications issued under Rule 8 are made conditional by making observance of the procedure contained in Rule 56A compulsory for availing of the input concession. Thus, not only such exemptions are to be continued but had to be made conditional for availing of input concession. It is far from saying that such input concessions are to be withdrawn. It is easy to visualise that if input concessions were to be withdrawn, the notification under Rule 8(1) would have been rescinded as contemplated in para (i) of the explanatory notes. We may, however, observe that merely because the explanatory notes about budget changes may have proceeded on these lines, they would not be directly relevant for interpreting the express language contained in the proviso to the exemption notification and it has to be examined in its own context and light and interpreted as such. We have already reached the conclusion on interpretation of the said proviso that only procedural aspect of Rule 56A and not substantive provisions of the proviso to Rule 56A can be attracted for interpreting the exemption notification or for deciding eligibility of the concerned manufacturer manufacturing S.O. Dyestuffs for getting exemption under the said notification. These explanatory notes do afford a general background under which the said amendments were brought about in the exemption notification for achieving the intended purpose and these background facts also run parallel to the interpretation which has been placed by us on the exemption notification especially the proviso thereof and do not run counter thereto.
8. In view of the aforesaid discussion, therefore, the conclusion is inevitable that the communications issued by respondents Nos. 1 and 2 at annexures B and C were clearly misplaced and they run counter to the real scope and ambit of the exemption notification under Rule 8(1) and had proceeded on a total misconception of the real purport of this exemption notification read in the light of Rule 56A. Hence, these communications at annexures B and C are liable to be quashed and set aside. We order accordingly. Prayer (A) shall stand granted. So far as Prayer (B) is concerned, as a consequence of our aforesaid conclusion, it must be held that the petitioner will be entitled to the benefit of set-off of countervailing duty in the light of the exemption notification at annexure D during the time of its currency i.e. upto 15-10-1984 as it stood rescinded thereafter. It shall be subject to the petitioner complying with the procedural provision of Rule 56A as laid down by the proviso to the exemption notification without in any way being required to follow the substantive provision and without in any way being fettered by the provisos (i) and (ii) of Rule 56A(2). Prayer (B) will accordingly stand granted to the aforesaid extent. We make it clear, however, that so far as prayer (B) is concerned, in the present petition, we have decided only the short question as to whether the communications at annexures B and C were justified in law or not and there was no occasion for us to examine any other wider question including the question whether the procedural provisions of Rule 56A as per the proviso to the exemption notification were in fact complied with by the petitioner at the relevant time or not. That question will be relevant if and when the petitioner puts forward refund claim for adjudication. So far as prayer (D) regarding refund of excise duty is concerned, it is always open to the petitioner to make proper application for refund in the light of the present decision and as and when such application is made, it will have to be decided by the concerned authority in accordance with law and as expeditiously as possible in view of the fact that this is an old claim. We make it clear that we express no opinion one way or the other about eligibility of the petitioner for such refund. Rule is accordingly made absolute to the aforesaid extent with no order as to cost.