Customs, Excise and Gold Tribunal - Delhi
Oswal Agro Mills Ltd. vs Collector Of C. Ex. on 15 October, 1996
Equivalent citations: 1998(101)ELT469(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. M/s. Oswal Agro Mills Ltd. have filed the captioned appeal being aggrieved by the order of the ld. Collector (Appeals). The ld. Collector (Appeals) in his order-in-appeal dated 29-4-1992 had held:
"I have considered the submissions of appellants contained in the memorandum of appeal and also during the course of personal hearing. The main point that has been taken up by the appellants is that the processing loss was admissible in terms of Notification No. 40/87 which ground has been contested by the adjudicating authority. So far as the question of processing loss is concerned, on a very strict reading of the Notification there is nothing in it to indicate that processing loss is allowable. I, therefore, uphold the Asstt. Collector's order and reject the appeal."
2. The facts of the case are that the appellants are engaged in the manufacture of various goods including soap and are availing credit of money on oils both rice bran oil and minor oil specified under Notification No. 40/87-C.E., dated 1-3-1987. During the month of July, 1987, the appellants issued for manufacture of soap, raw rice bran oil of quantity 545.479 MT & 164.242 MT for soap exceeding value Rs. 12,000/- PMT and value not exceeding Rs. 12,000/-PMT. The appellants issued 126.350 MT of Mahua oil(raw) and 1057.147 MT of (raw) sal oil for manufacture of soap with value not exceeding Rs. 25,000/-PMT but above Rs. 12,000/- PMT. It was also alleged that the appellants took credits on the whole quantities @ Rs. 2,800/- PMT as prescribed under Notification No. 40/87-C.E., dated 1-3-1987. It was alleged that in the process of hydrolyzation, there was a loss of 55.054 MT. It was also alleged by the deptt. that according to Notification No. 40/87-C.E., credit of money will be taken only in respect of quantities of oils subjected to process of hydrolysis and the credit shall be taken only on the date on which inputs have been so hydrolyzed. The deptt. alleged that this clearly implies that the credit of money has to be taken only on the quantity of oil after it is actually hydrolyzed and not on the quantity of raw oil issued for hydrolysis. It was also alleged that the absence of the words 'to be' before the words "subjected to" in Condition No. (1) of the notification and inclusion of the word "only" before the words "in respect of" in the said condition restricts credit of money on the quantity of oil obtained during process of hydrolysis. It was alleged that the appellants had taken credit of money amounting to Rs. 1,04,370/- wrongly and that the same was liable to be recovered u/r 57P of the C. Ex. Rules, 1944. A show cause notice was issued to the appellants accordingly. On careful consideration of the submissions made by the appellants, the A.C., in his order-in-original, disallowed credit of money amounting to Rs. 1,04,370/- and ordered that reverse entry should be made for this amount in the relevant register and if there was not sufficient balance, this amount should be deposited under TR-6 challans.
3. Shri J.P. Kaushik, the ld. Advocate appearing for the appellants submitted that Notification No. 40/87-C.E. clearly provided for money credit on the quantity of oils issued for hydrolysis. He submitted that the interpretation placed by the deptt. to Condition No. (i) of the Notification is not correct inasmuch as the deptt. has interpreted that the quantity eligible for money credit shall be the quantity obtained after hydrolysis. The ld. Counsel submitted that this interpretation of the Notification No. 40/87-C.E. by the deptt. is patently wrong and submitted that similar issue came up before the Tribunal in the case of Wipro Ltd. reported in 1996 (13) RLT 578 (CEGAT-WRB) and that in that case though the notification number involved was Notification No. 45/89-C.E. (N.T.), dated 11-10-1989, the Tribunal had held that the quantity eligible for money credit can only be the weight of minor oils present in the total weight of mixture of oils immediately before such mixture is subjected to the process of hydrogenation for conversion to vegetable product.
4. Shri Jangir Singh, the ld. DR reiterated the findings of the lower authorities.
5. Heard the submissions of both sides. We find that the relevant notification in the present case is Notification No. 40/87-C.E., dated 1-3-1987 which is reproduced below:
Credit of duty on use of minor oils if used in the manufacture of soap. In exercise of the powers conferred by rule 57K of the Central Excise Rules, 1944, the Central Government hereby specifies -
(i) the input, namely, fixed vegetable oils of the description in column (2) of the Table hereto annexed and used in the manufacture of the final products, namely, soap falling under sub-heading No. 3401.10 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); and
(ii) the rates in the corresponding entry in column (3) of the said Table as the rate at which credit may be granted for use of said input in the manufacture of the said final product.
For the purposes of Section AAA of Chapter V of the said rules and stipulates that the grant of credit and utilisation thereof, shall, in addition to the provisions of the said section, be subject to the following conditions, namely:
(i) the credit shall be taken only in respect of the quantity of oil subjected to the process of saponification or the process of hydrolyza-tion where such hydrolyzation precedes saponification, on or after the 1st day of March, 1987, for the manufacture of the said final products and the credit shall be taken only on the date on which the inputs have been so saponified or hydrolyzed, as the case may be;
(ii) the credit taken during any calender month shall be utilised for payment of duty on the said final products only after the commencement of the succeeding month;
(iii) the Form RG 23B Part I and Part II shall be maintained separately for soap of value -
(a) not exceeding Rs. 12,000/- per tonne;
(b) exceeding Rs. 12,000/- per tonne but not exceeding Rs. 25,000/- per tonne; and
(c) exceeding Rs. 25,000/- per tonne;
(iv) the credit on inputs used in the manufacture of each variety of soap, specified clause (iii) above, shall be utilised for payment of duty leviable on that variety of soap alone and no amount of the excess credit, if any, available in the credit account shall be refunded to the manufacturer or adjusted against or utilised for payment of duty on any other excisable goods.
TABLE
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S. Fixed Vegetable Oils Rate of credit per tonne No. of the fixed vegetable oil --------------------------------------------------------- (1) (2) (3) --------------------------------------------------------- 01. Rice bran oil Rs. 320 02. Neemoil Rs. 2800 03. Karanj oil Rs. 2800 04. Kusum oil Rs. 2800 05. Sal oil Rs. 2800 06. Khakhan oil Rs. 2800 07. Mahuaoil Rs. 2800 08. Rubberseedoil Rs. 2800 09. Mango-kernaloil Rs. 2800 10. Kokum oil Rs. 2800 11. Dhupaoil Rs. 2800 12. Undioil Rs. 2800 13. Marori oil Rs. 2800 14. Pisa oil Rs. 2800 15. Nahooil Rs. 2800 ---------------------------------------------------------
Condition No. (i) of this Notification according to the department, stipulates admissibility of money credit only on the quantity of oil which is obtained after hydrolyzation whereas the appellants have contended that money credit will be admissible on the quantity of oil before it is hydrolyzed. We find that the appellants have relied upon the decision of the Tribunal in the case of Wipro Ltd. cited supra.In that case, Notification No. 45/89-C.E. [(N.T.)] dated 11-10-1989 was involved. Condition (i) of Notification No. 45/89-C.E. [(N.T.)] read as "(i) The credit shall be taken only in respect of the quantity of oil or fat as the case may be subjected to hydrogenation on (or after the 11th day of October, 1989) for the manufacture of the said final products, and the credit shall be taken only on the date on which the oil or fat, as the case may be, has been so hydrogenated." Para 6.5 of this decision of the Tribunal in the case of Wipro Ltd.cited supra is reproduced below:
6.5 We also looked into the provision of exemption Notification, which was predecessor to the Money Credit Scheme. Notification No. 115/86-C.E., dated 1-3-1986 was the one prevalent prior to introduction of the Rules relating to Money Credit Scheme. Explanation (3) of the said Notification is reproduced below:
Quote "The percentage of cotton seed oil or specified minor oils used in the manufacture of vegetable product shall be calculated with reference to the weight of such oils and the total] weight of the mixture of oils immediately before such mixture is subject to the process of hydrogena-tion for conversion into the said vegetable product".
(Emphasis supplied) Unquote From the above, we find that all along the Government's intention was to give exemption only with reference to the weight of minor oils present in the total weight of mixture of oils immediately before such mixture is subject to the process of hydrogenation for conversion to V.P. It did not extend to the percentage calculated with reference to the quantity of raw oil drawn for hydrogenation. What was given by way of an exemption in the above manner is now given by way of money credit scheme. Hence the Notification No. 45/89 issued under Rule 57K cannot be held to be otherwise, as pleaded by Shri Ravindran, merely because of the provision of Rule 57M or because of the stipulation in the Vegetable Oil Products Control Order. Rule 57M could be pressed into service. If there is a loss in hydrogenation or thereafter. It cannot come into play. Where the Notification does not allow money credit for the quantity of raw oil taken for processing, before hydrogenation. Notification No. 45/89 read in the context of the proceeding exemption Notification No. 115/86-C.E. leaves no doubt that the Government's intention had been all along to give exemption or credit only in respect of the quantity of oil subject to hydrogenation. We therefore, hold that either going by the position as reflected in the notification prevalent prior to introduction of money credit or going by straight reading of condition (i) of Notification No. 45/89, the quantity eligible for money credit can only the quantity subject to hydrogenation and not the quantity of raw oil subject to processing before hydrogenation."
6. We find that Condition (i) Notification No. 45/89, dated 11-10-1989 and Notification No. 40/87, dated 1-3-1987 are similar if not identical and the words used are also similar. The Tribunal in that case dismissed the six appeals on the ground that the weight of the oil issued for hydrolyzation shall be admissible for money credit on not the weight of the oil issued for processing before hydrolyzation. Though Notification No. 45/89 and Notification No. 40/87 pertained to two different commodities, however, the language being the same, the ratio of the decision in the case of Wipro Ltd. shall be applicable to the facts of the case before us. Following the ratio of the decision of this Tribunal in the case of Wipro Ltd., we hold that the weight of oil issued for hydrolyzation shall be admissible for money credit.
In this view of the matter, the appeal is allowed and the impugned order is set aside.