Customs, Excise and Gold Tribunal - Delhi
Sandoz (India) Ltd. vs Collector Of Central Excise on 27 July, 1988
Equivalent citations: 1990(29)ECC299, 1988(18)ECR629(TRI.-DELHI), 1988(37)ELT299(TRI-DEL)
ORDER V.P. Gulati, Member (T)
1. This is an appeal filed against the order of C.C.E. Bombay. The brief facts of the case are that the appellants claimed the benefit of Notification No. 103/61, dated 20.4.1961 as amended. The amendment to this Notification No. 103/61 was made by Notification No. 109/80 by which the benefit of the exemption under this notification was made subject to the procedure under Rule 56A being followed. The procedure under Rule 56A was amended by Notification No. 104/79, dated 3.3.1979 and a proviso was added in Sub-rule (ii) as under:
"1 (Provided further that no credit of countervailing duty shall be allowed in respect of any material or component parts used in the manufacture of finished excisable goods, if countervailing duty has been paid in respect of such material, or component parts, as fall under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944)."
2. The appellants enjoyed the benefit of Notification No. 103/61 till 19.06.80 when by virtue of Notification 109/80 the procedure of set-off under Rule 56A was made applicable.
3. The lower authorities held that inasmuch as the benefit of the set-off in respect of C.V. Duty paid under Tariff Act 68 was not available in terms of proviso to Rule 56A introduced by virtue of Notification No. 104/79, the appellants were not eligible for the benefit of the said Notification No. 103/79 in respect of Item 68 products on which C.V. duty was paid and which were used by them for the manufacture of S.O. Dye stuffs as Intermediate goods. The Notification No. 103/61, for convenience of reference, as amended, is reproduced below:
"In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts synthetic organic dyestuffs manufactured wholly or partly out of the imported intermediates from the payment of so much of the duty of excise leviable thereon as is equivalent to the amount of countervailing customs duty paid on such imported intermediates."
"Provided that in relation to the exemption under this notification, the procedure set out in Rule 56A of the aforesaid rules is followed."
4. The learned Advocate for the appellants drew our attention to Rule 56A and pleaded that any restriction in regard to availment of the credit in respect of Tariff Item 68 goods on which C.V. Duty was paid, can only be restricted in case the appellants availed of the benefit of the exemption as a notified item under Rule 56A. He pleaded that the appellants have claimed the benefit of exemption under Notification No. 103/61 and not under Rule 56A. He pleaded that what was sought to be done by Notification 109/80, dated 19.6.1980 was that for the purpose of availing the benefit under Notification 103/61. the procedure as prescribed for availing the credit under Rule 56A was required to be followed. He pleaded that so far as benefit claimed under the Notification 103/61 was concerned, the same was being claimed in terms of this notification, and this benefit could not be denied under a notification issued in the context of Rule 56A. He pleaded that only the procedural part relating to the mode of the availing of the credit was made applicable by amending Notification No. 109/80 for availing the benefit of Notification No. 103/61 and not the substantive part of Rule 56A.
5. The learned S.D.R., for the department, generally adopted the reasoning given in the Order of Collector (Appeals) Rule 56A Sub-rule (i) reads as under:
"Notwithstanding anything contained in these rules, the Central Government may be notification in the Official Gazette, specify the excisable goods in respect of which the procedure laid down in Sub-rule (2) shall apply."
It is seen that the procedure to be followed in terms of this rule for the purpose of getting benefit under Rule 56A has been set out in Sub-rule (2). By this sub-rule, an asses-see Is required first to obtain permission for availing of the proforma credit from the Collector on an application, made in this behalf subject to the conditions as laid down in Sub-rule (3) to be complied with by the assessee. It Is under this sub-ode (2) that circumstances under which the facility for proforma credit in respect of duty paid inputs is allowed subject to the exceptions set out In this sub-rule.
6. The question for consideration is in terms of Notification No. 103/61 as amended by Notification No. 109/80, which sub-rule should be taken to be the procedure which is required to be complied with for the purpose of exemption under Notification 103/61.
7. We observe that the procedure set out under Sub-rule (2) of Rule 56A provides for availing of credit of duty already paid on raw-material and component parts and finished products used in the manufacture of notified goods under Sub-rule (1) of the said rule or for convenient distribution of such notified goods subject to certain provisos set out under this Sub-rule (2) and other provision of Rule 56A. As seen from the wording of Sub-rule (2), the conditions of this are applicable only in respect of goods notified under Sub-rule (1) of Rule 56A and the provisions pertain to what the authorities are required to do in terms of this Sub-rule and the manner in which the proforma credit is to be allowed and circumstances under which the same cannot be allowed. The conditions which a manufacturer of the goods availing of the credit has to comply with one set out under Sub-rule (3) of Rule 56A.
8. We observe that Notification No. 103/61, as amended, exempts synthetic, organic dye stuffs from the payment of so much of the duty of excise leviable thereon equivalent to the amount to be paid on such intermediates. It is seen that the exemption given is without any restriction that the imported intermediates should fall under any specified tariff headings. The only restriction placed for availing the benefit of this exemption notification is that the procedure set out under Rule 56A of a Central Excise Rule has to be followed. Now under Sub-rule (2) of Rule 56A, the permission to avail of proforma credit is not to be allowed in respect of C.V. duty paid on raw-materials or component parts falling under T.I. 68 CET used In the manufacture of notified finished excisable goods.
9. We observe that synthetic organic dye stuffs also figure as one of the notified items under Rule 56A.
10. The appellants, however, In the present case, are not claiming the benefit of the exemption in the form of proforma credit under Rule 56A but are claiming the benefit of exemption under Notification No. 103/61, as amended.
11. By virtue of making the procedure, set out under Rule 56A, applicable for availing the benefit of Notification No. 103/61, as amended, the position that emerges legally is that the appellants will have to conform to the procedure for availing of the benefit of the notification as has been set out under Rule 56A. This would mean that in terms of this procedure, they will have to apply for the permission to avail of the credit of duty paid on the Intermediate goods for use in the S.O. dyes and utilise the same in the manner prescribed under Rule 56A after conforming the conditions set out thereunder.
12. Under Rule 56A, there is a specific prohibition for availing of the credit of C.V. duty paid on raw-materials, etc. under Tariff Item 68. This-specific prohibition for availing of the credit does not figure under Notification No. 103/61, as amended. In the substantive portion of Notification No. 103/61, as amended, the extent of the exemption to be allowed is not subject to any specific exclusion in regard to the C.V. duty paid on any category of goods. This Notification No. 103/61 is an independent notification for a specific category of goods and the extent of exemption that is allowed thereunder cannot be In any way reduced by a prohibition regarding the benefit available under another Rule or Notification unless this specifically provides for the same.
13. The only provisio to the notification relates to the procedure to be followed. The procedure provides for the mechanics of availing of the exemption and the extent of exemption given cannot be reduced or nullified by reading the provision of Rule 56A Into it, unless it were specifically warranted by the wording of the notification.
14. In the present case, we do not read any such meaning in the wording of Notification No. 103/61, as amended. The procedural compliance in terms of Rule 56A can only be read to mean the manner in which the benefit of exemption can be availed of but it has nothing to do with the extent of exemption that is available under the notification.
15. In view of this, we find that the lower authorities order is not maintainable and allow the appeal with consequential relief.