Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Garware Paints Limited on 30 July, 1987
Equivalent citations: 1987(12)ECR1077(TRI.-DELHI), 1987(31)ELT775(TRI-DEL)
ORDER K. Prakash Anand, Member (T)
1. In this case the facts are that M/s. Garware Paints Ltd., Thane were allowed by the department to avail set off of duty paid on raw materials, namely (i) Rosin; (ii) Pathalic Anhydride and (iii) Litharge, falling under Item No. 68 of the Central Excise Tariff, which were to be used in the manufacture of products falling under Item No. 14 of the Central Excise Tariff (hereafter C.E.T.)
2. The department's case is that M/s. Garware Paints Ltd. used these raw materials not directly in the manufacture of products falling under Item No. 14 of the C.E.T., but in the manufacture of Alkyd Rosins falling under Item No. 15-A of the C.E.T. which were exempt from payment of Central Excise duty vide Notification No. 122/71 dated 1.6.1971. It is admitted that Alkyd Rosins so manufactured were further consumed in the production of products falling under Item No. 14 of the C.E.T. It is submitted on behalf of the department that since Alkyd Rosins were exempt from payment of Central Excise duty, therefore, raw materials used in their manufacture could not be allowed proforma credit.
3. The above view was taken by the Assistant Collector of Central Excise in his Order-in-Original but the Collector of Central Excise (Appeals) set aside his order relying on the Trade Notice No. 100(MP)/Gen./19/1980 dated 28.10.1980 as well as the decision of the Bombay High Court in the case of Indian Aluminium Co. Ltd., and Anr. v. A.K. Bandyopa-dhyay and Ors. - 1980 E.L.T. 146 (Bom.). It is against this order of Collector (Appeals) that the department has come up before us.
4. The short point on which the appeal is before us is whether it is permissible for the assessee to take credit of duty paid in respect of inputs which are utilized in the manufacture of intermediate products, namely, Alkyd Rosins falling under Item No. 15-A of the Central Excise Tariff and exempt from duty, although such Alkyd Rosins go into the production of dutiable finished products falling under Item No. 14 of the C.E.T.
5. Heard Shri Shishir Kumar, SDR for the department and Shri G.R. Divekar, Consultant for the respondent.
6. The learned SDR submits that allowing of proforma credit in this case would be contrary to the provisions of Notification No. 201/79 dated 4.6.1979 as amended by Notification No. 105/82 dated 28.2.82. It is added by the SDR that Collector (Appeals) wrongly relied on the decision of the Bombay High Court in the case of Indian Aluminium Company Ltd.
7. Responding, Shri G.R. Divekar Consultant has reiterated the view taken by the Collector (Appeals) and strongly relied on both the Trade Notice and the Bombay High Court judgment cited supra. Apart from this, he has stated that the demand of duty is time barred. It is also urged that duty is being demanded even for period during which appellants had in fact not availed of the proforma credit.
8. The facts of the case and the submissions made by both sides have been carefully considered. It is seen that in the decision that the Collector (Appeals) has taken, he relied on the Trade Notice issued by the Bombay Central Excise Collectorate, a copy of which has been filed by the respondent with his Cross Objections. The relevant extract of the Trade Notice is reproduced below :
''Central Excise - Applicability of Rule 56A where the raw materials pass through a fully exempted intermediate product stage -
The question was under the consideration regarding availability of Proforma Credit under Rule 56A where an intermediate product which is fully exempt from the excise duty comes into being, during the process of manufacture of a notified finished product.
It is clarified that the-proforma credit in the type of cases referred, to above, will be permissible, provided the product which comes into being at the intermediate stage during the process of manufacture of a notified finished product and is fully exempt from the payment of duty, is consumed within the factory in the manufacture of the notified finished product. However, proforma credit will not be available if the fully exempted intermediate product is removed as such, from the factory.
This facility will also be applicable to Notification No. 201/79-CE dated 4th June, 1979 whereunder the procedure for claiming benefit of duty paid on the inputs falling under Tariff Item 68 is provided for."
9. It is seen that Trade Notice of this kind is an authoritative interpretation of the department which would be governing a large number of units availing the Rule 56A procedure. In the face of such a clarification from the department, with which we cannot find any obvious fault, the department's dispute based on obstractions cannot carry any conviction. It is true that the inputs is question are going into the production first of Alkyd Rosins which emerge as intermediate products, but it is not denied that those intermediate products go into the final production of notified finished products. In the case of Indian Aluminium Company Ltd., the High Court of Bombay had rightly observed that if the raw material brought under Rule 56A is used in the manufacture of any finished excisable goods which are notified and during the course of such manufacture, any non-dutiable intermediary products emerges, then it cannot be said that the raw material was not used in the manufacture of the finished notified goods. The ratio of the Bombay High Court decision is fully applicable to the facts of this case.
10. In the view that we are taking, it is un-necessary to deal with the respondent's other arguments regarding time bar etc.
11. Appeal dismissed and Cross Objections also disposed of accordingly.