Customs, Excise and Gold Tribunal - Delhi
Shriram Rayons vs Collector Of Central Excise on 15 February, 1999
Equivalent citations: 1999(107)ELT26(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in the appeal filed by M/s. Shriram Rayons is regarding the availability of benefit of Notification No. 225/86.
2. Shri A.R. Madhav Rao, learned Advocate submitted that the appellants manufacture Rayon yarn and availed of set off of duty paid on inputs while discharging the duty on their final product; that during the period from 17-5-1988 to 14-4-1989, Department did not allow them to utilise the credit as the Department insisted on 1:1 correlation and maintenance of set off Register. When they asked for refund of the accumulated credit in cash, the Assistant Collector rejected the refund holding that there is no provision in the notification to allow carry forward of the credit and utilisation thereof for payment of duty on other goods; that the appellants could not produce the material which provides for refund in cash of credit available in balance. The Collector (Appeals) also confirmed the order passed by the Assistant Collector. The learned Advocate, further submitted that Notification No. 225/86 exempts artificial staple fibre and tow and artificial filament yarn to the extent of duty already paid on the inputs specific in the table annexed to the notification; that they should have been allowed to utilise the credit which has been accumulated only because of the reason that the Department had denied the utilisation of the credit pending determination of one to one correlation between the input and the final product; that it is a settled law that a person or authority cannot take advantage of his or its own mistake; that since the credit had accumulated only on account of the action of the department, they ought to have been allowed to utilise the same. He also mentioned that the Board, under instruction dated 24-7-1990, had directed that under Notification No. 225/86 credit was permissible on that quantity of duty paid inputs which had been issued for the manufacture of finished excisable goods and Board also classified that the credit was not confined to the duty on the quantity of inputs actually contained in the finished product. He also referred to the decision in the case of CCE v. ITC Ltd.; 1993 (67) E.L.T. 852 (Tribunal) in support of the proposition that where the Notification like 225/86 did not stipulate a condition that set off must be claimed at the time of clearance itself, benefit of set off cannot be denied by way of refund of duty subsequently. He also submitted that export under bond cannot result in denial of the input credit and reliance was placed on Orissa Synthetics Ltd. v. CCE; 1995 (77) E.L.T. 350 (Tribunal)s and Reliance Industries v. CCE; 1995 (78)s E.L.T. 595. He also relied upon the decision in the case of J.K. Synthetics v. CCE; 1996 (81) E.L.T. 648 wherein it was held that no one to one correlation is required for availing the credit for payment of duty with reference to Notification No. 225/86. He finally submitted that they should be permitted to utilise the entire credit accumulated during the disputed period by crediting the same in Modvat credit account or the same be refunded in cash.
4. Countering the arguments, Shri R.S. Sangia, learned DR submitted that there is no provision in the Notification No. 225/86 for refund of the accumulated credit in cash. He relied upon the Final Order No. 952/98-D, dated 24-11-1998 in the case of J.K. Synthetics Ltd. v. CCE, Jaipur in which the Appellate Tribunal held that "The Collector (Appeals) finding that Notification No. 225/86 is a special concessional provision and it does not provide for any refund of duty paid on the inputs namely MEG is correct in the face of the clear language of Notification No. 225/86." He, further, submitted that for the quantity of final products exported, the appellants should follow the procedures already prescribed for refund/remission of duty paid on the inputs. He mentioned that the appellants cannot be refunded the amount of credit; they can utilise the same only for payment of duty on the final product only.
5. At this stage the learned Advocate appearing for the Appellants, submitted that they are still manufacturing the same final product in the manufacture of which the raw material was used and they would utilise the accumulated credit for the clearance of the said final product.
6. We have considered the submissions of both the sides. The Larger Bench of the Appellate Tribunal has held in the case of J.K. Synthetics Ltd., supra that Notification No. 225/86 does not require that the quantum of exemption equivalent to the duty paid on particular lot of inputs should be utilised only for payment of duty on the final products made from that lot of inputs. There is neither an express or implied condition in the notification to that effect. The absence of one to one correlation between inputs and final products will apply to Notification No. 225/86 notwithstanding the absence of an inbuilt procedure for taking credit therein. In view of this the amount of credit which has been accumulated can be used for clearance of the final product. The learned D.R. has fairly mentioned that the appellants can used the said credit for clearing the goods instead of refund in cash. Further as far as the credit in respect of inputs used in the manufacture of final products, which were exported, is concerned, the same stands settled by the Tribunal's decision in the case of Reliance Industries and Orissa Synthetic Ltd., supra wherein it was held that goods cleared for export under bond without payment of duty are neither goods exempted from whole of duty nor goods chargeable to nil rate of duty. In this regard Ministry of Finance instruction dated 3-4-1975 was also mentioned in Orissa Synthetics case according to which goods exported in bond cannot be treated either as exempted from payment of duty or chargeable to nil rate of duty. In view of this position, the appellants are eligible to utilise the entire amount of accumulated credit for payment of duty on the same final product. The appeal is disposed of in these terms.