Customs, Excise and Gold Tribunal - Delhi
Gora Mal Hari Ram Ltd. vs Collector Of Central Excise on 20 December, 1994
Equivalent citations: 1995(77)ELT564(TRI-DEL)
ORDER Shiben K. Dhar, Member (T)
1. The issue that calls for determination in this appeal falls within a narrow compass i.e. admissibility of higher notional credit in case of special excise duty in terms of Rule STB of Central Excise Rules, 1944.
2. The learned Advocate at the very outset fairly conceded that issue has been decided against them by Tribunal in case of Reckitt & Colman of India Ltd. v. CCE - reported in 1992 (63) E.L.T. 148 (Tribunal) and in case of Sarda Service Corporation v. CCE - reported in 1992 (62) E.L.T. 173. There is, he also conceded, no contrary judgment of Tribunal or any Court.
2.2 The Learned Advocate however submitted that basic issue has not been fully appreciated in these judgments which are sub-silentio. Rule 57A as well as notification issued thereunder refers to "Specified duty". Special excise duty is a "Specified duty". Rule STB stipulates that notwithstanding anything contained in Rule 57A, credit of specified duty on inputs may, in a case where the duty on inputs has been paid under a notification issued under Rule 8(1) or Section 5A(1) of the Act exempting such inputs from a part of the duty leviable thereon on the basis of value of clearances of such inputs during any specified period, be allowed at the rate otherwise applicable to such inputs but for the said notification provided this Notification provides for grant of credit at such higher rates as specified therein.
2.3 The learned Advocate submitted that the Rule provides for grant of credit of specified duty at higher rate and therefore notional credit would be admissible in respect of special excise duty also which is a "Specified duty".
3. Learned DR reiterated the Department's arguments.
4. Considered. I find that issue has been adequately discussed by Tribunal in case of Reckitt & Colman of India Ltd. (supra) and Sarda Service Corporation (supra). In this connection I am reproducing relevant extracts of para-4 of Order of Tribunal in case of Sarda Service Corporation.
"...the availment of higher quantum of the specified duty in excess of the actual amount paid on the inputs cleared by small scale industries is regulated in terms of Rule 57B of the Central Excise Rules, 1944, read with Notification No. 175/86 dated 1-3-1986, as subsequently amended. This Rule lays down that where duty on inputs has been paid under Sub-rule (1) of Rule 8 or subsection (1) of Section 5A of the Central Excises and Salt Act, 1944, as the case may be, exempting such inputs from a part of the duty leviable thereon, on the basis of value of clearances of such inputs, credit of duty may be allowed at the rate otherwise applicable to such inputs but for the said Notification. The proviso to the said Rule 57B lays down that such a Notification should provide for grant of credit for such inputs at such higher rates as may be specified. Special Excise Duty is not covered by any such exemption Notification. What is exempted under Exemption Notification 175/86, dated 1-3-1986 as subsequently amended is the duty of excise leviable which is specified in the Schedule to the Central Excise Tariff Act, 1985. Such a duty is the basic excise duty. Special excise duty is not specified in the said Schedule and it is levied under the provisions of the Finance Act each year. It is levied as a percentage of the effective amount of the basic excise duty leviable. The quantum of special excise duty is thus a percentage of the quantum of basic duty after the rate of basic excise duty has been decided and applied. There is no exemption Notification specifically applied to the special excise duty, let alone a notification providing for a higher credit thereof as required under Rule STB."
5. Paraphrased in simple language, the position, in law is that Rule 57A allows a manufacturer of dutiable goods to take a credit of actual "specified duty" and utilise such credit towards duty payable on such finished goods in the manufacture of which such goods have been used. "Specified duties" are indicated in Notification No. 177/86 issued under Rule 57A.
5.2 Special duty admittedly is a "Specified duty".
5.3 While Rule 57 A allows credit only of actual duty, Rule STB, by virtue of the non-obstante clause, provides, in case of goods produced by small scale units availing exemption under Notification No. 175/86 as amended, credit at a rate higher than that at which duty has been actually paid.
5.4 Rule STB however, while allowing credit at a higher rate, which would otherwise not have been payable under Rule 57A but for the non-obstante clause under Rule STB, subjects this concession to a condition that the notification allowing payment of duty at a lower rate (in this case Notification 175/86 as amended) should provide for grant of credit on such goods at a higher rate.
5.5 Para 5 of Notification 175/86, allows credit, in spite of exemption granted under notification, at a higher rate. Para 5 of this notification in other words, says that even though certain goods may have paid duty at a concessional rate by virtue of this notification, these would be eligible, in terms of rule 57B, to a credit at a higher rate when used as inputs in the manufacture of finished excisable goods. In other words, credit at the normal rate such as is charged in case of other goods.
6. Notification No. 175/86, dated 1-3-1986, as amended, has been issued under Rule 8 of Central Excise Rules, 1944, simpliciter without reference to any other statute. This notification grants exemption, to the extent indicated therein, "of such of the duty of excise leviable thereon" on specified excisable goods falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).
It is clear therefore, that this notification grants exemption from basic excise duty only.
6.2 The position in law in regard to this proposition has been clarified by the Hon'ble Apex Court in case of Union of India and Ors. v. Modi Rubber Ltd. reported in 1986 (25) E.L.T. 849 Compilation of Supreme Court Judgments. Para 9 of the Judgment is set out below:
"Where a notification granting exemption is issued only under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 without reference to any other statute making the provisions of the Central Excises and Salt Act, 1944 and the Rules made thereunder applicable to the levy and collection of special, auxiliary or any other kind of excise duty levied under such statute, the exemption must be read as limited to the duty of excise payable under the Central Excises and Salt Act, 1944 and cannot cover such special, auxiliary or other kind of excise duty. The notifications in the present case were issued under Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 simpliciter without reference to any other statute and hence the exemption granted under these two notifications must be construed as limited only to the duty of excise payable under the Central Excises and Salt Act, 1944 ... by reason of Sub-section (4) of Section 32 of the Finance Act, 1979 and similar provision in the other Finance Acts. Rule 8(1) would become applicable empowering the Central Government to grant exemption from payment of special duty of excise, but when the Central Government exercises this power, it would be doing so under Rule 8(1) read with Sub-section (4) of Section 32 or other similar provision. The reference to the source of power in such a case would not be just to Rule 8(1), since it does not of its own force and on its own language apply to granting of exemption in respect of special duty of excise, but the reference would have to be to Rule 8(1) read with Sub-section (4) of Section 32 or other similar provision."
6.3 Since the Notification 175/86 as amended has been issued under Rule 8(1) of Central Excise Rules, the grant of credit at a higher rate to which it refers can only mean credit of basic excise duty with which Notification is dealing. Since it clearly says that in spite of exemption from basic excise duty under that notification to a class of goods, such goods could be given a credit at a higher rate. Special excise duty is not specified in the Schedule to Central Excise Tariff Act but is levied under Finance Act each year. It is not the case of the learned Advocate that there is a notification like the one referred to in Rule 57B which grants exemption of special excise duty in like manner to a specified [class of] goods, and that, that exemption also speaks of credit at higher rate notwithstanding such exemption.
6.4 This being the case there can be no manner of doubt that Rule STB read with Notification No. 175/85 as amended allows credit at a higher rate only of Basic Excise Duty.
7. The learned Advocate forcefully argued that the notification cannot travel beyond rules since Rule 57B clearly allows grant of such credit. It is true Rule 57B allows grant of credit at a higher rate of "specified duty", and special excise duty, being a specified duty, would also have ordinarily qualified for credit at a higher rate. Proviso to Rule 57B however, makes grant of such higher rate in a notification a condition precedent for such higher rate. Since the Notification issued does not mention special excise duty, but only basic duty, higher rate in case of special duty cannot be claimed only on the basis of Rule 57B without reference to its proviso.
7.2 If legislature thought it fit not to grant such higher rate in case of special excise duty, there is, in my view, nothing more to be said. If however, it was a result of omission, it is not for the Courts to supply the deficiency. Assuming that similar concession ought to have been, but has not been, provided for in the statute, it cannot be so provided for by Court as to do so would be to take it away from the field of construction and push it up to the domain of legislation. Assuming that there is causus omissions, the defect cannot be remedied by the Courts.
7.3 The simple position however, is that the notification has not travelled beyond Rule 57B, but, by virtue of its being a Notification under Rule 8(1) of Central Excises Rules simpliciter, without reference to provisions of other statements, has granted higher credit only in respect of basic excise duty.
8. The learned Advocate also submitted that earlier Order of Tribunal referred to para-2 are sub-silentio.
8.2 A decision sub-silentio however is one where particular points of law involve in the decision is not perceived by the Court or present to its mind. A proposition of law, implicit in a decision, when not expressly stated in argument or judgment, makes the decision sub-silentio. That, however, is not the position here as would be obvious from the portion of the extracted earlier from the Tribunal Order in case of Sarda Service Corporation (supra).
8.3 Since however I have independently arrived at the same conclusion, I do not consider it necessary to expatiate any further on the doctrine of sub-silentio.
9. In the result, for the reasons set out hereinbefore, the Appeal is rejected and the impugned Order is upheld.