Delhi High Court
Zenith Chemicals vs Government Of India on 27 May, 1994
Equivalent citations: 1994(30)DRJ422, 1994(73)ELT533(DEL)
Author: M. Jagannadha Rao
Bench: M. Jagannadha Rao
JUDGMENT Anil Dev Singh, J.
1. This is a writ petition against the order of Government of India, Ministry of Finance, Department of Revenue dated February 4, 1991, whereby the revision application filed by the petitioner against the appellate order dated March 19, 1990, passed by the Collector of Customs, Central Excise Appeals, Bombay, who had upheld the order of the Assistant Collector (Rebate), Bombay dated February 24, 1989, was rejected.
2. The writ petition arises in the following circumstances :
3. The petitioner is a manufacturer and exporter of H. Acid (Dye-Intermediate). Naphthalene is one of the inputs used in the manufacture of H. Acid. Before the commencement of the Central Excise Tariff Act, 1985 both the aforesaid input as well as the end product fell under tariff item 68 of the Central Excise Tariff.
4. The petitioner at that time was availing proforma credit under Rule 56A, Central Excise Rules, 1944 as both the input as well as the end product fell under one common tariff item. Subsequent to the coming into force of Central Excise Tariff Act, 1985. Naphthalene was classifiable under sub-heading 2707.40.
5. On October 6, 1986, the Government of India by Notification No. 432/86 exempted final products, namely, Dye Intermediate, Pharmaceutical Products, Pigments, Synthetics, Organic Dye-Stuff and Leather Tanning Agents from so much of duty of Excise leviable thereon under the Central Excises and Salt Act, 1944 as is equivalent to the duty of Excise already paid on the input namely Naphthalene. This Notification in so far as it is relevant is extracted below and reads thus :-
"In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts excisable goods of the description specified in column (5) of the Table hereto annexed (such goods being hereinafter referred to as "final products") and falling under such Chapter of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as is specified in the corresponding entry in column (4) of the said Table, from so much of the duty of excise leviable thereon under the Central Excises and Salt Act, 1944 (1 of 1944) as is equivalent to the duty of excise leviable thereof under the said Act already paid on the goods of the description specified in the corresponding entry in column (3) of the said Table (such goods being hereinafter referred to as "inputs") and falling under such sub-heading No. of the said Schedule as is specified in the corresponding entry in column (2) of the said Table :
Provided that the inputs specified in column (3) of the said Table are used in the manufacture of the final products specified in the corresponding entry in column (5) of the said Table."
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Sr. No. Sub-Heading Description Chapter Description of final
No. of Inputs No. products
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1. 2707.40 Naphthalene 29 Dye Intermediate
2. 2707.40 Naphthalene 30 Pharmaceutical Products
3. 2707.40 Naphthalene 32 Pigments, Synthetic Organic Dyestuffs
4. 2707.40 Naphthalene 34 Leather Tanning agents
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6. During August 1988 the petitioner exported three consignments of Dye-Intermediate (H-Acid) in regard to which it filed a claim with the Excise authorities amounting to Rs. 5,31,954.05 as per the following details :-
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SP 1 No. & AR 4 No. & Amt. of duty Amt. of duty adj. in date date Rs. set off register
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30/30-8-1988 62/88/22-8-1988 1,96,156.08 1,96,156.08
29/25-8-1988 61/88/22-8-1988 2,85,806.03 2,85,806.03
28/24-8-1988 63/88/23-8-1988 49,991.94 49,991.94
5,31,954.05 5,31,954.05
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7. On November 18, 1988 the Superintendent, Central Excise (Rebate), Bombay issued a notice to the petitioner to show cause why its claim for refund of duty be not rejected on the ground that the amount of duty claimed on account of input, was adjusted in set off register and was utilised for payment of duty on the final product. In the notice it was pointed out that there is no provision to grant refund of duty claim against goods which are cleared for export for availing set off duty under Notification No. 432/86 dated October 6, 1986 unless the duty is actually paid. Pursuant to the show-cause notice, the petitioner by his letter dated December 21, 1988 filed his written submission.
8. The Assistant Collector of Customs Excise (Refunds) Bombay-I by his order dated February 24, 1989 rejected the claims of the petitioner on the ground that Notification No. 432/86 does not provide for permitting any credit of duty on the inputs as is available under Rule 56A and Rule 57A of the Central Excise Rules, 1944 but it only exempts the final product from the equivalent of duty so paid on the inputs provided full duty of excise was already paid since the petitioner claimed that the duty is paid through set off register which is analogous to RG 23 Part II register, it did not qualify for exemption.
9. The petitioner not being satisfied with the order of the primary authority filed an appeal but the same was rejected by the Collector of Customs, Central Excise Appeals, Bombay by its Order dated March 19, 1990. Thereupon the petitioner carried the matter in revision before the Government of India but the revision also failed and the appellate decision was upheld. It is against this order of the revisional authority that the petitioner has filed this writ petition.
10. After hearing the learned counsel for the parties, we find that the petitioner has not made out a case for our interference with the order of the first respondent (Government of India). The view of the first respondent is that Notification No. 432/86 exempts the final product from so much of excise leviable as is equivalent to the duty already paid on the input used for manufacturing the final product and the Notification does not provide for adjustment of duty as claimed by the petitioner. This interpretation of the first respondent is in conformity with the plain meaning of the said Notification. The petitioner's claim that the duty can be adjusted through set off register is misconceived as such an adjustment does not tantamount to the payment of the duty in accordance with the said Notification. First the assessed is required to make the full payment of duty and only then he can claim refund of the duty paid on account of the input on the basis of exemption allowed under the Notification. The Notification does not provide for refund of duty claimed against goods which were exported by availing set off of duty. Set off procedure is not contemplated in the Notification No. 432/86. Any other interpretation will militate against the expressed provisions of the Notification. Exemption provided for in the Notification is subject to certain conditions specified therein unless the same are satisfied, the exemption will not be available to the assessed.
11. In view of the above discussion, the writ petition fails and is dismissed without any order as to costs.