Customs, Excise and Gold Tribunal - Mumbai
Cce vs Bombay Tyres International Ltd. on 28 November, 2000
Equivalent citations: 2001(97)ECR137(TRI.-MUMBAI), 1999(113)ELT821(TRI-MUMBAI)
ORDER P.G. Chacko, Member (J)
1. This appeal filed by the Revenue is against the order of the Collector (Appeals) interpreting certain provisions of Notification No. 283/82-CE dated 27.11.1982 in a way different from what the Assistant Collector understood such provisions.
2. Notification No. 283/82-CE ibid was issued by the Central Government implementing their scheme proposed under Notification No. 282/82-CE dated 27.11.1982 for granting excise incentive credit to manufacturers of certain excisable goods. The goods in respect of which the incentive was given were listed in Tables A and B annexed to Notification 283/82-CE. Those goods included tyres and flaps mentioned at serial numbers 2 and 4 respectively of Table B. The respondent in this appeal was engaged in the manufacture of tyres and flaps among other goods. Notification No. 283/82-CE provided that, in respect of excisable goods (specifically described in Tables A&B) cleared from a factory for home consumption during the period commencing on and from the 1st day of March 1982 and ending with the 28th day of February 1983 (incentive period) in excess of the base clearance, a credit of an amount equal to one-fifth of the duty of excise paid on such excess clearances would be granted in a case where duty of excise on the goods was chargeable with reference to value and the effective rate of duty leviable was not more than 20 per cent ad valorem. The credit of duty so available was further, subject to other conditions laid down in the Notification. Explanation to the Notification defined "base clearance", for various situations, as follows:
(1) base clearance:
(a) in the case of a factory which had not remained closed for a period of more than 15 days at one time during the base period due to any reason-
(i) in respect of goods specified in Col. (3) of the said Table-A, means 10% of the clearances of such goods from such factory during the base period: and
(ii) in respect of goods specified in Col. (3) of the said Table-B, means 120% of the clearances of such goods from such factory during the base period;
(b) in the case of a factory which had remained closed for a period of more than 15 days at one time during the base period due to any reason, means the clearances as determined under Sub-clause (i) or, as the case may be, Sub-clause (ii) of Clause (a) above multiplied by factor 365/365-X, where 'X' denotes the total number of days comprised in the period or, as the case may be, periods during which the factory was so closed.
Tyres and flaps manufactured and cleared by the respondents for home consumption during the incentive period (1.3.1982 to 28.2.1983) were (as noted earlier) goods specified in Table-B to the Notification and the same were chargeable to duty of excise with reference to value and the effective rates of duty leviable under the Central Excise Act on the goods were not more than 20% ad valorem. Therefore, a credit of an amount equal to one-fifth of the duty paid on the clearances in excess of base clearances (as defined above) effected during the base period (1.3.1981 to 28.2.1982) defined under the Explanation to the Notification was available to those goods for the incentive period. The dispute involved in the present appeal is on how to compute the base clearances of tyres and flaps manufactured by the respondent.
3. The lower authorities interpreted the definition of 'base clearance' under the Explanation to Notification No. 283/82-CE differently and, consequently, arrived at different results in respect of the credit of duty available to the respondent for the incentive period.
4. During the base period 1.3.1981 to 28.2.1982, there was a labour problem in the respondent's factory. The factory operations were suspended w.e.f. 24.7.1981. Subsequently, a lock-out was declared by the company w.e.f. 11.8.1981 and the same was, later on, lifted on 15.10.1981. In computing the period of closure of the factory during the base period in terms of the Explanation to the Notification, the Assistant Collector rejected the assessee's argument that, since they had effected clearances on 29.9.1981, 30.9.1981 and 1.10.1981, the period from 29.9.1981 to 1.10.1981 should be excluded from the period of closure and, consequently, the period from 2.10.1981 to 14.10.1981 (being less than 15 days) should also be excluded from the period of closure. The AC also rejected the assessee's plea for excluding weekly offs and national/festival holidays also from the period of closure. The AC took the view that, since there was no production during the period 25.7.1981 to 14.10.1981, the entire period (82 days) during the base period constituted period of closure for purposes of computation of base clearances. The AC also rejected the assessee's incentive claim in relation to the amount of Rs. 2,31,111.37 in Basic Excise Duty (BED) and Rs. 23,111.14 in Special Excise Duty (SED) paid under protest on 31.3.1984. This was on the ground that the duties were paid neither during the base period nor during the incentive period. A credit of Rs. 2,56,233.21 in SED which had been sanctioned to the assessee earlier but could not be utilised was, however, allowed by the AC, subject to the procedure prescribed by the Department. In the appeal filed by the assessee against the order of the Assistant Collector, the Collector (Appeals) examined the provisions of Notification No. 283/82-CE and determined the period of closure of the respondent's factory as 66 days from 25.7.1981 to 28.9.1981 and allowed the assessee's claim for availing incentive credit on that basis. In so determining the period of closure, the Collector (Appeals) took the view that the assessee's factory could not be considered to have remained closed during the period 29.9.1981 to 1.10.1981 (being days on which the goods were cleared from the factory) and also during the period from 2.10.1981 to 14.10.1981 (being less than 15 days). The lower appellate authority also held that the assessee was entitled to credit of duty corresponding to BED of Rs. 2,31,111.37 and SED of Rs. 23,111.14 as the payment of these amounts related to the incentive period. In the present appeal of the Department, the appellant has prayed for setting aside the order of the lower appellate authority and restoring the order of the adjudicating authority.
5. We have heard ld. JDR Shri M.P. Singh for the appellant. There was no representation for the respondents. The notices of hearing issued to them returned with the postal endorsement "company lockout".
6. Ld. JDR referred to the Explanation to Notification No. 283/82-CE and submitted that the period of closure of the respondent's factory during the base period was correctly determined by the Assistant Collector as 82 days covering the period from 25.7.1981 to 14.10.1981. He submitted that it was not any non-clearance of goods but non-production of goods that was relevant for purposes of computing the period during which any factory had remained closed during the base period in terms of Explanation to the Notification. In support of this argument, ld. JDR relied on the Finance Minister's speech made on the occasion of presentation of Annual Budget for 1982-83 in the Lok Sabha. The JDR specifically referred to para 135 of the text of the Finance Minister's speech, which is extracted below:
135. As the House is aware. 1982 has been designated by the Prime Minister as the "Productivity Year". With the improvement in infrastructural facilities, it is hoped that industrial production would register further growth in the current year. The fiscal mechanism could be judiciously deployed in furthering this objective. With this in view, I propose to formulate a scheme of excise duty concession for increased production of goods during the period of 12 months commencing on the 1st March, 1982 and ending on the 28th February, 1983. The scheme would cover 38 tariff items including some basic raw materials, other important industrial inputs and certain finished products. Some of the items are caustic soda, fertilisers, synthetic resins, steel ingots and steel products, internal combustion engines, wires and cables, two and three wheeled motor vehicles, light and heavy commercial vehicles tractors, railway wagons, man-made fibres and filament yarn, tyres and writing and printing papers. A full list may be found in the Budget papers. The benefits of the scheme would accrue only in cases where the production in the 12 months period referred to above exceeds 110 per cent of the production during the base period, namely, the 12 months ending on the 28th February, 1983. The duty concession would be 1/5th of the total amount of duty paid on the excess production computed, as explained earlier, in respect of goods carrying basic excise of 20 per cent ad valorem or less, and 1/10th of the duty on other cases. The amount so computed for the whole period would be given as a credit which may be utilised for payment of Central Excise Duty during the financial year 1983-84.
(Emphasis added.)
7. We are in agreement with the arguments of ld. JDR. Notification No. 283/82-CE was issued for implementing the scheme referred to in the Finance Minister's speech. Therefore, the policy statement contained in para 135 of the text of the speech would be a reliable aid for understanding the legislative intent underlying the Notification and for interpreting the provisions thereof. The scheme itself was to encourage production of specified goods in 1982-83. It is, therefore, reasonable only to accept ld. JDR's contention that it is the production, rather than clearance, of the specified goods during the base period that should be the yardstick for computing the period of operation of the factory. Conversely, any spell of closure of the factory during the base period would be one of non-production rather than of non-clearance. Therefore, any clearance of the specified goods during the period 29.9.1981 to 1.10.981 cannot interrupt the period of closure of the respondent's factory and, consequently, the entire period (25.7.1981 to 14.10.1981) during which the factory was, admittedly, not engaged in any production activity, would be taken into account in determining the period of closure during the base period, for the purpose of computing base clearances in terms of the Explanation to the Notification. The Assistant Collector's decision on the point has, therefore, to be upheld.
8. Ld. JDR further submitted that the BED amount of Rs. 2,31,111.37 and SED amount of Rs. 23,111.14 were paid by the assessee under protest on 31.3.1984. Such payments were neither during the base period (1.3.1981 to 28.2.1982) nor during the incentive period (1.3.1982 to 28.2.1983). Therefore, neither of those amounts could have been validly taken into account for computing admissible credit during the incentive period. Therefore, the Assistant Collector's decision on the point was correct. We do not find any reason to disagree with this submission inasmuch as there is no evidence on record to show that the above amounts were paid in respect of clearances of the specified goods effected during the relevant period.
9. The Revenue has been able to substantiate the grounds of this appeal. We, therefore, allow the appeal by setting aside the order of the Collector (Appeals) to the extent impugned and upholding the order of the Assistant Collector for the reasons recorded above.
(The operative part of the order has already been pronounced in open Court).