Customs, Excise and Gold Tribunal - Tamil Nadu
Collector Of C. Ex. vs Shriram Refrigeration Industries Ltd. on 11 November, 1991
Equivalent citations: 1992(37)ECC114, 1993ECR492(TRI.-CHENNAI), 1993(67)ELT189(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This appeal has been filed by the Revenue against the order of Collector of Central Excise (Appeals), Madras. The Central Excise Authorities demanded duty from the respondents in respect of Aluminium scrap which was cleared without payment of duty from the Respondents' factory under Rule 57F(2) for the reason that in terms of Rule 57F(4), the same could not be allowed clearance free of duty in the case of scrap generated in the factory out of the inputs in respect of which Modvat Credit had been taken, and that the same could be cleared either on payment of duty or it be destroyed. Duty was demanded in respect of Aluminium scrap cleared for the period between 20-1-1988 and 20-7-1988. The learned Collector (Appeals) took note of the fact that trade notice had been issued by the Hyderabad Collectorate bearing No. 94/89 dated 18-5-1989 under which it has been clarified that Aluminium scrap as in the case of the Respondents can be allowed to be removed without payment of duty under Rule 57F(2) and he had held that in view of this trade notice, the demand was not enforceable.
2. Shri P.B. Vedantham, the learned D.R. for the Revenue pleaded that the provisions of Rule 57F(4) are mandatory in nature and this rule specifically provide for as to how the scrap generated in case of units working under Modvat Scheme has to be dealt with for the purpose of clearance from the factory. He pleaded that there are only two modes available for dealing with the scrap i.e. either it should be cleared on payment of duty or it should be destroyed by the assessee. The only contingency when it can be cleared without payment of duty was when the Central Government issues an order allowing the clearance of the scrap without payment of duty. He pleaded that in the face of Rule 57F(4) the Respondents have been correctly asked by the original authority to pay duty.
3. Shri Bhushan Rao, the representative appearing on behalf of the Respondents pleaded that in view of the trade notice issued the Respondents have been rightly allowed the facility of removal of the Aluminium scrap without payment of duty under Rule 57F(2). On a query from the Bench, he however, stated that the relevant period for which the demand has been made was period prior to the issue of the trade notice.
4. We observe that there is specific provision under Rule 57F(4) of the Central Excise Rules, legislated for the purpose of Modvat Scheme dealing with removal of the scrap generated out of the inputs in respect of which Modvat Credit has been taken. Rule 57F(4) for convenience of reference is reproduced below:
"Any waste arising from the processing of inputs in respect of which credit has been taken may -
(a) be removed on payment of duty as if such waste is manufactured in the factory; or
(b) be removed without payment of duty, where it belongs to such class or category of waste as the Central Government may from time to time by order specify for the purpose for being used in the manufacture of the class or categories of goods as may be specified in the said order, subjected to the procedure under Chapter X being followed; or
(c) be destroyed in the presence of proper officer on the application by the manufacturer, and if found unfit for further use or not worth the duty payable thereon, the duty payable thereon being remitted."
5. As pleaded by the learned D.R. the rule only envisages clearance on payment of duty or destruction of the scrap and the only contingency when the same can be cleared without payment of duty is when an order has been issued by the Central Government in respect of such scrap for its clearance without payment of duty. Admittedly at the relevant time no such order was in existence and the trade notice allowing removal of Aluminium scrap came to be issued only in 1989. Trade notice may have been issued at the behest of the Board or Central Government and a claim can be made that this can be treated as an order by the Central Government for the purpose of Sub-rule (b) of Rule 57F(4) allowing removal of aluminium scrap without payment of duty. Admittedly there was no such trade notice in existence at the relevant time and the question of allowing removal of Aluminium scrap without payment of duty therefore would not arise. We have held in the same context as under in the case of Collector of Central Excise, Hyderabad v. Nucon Industries (Pvt.) Ltd. reported in 1992 (59) E.L.T. 122 (Tri.):
"Admittedly, the trade notice No. 94/89 was issued only in respect of Aluminium scrap and this trade notice can be taken to have been issued at the behest of the Board or the Central Government and a claim can be made that this can be treated as an order of the Central Government for the purpose of Sub-rule (b) of Rule 57F(4). In that view of the matter in case of aluminium, the benefit of extended interpretation of Sub-rule (b) can be given. However, in respect of brass and zinc no such trade notice or order has been issued and therefore, in terms of Rule 57F(4) the scrap has to suffer duty before it can be cleared out of the factory".
Following the ratio of our above decision, we hold that the Collector (Appeals) was in error in allowing the Respondent's appeal and we hold that duty has been correctly demanded from the respondents. We, therefore, allow the appeal of the Revenue.
S. Kalyanam, Member (J)
6.While agreeing with my learned brother that the impugned order is not sustainable in law, I should like to add the following.
7. The respondent, who was the appellant before the Collector of Central Excise (Appeals), Madras, only prayed for a relief that the differential duty payable on the waste and scrap as calculated by them would only work out to Rs. 1,05,527.74 and the same had been debited in the respondents RG 23 Part II statutory account and further prayed that 'the lower authority should be directed to accept their calculation'. The lower appellate authority in the impugned order in this context has found 'that was the only relief claimed by them in the appeal'. In such a situation it does not stand to reason as to how the lower appellate authority could carve out a larger relief, which the appellant before him did not even pray for, and grant it to the detriment of the Department. Such a procedure is not conceivable in quasi-judicial adjudications and appeals and there is also no warrant for grant of such relief in law or on facts either. It is also fairly well-settled that a Trade Notice issued by a Collectorate cannot be construed to be statutory in nature and even in the interests of justice if the Trade Notice of Hyderabad Collectorate No. 94/89 dated 18-5-1989 could be construed to be statutory in character and by a broad and liberal interpretation could be brought within the mischief of Rule 57F(4)(b) and treated as one issued by the Central Government, the respondent would not get any relief out of the same for the simple reason that the Trade Notice was issued on 18-5-1989 whereas the period involved is between 20th January, 1988 and 20th July, 1988. There is no warrant in law to construe it as operative retrospectively and, therefore, in any view of the matter the impugned order is not sustainable in law. In this view I hold that the appeal has to be allowed and I order accordingly.