Customs, Excise and Gold Tribunal - Mumbai
Fibre Foils Ltd. vs Commissioner Of Central Excise on 2 September, 2005
Equivalent citations: 2005(190)ELT352(TRI-MUMBAI)
ORDER Archana Wadhwa, Member (J)
1. The appellant is engaged in the manufacture of battery parts as also other products like plain paper drums, laminated composite containers, spiral paper tubes etc. During the relevant period i.e. from April, 1993 to October, 1993, they availed the benefit of Modvat credit of duty paid on the tin plates used in the manufacture of battery parts but utilised the credit for payment of duty in respect of other final products, in the manufacture of which such tin plates were never utilized.
2. On the above basis, proceedings for denial of credit of Rs. 1,56,207.48 so availed on tin plates but used for discharge of duty on other final product other than battery parts, were initiated which culminated into the impugned orders passed by the authorities below, vide which demand was confirmed and penalty of Rs. 5000/- was also imposed. It has been observed in the said orders that provisions of Rule 57F(4) were amended with effect from 16-3-95 when a proviso was added vide Notification No. 11/95 Central Excise (N.T.). As a result to the said proviso, Modvat credit earned on any input can be used for payment of duty on any of the final product irrespective of the fact as to whether such input has been used in the manufacture of such final product or not. As such, the authorities below have concluded that since the period involved in the present appeal is prior to the introduction of the provision, benefit cannot be extended to the appellant. However, while rejecting appeal, Commissioner (Appeals) did not deal with the appellant's contention that they be allowed to pay duty from PLA and reverse back the credit, so utilized in their modvat account RG 23A Part II.
3. Shri T.C. Nair, Id. Advocate appearing for the appellant submits that the said Notification No. 11/95-C.E. (N.T.), dated 16-3-95 should be held to be retrospective as held by the Tribunal in the case of Hindustan Petroleum Corporation Ltd. v. Commissioner of Central Excise, Vishakhapatnam as reported in 2002 (53) RLT 940 (CEGAT-Bom.). He also relied upon the Tribunal's decision in the case of Samtell (India) Ltd. v. Commissioner of Central Excise, Jaipur - 2002 (148) E.L.T. 468 (Tri.-Del.) in support of his contention that there is no one to one co-relation with the inputs and the final product and credit earned in respect of one type of inputs can be used for payment of duty on other type of final product. He also re-iterated his alternative plea of restoring credit in RG 23A Part II, in case they are directed to pay duty out of PLA. He also submitted that it being a bona fide legal dispute about interpretation of provisions of law and the final product having been cleared on statutory excise documents after debiting duty, no penalty should have been imposed upon.
4. Countering the arguments, Id. JDR, Shri N.V.B Nair submits that prior to introduction of Proviso to Rule 57F(4) with effect from 16-3-95 there was no provisions for extension of such benefit. The dispute has to be decided by referring to the provisions as they existed during the period under dispute. He further contended that there is nothing to suggest that the benefit extended by the legislature with effect from 16-3-95 is to be treated as retrospective in nature.
5. I have considered the submissions made by both the sides and have gone through the impugned order. The appellants' only contention is that Notification No. 11/95-C.E. (N.T.), dated 16-3-95 introducing proviso to Rule 57F(4) should be treated as a retrospective for better appreciation, I reproduce the added proviso to said rule :-
"Provided also that, that notwithstanding anything containing in Sub-rule (1) of rule 57A and the Notifications issued thereunder the credit of specified duty allowed in respect of any inputs may be utilised for payment of duty on any other final product, whether or not such inputs have actually been used in the manufacture of the such other final product, if the said inputs have been received and used in the factory for production on or after the 16th day of March, 1995."
Prior to the introduction of the said proviso, the said rule provided for use of credit as under :
Rule 57F(4) Credit of specified duty allowed in respect of any inputs may be utilised towards payment of duty of excise :-
(i) On any of the final products in or, in relation to the manufacture of-which such inputs are intended to be used in accordance with the declaration filed under Sub-rule (1) of rule 57G; or
(ii) On the waste, if any, arising in the course of manufacture of the final products; or
(iii) On the inputs themselves if such inputs have been permitted to be cleared under Sub-rule (1)] :
As it is clear from contrast reading of Rule 57F(4) without the proviso and with the proviso that the earned credit could be utilised only in the manner specified in the said rule Sub-rule (i) allows such utilisation towards payment of duty of excise on any of the final products in or in relation to the manufacture (emphasis provided) of which such inputs are intended to be used. Reasonable interpretation and conclusion from the above reading, which follows, is that if such inputs are not intended to be used in or in relation to manufacture of a final product, earned credit would not be available for use. However, with the addition of proviso, the entire scenario changed. The proviso starts with notwithstanding anything contained in Sub-rule (1) of Rule 57A. As such, it goes without saying that the proviso extends the scope of the rule and by way of an exception to the otherwise general rule laid down for utilisation of credit. Such additional facility extended has to be held as being effective from the date, when it was extended and cannot, in my views, be held to be retrospective. Any subsequent enactment can be held retrospective in nature, when the benefit it seeks to extend was otherwise also available on the interpretation of the existing provisions and it merely clarifies the same. That is not the case here. As such, I am of the opinion that the credit earned in respect of tin plates is not available for payment of duty on paper drums prior to 16-3-95. Accordingly, the appellants are required to pay duty on paper drums out of PLA. However, the credit so reversed by them at the time of discharge of duty is liable to be credited by them in the Modvat account. I am also of the view that penalty imposed upon the appellant is not justified as the issue involved is bona fide dispute about the interpretation of law.
7. As regards the Tribunal's decision in the case of Samtel (India) Ltd., relied upon by the appellant. I find that the ratio of the same is not applicable as the facts in that case were entirely different. It is seen that out of 31 inputs, 29 inputs, were common for all sizes of picture tubes and issue related to use of the inputs in the picture tubes of different sizes, some of which were also be exported. It was in these circumstances, Tribunal observed that the word 'similar' as appearing in Rule 57F(98) was wide enough to cover picture tubes of various sizes. In fact in para 15 of said judgment, reference has been made to earlier decisions where record players and two-in-ones cassette players and Black & White T.V. Sets and colour T.V. Sets were held to be different goods. In the instant case, admittedly, battery parts and paper drums are two different, in fact, poles aparts, goods. The said decision, as such does not advance appellants case.
8. The appellants have also referred to the Tribunal's decision in the case of Hindustan Petroleum Corporation Limited v Commissioner of Central Excise, Vishakapatnam reported in 2002 (53) RLT 940 laying down their Notification No. 11/95-C.E. is retrospective in nature. In as much as my views as discussed above are contrary to the above decision, I refer the matter to Larger Bench. Registry is directed to place the papers before the Hon'ble President for constitution of Larger Bench.
(Pronounced in Court on 2-9-2005)