Customs, Excise and Gold Tribunal - Delhi
Atic Industries Ltd. vs Collector Of Central Excise on 27 May, 1987
Equivalent citations: 1987(12)ECR433(TRI.-DELHI), 1987(30)ELT741(TRI-DEL)
ORDER D.C. Mandal, Member (T)
1. The facts of the case, in brief, are that Notification No. 180/61-CE dated 23-11-1961 exempted dyes specified in the Schedule annexed to the Notification from the whole of Central Excise Duty leviable thereon, if and only if such dyes were manufactured from any other dyes on which duty of excise or countervailing duty had already been paid. "Solubilised Vats" was specified as one of the dyes in the Schedule to that Notification. M/s Atic Industries Limited, the appellants herein, were manufacturing Synthetic Organic Dyestuffs falling under Tariff Item 14-D of the First Schedule to the Central Excises & Salt Act, 1944, and were availing special procedure for movement of duty paid materials or component parts for use in the manufacture Of finished excisable goods under Rule 56-A of the Central Excise Rules, 1944. They received 2000 Kg. Indigo Pure on which countervailing duty was paid as per Bill of Entry No. 936 dated 9-10-1975 and they took the credit of Rs. 66,153.68 on account of the said countervailing duty in their R.G. 23 Part II on 19-1-1976. The above credit of Rs. 66,153.68 was fully utilised by them towards the payment of Central Excise duty on Synthetic Organic Dyestuffs manufactured by them and cleared under the gate passes No. 1062 to 1074 dated 27-2-1976. Out of the imported Indigo Pure, they utilised 895 Kg during the period from September, 1977 to 13-10-77 and balance 1105 Kg. during the period from November, 1977 to August, 1980 for the manufacture of Solubilised Vats or "Solatic Blue 4 BC". On 6-3-1979 the appellants made a debit entry of Rs. 66,153.68 in their P.L.A. vide Entry No. 83 dated 6-3-79 to reverse the credit of equivalent amount in R.G. 23 Part II taken on 19-1-76. Out of the 2000 Kg. Indigo Pure referred to above, they manufactured 5172 of Solubilised Vats (Solatic Blue 4 BC). They cleared 5140 solubilised vats without payment of duty during the period from March, 1979 to 10-4-80. Since the appellants took the proforma credit of the countervailing duty paid on the Indigo Pure in 1979 and utilised the credit in full on 27-2-1976, the Department issued a notice demanding Central Excise duty on 5140 Kg of solubilised vats manufactured out of the said imported Indigo Pure on the ground that the Indigo Pure was not duty paid and hence benefit of exemption Notification No. 180/61-CE was not available to the Solatic Blue 4 BC manufactured therefrom. The demand was confirmed by the Assistant Collector of Central Excise by the Order-in-original under Section 11-A (2) of the Central Excises & Salt Act, 1944. The order of the Assistant Collector was upheld by the Collector of Central Excise (Appeals), Bombay, by the impugned order. Being aggrieved by the impugned order, the appellants have come before us with the present appeal.
2. On the date of hearing before us, the learned advocate has submitted written arguments on behalf of the appellants and also orally argued the points raised therein. The gists of his arguments are as follows :-
(i) A consignment of 2000 Kg. Indigo Pure was imported on 29-12-1975 and countervailing duty of Rs. 66,153.68 was paid. On 15-1-76 the appellants requested to the Superintendent of Central Excise to allow proforma credit under Rule 56-A of Central Excise Rules in respect of the above duty. On 19-1-76 the permission was granted and the appellants credited the duty amount of Rs. 66,153.68 in the proforma account in Form RG 23 Part II. On 27-2-76 the appellants utilised the above credit for payment of duty on a consignment of Synthetic Organic Dyestuffs under gate passes No. 1062 to 1074. On 6-3-79 the appellants debited P.L.A. with Rs. 66,153.68 to withdraw the proforma credit for the same amount taken in R.G. 23 on 19-1-86. The appellants utilised 895 Kg. Indigo Pure before 6-3-79 and 1105 Kg. after 6-3-79 for the manufacture of solubilised vats which is an item specified in the Notification No. 180/61-CE. For the manufacture of solubilised vats they used imported Indigo Pure and also other dyes. Out of the total quantity of 5172 Kg. of Solubilised Vats, they cleared 5140 Kg. during the period 19-3-79 to 16-4-80, i.e. after the proforma credit was reversed by debit entry of Rs. 66,153.68 in the P.L.A. on 6-3-79. After this debit entry in the P.L.A., the imported Indigo Pure again became duty-paid. The only condition for exemption under Notification No. 180/61-CE is that specified dyes should be manufactured from other dyes on which Central Excise Duty or c.v. duty had been paid. In this case, 5140 Kg. of Solubilised Vats cleared during the period from 19-3-79 to 16-4-80 were manufactured out of the duty paid Indigo Pure and hence no Central Excise duty was payable on the end product so cleared. Exemption Notification was to be applied at the time of removal of the manufactured goods as held by this Tribunal in the case of Bharat Petroleum Corporation Ltd. v. Collector of Central Excise, Bombay, reported in 1984-(17)-ELT-420(Tribunal). The Notification should be read in its plain term. According to the ratio of the judgment of the Supreme Court in the case of M/s Hemraj Gordhandas v. H.H. Dave, Asstt. Collector of Central Excise and Customs, Surat and Ors., 1978 (2) ELT (J 350) and the judgment of Delhi High Court in Modi Rubber Ltd. v. Union of India and Ors., reported in 1983 (12) ELT-24(DEL). In the present case the end product was manufactured out of the duty-paid Indigo Pure and the condition of the Notification was fulfilled at the time of clearance of the end product in March/April 1980. In any event, out of the total quantity of 5172 Kg. of Solatic Blue 4 BC manufactured from the imported Indigo Pure only a quantity of 895 Kg. of Indigo Pure was taken for use before debiting the P.L.A. with the duty amount of Rs. 66,153.68 and the balance quantity of 1105 Kg. Indigo Pure was taken for use for the manufacture of Solatic Blue 4 BC after the debit entry was made on 6-3-79. On the pro-rata basis, a quantity of 2857.53 Kg. of Solatic Blue 4 BC was manufactured out of the said 1105 Kg. of indigo Pure. This quantity of 2857.53 was thus manufactured out of the duty paid Indigo Pure and must be held eligible for the exemption under the aforesaid notification, and the demand for duty on that quantity is not sustainable. The fact that the other dyes alongwith Indigo Pure was used as raw materials in the manufacture of Solatic Blue 4 BC should not stand in their way of availing duty exemption under the above Notification. Since it was held by the Supreme Court in Union of India and Ors. v. Tata Iron and Steel Co. Ltd., reported in 1977 (1) ELT-J-61, set off cannot be refused on the ground that non-duty-paid material has also been used alongwith duty-paid materials.
(ii) The appellants were given permission to avail of proforma credit under Rule 56-A for the c.v. duty of Rs. 66,163.68 paid on imported consignment of 2000 kg of Indigo Pure, but that proforma credit was only available for certain Synthetic Organic Dyestuff which did not include Solatic Blue 4 BC. The permission for proforma credit given by the Proper Officer under Rule 56 A{2) did not extend to Indigo Pure used in Solatic Blue 4 BC. No proforma credit could, therefore, have been legitimately utilised by the appellants in respect of Solatic Blue 4 BC. Having availed of credit of Rs. 66,153.68 they were, therefore, bound to return the same under the provisions of Rule 56-A(3)(v) of the Central Excise Rules. The appellants have actually done the same by debiting the P.L.A. with Rs. 66,153.68.
3. The gists of arguments of learned S.D.R. for the respondent the following :-
(1) According to Rule 56-A(3)(vi)(a), the credit of duty allowed in respect of any material or component part may be utilised towards payment of duty on any finished excisable goods for the manufacture of which such materials or component parts were permitted to be brought into the factory under Sub-rule (2) or where such materials or component parts are cleared from the factory as such, on such materials or component parts. According to this provision the proforma credit would be utilised towards the payment of duty on any finished excisable good. In the present case, the appellants were permitted to avail of the proforma credit and they actually availed of the same in respect of the c.v. duty paid and also utilised the said credit for payment of Central Excise duty on the finished product. There was, therefore, no question of reversing the entry in the R.G. 23. Such reversing of the entry is not contemplated in the rules. Reversing the entry by debit to P.L.A. does not nullify the credit of proforma account taken in RG 23 Part II under Rule 56-A. Once credit under Rule 56-A is taken, the goods become non-duty-paid. Once proforma credit is utilised, it cannot be reversed by a debit entry in the P.L.A. and benefit of Notification No. 180/61-CE cannot be availed of. Since in this case, the Indigo Pure became non-duty paid because of taking credit in the proforma account and it is utilised in full for payment of excise duty, the benefit of exemption Notification was not available to Solatic Blue 4 BC cleared by the appellants.
4. We have considered the records of the case and arguments of both sides. The following are the relevant admitted facts in this case:
(i) Notification No. 180/61-CE dated 23-11-61 exempted dyes, one of which was solubilised vats, specified in the schedule to the Notification and falling under Item 14-D of the Central Excise Tariff from the whole of the excise duty leviable thereon, if and only if such dyes are manufactured from any other dye on which duty of excise or countervailing duty had already been paid;
(ii) Additional duty under Section 3 of the Customs Tariff Act, 1975 (c.v. duty) of Rs. 66,153.68 was paid on imported Indigo Pure which is also a dye;
(iii) Appellants availed of proforma credit of the aforesaid amount of Rs. 66,153.68 in R.G. 23 Part II on 19-1-1976;
(iv) Proforma credit of aforesaid amount was utilised for payment of Central Excise duty on Synthetic Organic Dyestuffs cleared on 27-2-76 under gate passes No. 1062 to 1074;
(v) On 6-3-79 the appellants made debit entry in P.L.A. for Rs. 66.153.68 for the purpose of reversing the proforma credit already availed of by them;
(vi) Out of 2000 Kg. of Indigo Pure imported, a quantity of 895 Kgs. was utilised for the manufacture of Solatic Blue 4 BC prior to 6-3-79 and balance 1105 Kgs. were utilised for similar manufacture after 6-3-79. Notification has clearly laid down that the exemption stipulated thereunder is contemplated if and only if the dyes specified therein are manufactured from any other duty-paid dyes. In the present case, since the appellants availed of the proforma credit of the additional duty in RG 23 Part II and fully utilised the said credit for payment of Central Excise duty on Synthetic Organic Dyestuffs, the Indigo Pure lost its duty-laid character. If the same Indigo Pure was utilised in the manufacture of Solubilised Vats, i.e. Solatic Blue 4 BC, the end product could not be said to have been manufactured out of duty-paid dye, i.e. duty paid Indigo Pure. As a result, the benefit of Notification No. 180/61-CE was not available to the appellants in respect of Solatic Blue 4 BC. The debit entry in P.L.A. on a subsequent date with a view to availing of the exemption under this Notification does not render the said indigo Pure the duty paid character. In the circumstances, the authorities below correctly denied the benefit of notification to the appellants. The appeal filed before us, has, therefore, no merits. In the result, we find no infirmity in the orders of the lower authorities. Accordingly, we uphold the impugned order and dismiss this appeal.
5. As the appeal is being dismissed on merits, we are not called upon to discuss the other points raised by the appellants before us.