Customs, Excise and Gold Tribunal - Mumbai
Kumbhi Kasari Ssk Ltd. vs Commissioner Of Central Excise on 25 October, 2000
Equivalent citations: 2001(128)ELT246(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. The 'hree applications relate to three appeals involving common points of law. These applications were heard repeatedly. The point of law having emerged and got clarified, the appeals themselves are taken up for disposal vide this common order, after granting waiver for pre-deposit of the duties confirmed in each case.
2. The three appellants are manufacturers of Sugar, Molasses, Ethyl Alcohol and Denatured Spirit. Ethyl Alcohol is exempl from payment of duty. The three assessees had taken credit of the duty paid on Molasses. The credit proportionate to be inputs used in the manufacture cf product namely Ethyl Alcohol was sought to be used by the assessees for payment of duty on sugar. To do this they took recourse to the provisions of Rue 57F(12) of the Central Excise Rules, 1944 which read as under:
"Credit of specified duty allowed in respect of a ny inputs may be utilised by the manufacturer of the final products towar Is payment of duty of excise on any of the following, namely :-
(a) On any of the final products in the, manufacture of which such inputs are intended to be used n accordance with the declaration filed under Rule 57G; or
(b) On the waste, if any, arising in the course of manufacture of the final products; or
(c) On the inputs themselves if such inputs are removed as such under sub-Rule (3)."
3. The Commissioner Pune II issued Notices seeking reversal of the credit so utilised. Although the grounds for seeking r eversal are not very clear on the face of the notices, the Commissioner has spelt out the stand of the department in his adjudication orders in the following vords :
"On careful reading of the language of the Rule & proviso it is seen that sub-clause (a) of Rule 57F clearly lays down that credit of specified duty allowed in respect of any inputs is to be utilised towa rds payment of duty of excise on any of the final products in the manufacrC re of which such inputs are intended to be used in accordance with the decl iration filed under Rule 57G, among others. It is noteworthy that this provisi on of main Rule 57F(12) continues to remain on statute book even today. It is further significant to note that the nan obstante clause in the proviso only: nentions "notwithstanding anything contained in Rule 57A & Notfn. issued hereunder etc."
From this position it emerges that the proviso, which, as per the law has to be read along with the provision contained in ma n Rule itself cannot override or supercede the position brought out in the m rule itself especially when the proviso does not contain words requiring the provision of the main Rule to be disregarded.
Under these circumstances, a clear picture emerges that the require- ments of the main Rule that the credit of specified duty allowed in respect of any inputs is to be utilised on any of the final products in the manufacture of which such inputs are intended to be used in accordance with the declaration filed under Rule 57G, continues to hold full sway. In the facts of the present matter, it is nobody's case that sugar was the final product in the manufacture of which Molasses were the inputs intended to be used in accordance with assessee's declaration filed under Rule 57G."
In this belief he confirmed the demand in each case. Hence these appeals.
3. We have heard Shri V. Sridharan appearing along with Shri T. Vishwanathan and Shri K.G. Kulkarni for M/s. S.M. Shankar Rao Mohite-Patil, Shri K.P. Joshi appeared for M/s. Kumbhi Kasari SSK Ltd. and M/s. Shree Shankar SSK Ltd. The revenue was represented by Shri K.M. Patwari.
4. We have carefully considered the arguments made by both sides.
5. The purpose of a proviso is to create an avenue for a particular action which is not contemplated in the parent Rule. Therefore if the purpose for which the proviso is provided is sought to be defeated by going to the wording of the parent Rule, then the very purpose for inserting the proviso would be defeated. We find that the Commissioner's logic does not support the charge that there was any wrong availment of the credit.
6. However, during the proceedings that is at the time of hearing the arguments on the stay application the Bench had observed that the conditions of Rule 57F(12) could not be read in isolation but that they would be governed by the provisions of Rule 57C as also of Rule 57CC In our interim order dated 8-2-2000, we had observed that :-
"The basic supposition in the Modvat system is that where the final goods are charged with the burden of duty, that burden could be shared by utilising the duty paid on the inputs. Where the final product is not dutiable, the credit is not allowable in terms of Rule 57C. This is further specified in Rule 57CC which gives two options, the first is to pay duty on the final goods which are admittedly duty free and second is to write back the credit on those inputs which were utilised in the manufacture of duty free final goods. Rule 12 cannot be read in isolation but that the inputs would first have to pass the test of Rule 57C and Rule 57CC. In other words, where the credit is capable of being allowed it could be allowed to be utilised. The utilisation under Rule 57F(12) could be claimed only if the same is allowed under Rule 57C.
7. On receipt of this order the assessees in each case claimed that they had taken the route prescribed by Rule 57CC. Today each of the appellants has produced certificates from the Jurisdictional Central Excise Officials supporting this claim. Copies of these certificates had been marked to the DR also. The certificates are in addition to the Affidavit earlier filed by each of-the three appellants. On persual of the certificates, we find that the test of passing the hurdle or Rule 57CC has also been completed by the appellants.
7. In the result we find that the Commissioner's order does not survive. These appeals are allowed with consequential relief.