Customs, Excise and Gold Tribunal - Mumbai
Bombay Dyeing And Mfg. Co. Ltd. vs Commissioner Of C. Ex. on 8 June, 2000
Equivalent citations: 2000ECR285(TRI.-MUMBAI), 2000(121)ELT197(TRI-MUMBAI)
ORDER G.N. Srinivasan, Member (J)
1. This is an appeal filed by the assessee against the Order No. GKP(554 to 556) 448 to 450/M-IV/99 dated 15-3-1999 where under the Commissioner (Appeals) dismissed the appeal of the appellants for not producing the proof of payment of the compliance of the stay order dated 11-1-1999. We had directed the assessee to furnish bank guarantee for 50% which they have complied with.
2. The appellants are engaged in the manufacture of various types of yarn and fabrics falling under Chapters 52, 54 and 55 of the Schedule to the CETA, 1985. The appellants state that a Notification 7/94(NT) dated 1-3-1994 was issued under Rule 56A of the Central Excise Rules along with proforma credit in respect of synthetic filament yarn. The appellant opted for proforma credit by making an application to that effect to the concerned authority by their letter dated 1-3-1994. After getting stock lying with them on 1-3-1994 the appellants took proforma credit in respect thereof in their RG 23 register Part I & II. A show cause notice dated 30-8-1984 was issued by the jurisdictional Superintendent seeking to deny the said credit on the ground that proforma credit in terms of Notification 7/94 on the balance quantity of polyester filament yarn which was received before 1-3-1994 cannot be granted without obtaining prior permission of the AC. They filed reply. The jurisdictional AC by his order dated 3-9-1997 did not agree with the contentions raised by the appellants. Hence an appeal was filed before the Commissioner (Appeals) who by the impugned order directed payment of 50% of the disputed amount. Hence the present appeal.
3. Shri M.H. Patii and with Smt. MM. Patii, Advocates along with Shri Manjrekar, Consultant, appeared for the appellants. Shri Deepak Kumar appeared for the department.
4. Shri M.H. Patii submitted that seeking prior permission of the AC does not disentitle the appellants from claiming proforma credit on the inputs available in stock. He relies on the judgment of the Tribunal in the case of Zuari Agro Chemicals Ltd. v. CC -1986 (25) E.L.T. 783 where the learned third member to whom the order was referred on the difference of opinion between the two members had agreed with the order of the Member (judicial) who granted the proforma credit.
5. Shri Deepak Kumar, learned DR, would vehemently contend that the question before the Tribunal in Zuari Agro Chemicals was not the same which appears before us. He argued that what is known as transitional credit as is enshrined in Rule 57H of the Modvat Rules is absent in the proforma credit. The question before Zuari Agro Chemicals is not about transitional credit matters. Therefore, he submits that the ratio in that case cannot be applicable to the facts in this case.
6. We have considered the rival submissions. Normally we would have remanded the matter for consideration of the Commissioner (Appeals), but since the matter could be decided on the interpretation of the provisions of law and since there is no examination complicated questions of fact is involved, we have ourselves decided the matter.
7. In this case, certain inputs were available with the appellants prior to 1-3-1994. After the extension of proforma credit in respect of the products in question it was thought fit on the part of the appellants to claim the same when they made respective entries in RG 23 Part I & II. When it was questioned and after due hearing the AC in his order had held as follows:-
"I have carefully gone through the case records and written submissions made by the assessee. The issue is regarding proforma credit to be availed on the material lying in stock on the date of issue of Notfn. No.7/94(NT) i.e. 1-3-1994 under Rule 56A. There is no provision in Rule 56A to grant credit on raw material lying in stock on the date of issue of the said notification. The assessee has referred to Sub-rule (2A) of Rule 56A, which is regarding provisional credit to be allowed after receipt of material and pending grant of permission under Rule (56A) by Assistant Commissioner. The Rule 56A(2A) do not any way refer to credit to be allowed on stock lying with the assessee. The matter is more clear by referring to Sub-rule (2B) which empowers Collector to condone delay in filing of application under Rule 56A(2), provided that the material or component parts in respect of which credit of duty is to be allowed were received in the factory on or after the date of such notification. The case law cited by the assessee are not relevant to the issue of allowing duty credit on the stock lying under Rule 56(A) hence need not be discussed. In view of the above, demand issued is sustainable."
(Emphasis Supplied).
8. The main contention of the learned counsel is Zuari Agro Chemicals case is applicable to the facts of this case. We have considered this. In that case the question of eligibility was never discussed. The question as it appears to us is reflected in paragraph thereof as follows: "In this case the Government of India gave the benefit of Rule 56A to the assessee from the date of application of the licence." Here the question before us is not the date of application of the licence, here the question is the eligibility to the proforma credit.
9. In this connection, it will be useful to refer to what is contained in Rule 57H of the Modvat Scheme which is reproduced as follows :
"Transitional provisions. (1) Notwithstanding anything contained in Rule 57G, a manufacturer intending to avail of credit of duty paid on inputs received by him immediately before obtaining the dated acknowledgement of the declaration made under that rule, shall file a declaration under this Sub-rule with the jurisdictional Assistant Commissioner of Central Excise stating that -
(a) such inputs are lying in stock, or are received in the factory after filing the declaration made under Rule 57G; or
(b) such inputs are used in the manufacture of final products which are cleared from the factory after filing the declaration made under Rule 57G, and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification."
In Rule 57H to show that the rule making authority knowing fully well the difficulties of transitional credit has made a specific rule in respect of the goods lying in stock in respect of eligibility of Modvat in respect of goods lying in stock. In respect of proforma credit there are no comparable and similar provisions existing in proforma credit provisions. When we compare this we have come to the only conclusion that the appellants are not entitled to claim. The argument of Shri M.H. Patii which he forcefully puts forth that Zuari Agro Chemicals case is applicable to the facts of the case cannot be accepted because that was a case of benefit to the assessee from the date of application of the licence. We are not questioning here from what time the assessee eligible whether from the date of application or later or prior to that. Here we are questioning the eligibility. In the absence of similar provisions like Rule 57H in the proforma provisions, we are unable to accede to the argument of Shri M.H. Patii. Appeal stands dismissed. Impugned orders is upheld.
10. The other argument is relating to duty paying receipt of goods, in our view, is not material to the decision in appeal. As far as the penalty is concerned, the leviability is very clear. As stated above by us, when the rule making authority does not specifically enable the assessee to take proforma credit as similarly found in Modvat credit like existence of Rule 57H, it may not be understood how a seasoned assessee like Bombay Dyeing & Mfg. Co. Ltd. would have taken the proforma credit. Here there is no question of any mens rea involved. We are therefore of the view that penalty has been rightly imposed. Therefore we reject the argument in respect of reduction of penalty.