Bombay High Court
Steel Age Industries Ltd. And Another vs Union Of India And Others on 12 April, 1988
Equivalent citations: 1988(36)ELT24(BOM)
JUDGMENT
1. The first petitioner is a limited company of which are second petitioner is the director. For the sake of convenience, they will hereinafter be referred to as "the petitioners". The petitioners are engaged in the business of manufacture of security equipments such a safes, strong boxes, safe deposit lockers, furnitures etc. All these are made of steel. For this purpose the petitioner purchase steel sheets and plates from the factories which are now owned by the Steel Authority of India Limited which, as is well known, now owns the steel projects in the public sector. On the products manufactured by them the petitioners have to pay excise duty. However, under a Notification No. 95/79-C.E., dated 1st of March, 1979, credit is available to the petitioners to the extent of the excise duty which has been paid on steel sheets and plates consumed by the petitioners in the manufactures of their own products.
2. Rule 56A of the Central Excise Rules, hereinafter referred to as "the Rules", prescribes the procedure in accordance with which credit for the excise duty which is already paid under the notification referred to above is to be followed. A manufacture permitted to avail of the benefit of the said notification is required to bring to the factory the material or the component parts or finished products in original packing under the cover of A.R.I. (gate passes) or such other document as may be approved by the Central Board of Excise and Customs or bill of entry evidencing the payment of excise duty. In the present case the petitioners have followed none of the three options available. They purchased the steel plates and sheets from the factories owned by the Steel Authority of India Limited, hereinafter referred to as "the SAIL".
3. The petitioners addressed a letter dated 30th of April, 1979 to the Excise Department pointing out that under the notification dated 1st March, 1979 their products have been exempted from the duty paid on the steel sheets and plates in the manufacture provided Rule 56A is followed. They requested the Assistant Collector of Central Excise, to whom the said letter was addressed, to allow them to follow the procedure to avail of the said credit. The Assistant Collector of Central Excise by his reply dated 2nd April, 1979 pointed out to the petitioners that the petitioners were to produce subsidiary gate passes indicating therein all the description like the gate pass number under which the goods were cleared from the factory, rate of duty etc. from the dealers from whom they were purchasing the steel sheets. Further correspondence ensued between the petitioners and the Excise Department, the latter insisting upon the production of the documents mentioned in Rule 56A(3)(i)(b). The petitioner have now approached this Court under Article 226 of the Constitution of India praying for an order requiring the respondents to give them credit without insisting upon the documents mentioned by the respondents in their correspondence with the petitioners.
4. Mr. Andhyarujina, the learned Advocate appearing in support of the petition, has taken me through the petition and after pointing out the correspondence exchanged between the parties has sought to argue that it was an error on the part of the respondents to insist upon the production by the petitioners of the documents mentioned in the Rule referred to above. He has also placed reliance upon the invoices copy of one of which is annexed to this petition at Exhibit 'M', which show that the goods which were despatched by the Bokaro Steel Unit of the SAIL to Vidya Vihar Railway Station had been assessed to excise duty at Rs. 472.50 per M.T. and the same had been paid by Bokaro Steel Ltd.. Mr. Andhyarujina insists that this should be taken as sufficient evidence to show that excise duty has been paid on the steel sheets and plates which have been purchased by the petitioners from the SAIL. According to him this must also be regarded as substantial compliance with the requirement of the Rule on which the petitioners are placing reliance.
5. It has not been possible for me to accept this interpretation of the Rule made by Mr. Andhyarujina. The rule insists that particular documents ought to be produced. The document on which the petitioners went to place reliance is not one of the documents mentioned in the relevant rule. The relevant rule does not give discretion to the Assistant Collector to accept any other document for being satisfied that excise duty has been paid on the product in respect of which credit is being claimed. It may be, in the present case SAIL is a company in the public sector. But a rule cannot be interpreted in one way in the case of a public sector undertaking and in another way in the case of a non-public sector undertaking.
6. Mr. Andhyarujina says that even the Customs, Excise and Gold (Control) Appellate Tribunal, Western Regional Bench at Bombay, hereinafter referred to as "the CEGAT", has taken the view that Rule 56A should be held to be substantially complied with and instance should not be made on the technical compliance thereof. In Collector of Central Excise, Bombay v. Goodlass Nerolac Paints Limited, 1986 (26) E.L.T. 57, the West Regional Bench of the CEGAT at Bombay held that in order to claim proforma credit, it is not essential that the manufacturer who availed proforma credit should be shown as the consignee in G.P.I. or there should be an endorsement on the reverse of G.P.I. or there should be a subsidiary gate pass in his name. I do not see similarity between the facts in Goodlass Nerolac Paints Limited's case and the facts before me. In that case there was a document which was permitted to be relied upon, but only the name of the consignee had not been shown therein. In the present case there is no document at all which is contemplated under the rule.
7. Mr. Andhyuarujina then invited my attention to the proviso to sub-rule (3) of Rule 56A, which is as follows :-
"Provided that having regard to the period that has elapsed since the duty of excise was imported on any such material, component parts or finished products, the position of demand and supply of the said goods in the country and any other relevant consideration, the Central Government may direct that with effect from a specified date all stocks of the said goods in the country, except such stocks lying in a factory, customs area (as defined in the Customs Act, 1962) (52 of 1962) or warehouse as are clearly recognisable as being non-duty paid, may be deemed to be duty-paid and credit of duty in respect of the said goods may be allowed at such rate and subject to such condition as the Central Government may direct, without production of documents evidencing the payment of duty :"
In the petition foundation for resorting to this proviso has been laid by claiming leave to refer to the instructions dated 22nd September, 1962 and 26th July, 1963 to the authorities concerned. The instructions which have been given on 26th of July 1963 are as follows :-
"Having regard to the stock position as on the 1st March, 1963 and the possibility of stocks having been consumed, it has been decided that all stocks of semi-finished steel existing in the market on or after the 1st of August, 1963 should be deemed to have paid duty and no proof of payment of duty on them need be demanded. Set-off or exemption of duty on them need be allowed assuming that the semi-finished steel including blooms, billets and slabs etc. purchased from the market on or after 1.8.1963 have paid the appropriate amount of duty."
8. In the affidavit-in-reply filed on behalf of the respondents, there is no reference at all to the petitioners' averments relating to the instruction issued by the Government of India on 26th of July, 1963, except saying that "the stand of the petitioners with regard to open market stock of iron and steel in reference to Government of India's letter dated 26th July, 1962 and 22nd September, 1963 has no base". It is the petitioners' case that they have purchased the steel from SAIL though some part of their purchase could be from open market. Still it is not possible to understand the averment contained in paragraph 9 of the affidavit-in-reply wherein a distinction is sought to be made in respect of the stocks built up as a result of the purchases from the public sector undertaking and the purchases made from the open market. The proviso on which reliance is placed does not make any such distinction.
9. In my opinion, if the petitioners want to rely upon the proviso referred to above, they are entitled to do so, but the credit which they will get as a result of the application of the proviso to sub-rule (3) of Rule 56A will be at such rate and subject to such conditions as the Central Government may direct. Since the petitioners are claiming credit in respect of the stocks lying with them after 1st of August, 1963, I am inclined to agree that they are entitled to take benefit of the proviso to sub-rule (3) of Rule 56A subject, of course, to the conditions mentioned in the same proviso, namely that credit will be available to them at such rate and subject to such conditions as the Central Government may direct.
10. In the result, the petition only succeeds partially. The respondents are directed to calculated the credit that may be given to the petitioners in respect of the stock of steel utilised by them in the manufacture of their products in accordance with the proviso to sub-rule (3) of Rule 56A of the Central Excise Rules and in the light of the directions given by the Central Government with reference to that proviso.
11. The period with which the present petition is concerned is from 1979-1980 to November, 1981. The respondents shall calculate the credit available to the petitioners in respect of the said period within eight weeks from today. It is expected that in view of the proviso referred to above an the instructions given by the Government, the same procedure will be followed by the authorities for the subsequent periods.
12. There will be no order as to costs in this petition.