Customs, Excise and Gold Tribunal - Delhi
Ranbaxy Laboratories Ltd. vs Commissioner Of C. Ex. on 14 February, 2000
Equivalent citations: 2000(69)ECC293, 2000ECR851(TRI.-DELHI), 2000(119)ELT491(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. In the impugned order ld. Commissioner (Appeals) held :-
"3. I have gone through the case records as well as the submissions made at the time of personal hearing and observed that the competent authority was providing relief under Rule 12 of Central Excise Rules, 1944 by way of sanctioning rebate claims and the appellant were taking credit in their RG 23A Pt. II from time to time till Jan' 1997. Subsequently, the appellant vide their letter, dated 26-3-1997 requested to the competent authority to review their claims for cash refund. There is no provision under the Central Excise law to change the already accepted mode of relief by way of rebate under Rule 12 of Central Excise Rules, 1944, subsequently. The remedy available with the appellant was before taking credit of the sanctioned amount in their RG 23A Pt. II. Further, the ratio of the O-I-A No. 301/CE/APPL/CHD/97 in the case of Montari Inds. Ltd. is inapplicable in the instant case inasmuch as that M/s. Montari Inds. Ltd. had not availed the sanctioned rebate claim whereas in the instant case appellant have already taken the credit of sanctioned rebate claim in their RG-23A Pt. II.
4. In view of the above, I do not find any reason to disturb the O-I-O passed by A.C. Central Excise Ropar and uphold the same".
Being aggrieved by this order, the appellants have filed the captioned appeal.
2. The facts of the case in brief are that the appellants are engaged in the manufacture of bulk drugs falling under Chapter 29 of the Central Excise Tariff Act, 1985. The appellant is exporting the bulk drugs on payment of Central Excise Duty under the provisions of Rule 12(1)(a) of the Central Excise Rules, 1944. After receiving the proof of export the appellant filed 198 rebate claims under Rule 12(1)(a) during the years 1995-96 and 1996-97 amounting to Rs. 4,06,52,757/-. The claims were found to be admissible. Out of this an amount of Rs. 2,53,22,1157- was paid in cash and an amount of Rs. 1,53,30,642/- was sanctioned in RG 23A Ft. II which the appellant credited in their RG 23A Ft. II during the period Aug. 96 to Jan/97. On 26-3-1997, the appellant submitted a letter claiming the refund of the amount of Rs. 1,53,30,642/-. The Asstt. Commissioner while adjudicating the claim of the appellant observed:-
"Keeping in view the foregoing, the request of the party at the belated stage is not tenable since the credit of rebate claims have already been taken by them in their RG 23A Pt. II from time to time treating this claim as full and final. Moreover no request for payment of rebate claim in cash had been made before taking the credit. Hence there is no locus standi in the case and therefore, the request of the party for payment of total rebate claim of Rs. 1,53,30,5427-in cash is hereby rejected".
3. Arguing the case Shri R. Swaminathan, ld. Consultant submits that the appellants are availing the benefit of Modvat credit of duty paid on the inputs used in the manufacture of bulk drugs; that the appellants are clearing around 70% of the total production for export; that the appellants were clearing the goods for export under Rule 12(1)(a) of Central Excise Rules, 1944 on payment of duty; that the appellants have never been able to utilise the amount of credit taken in RG 23A Part II granted as rebate under Rule 12 of the Central Excise Rules, 1944 and allowed as credit in RG 23A Pt. II; that the Central Board of Excise & Customs clearly held that the rebate claim is to be paid in cash; that on 1-3-97, the provisions of Rule 57F were amended and Rule 57F(17) was introduced w.e.f. 1-3-97; that this amended Rule provided that the credit of specified duty lying unutilised on 1-3-97 with the manufacturer of bulk drugs shall lapse and shall not be allowed to be utilised for payment of duty on any excisable goods whether cleared for home consumption or for export; that the proviso to this rule provided that nothing contained in this Clause shall apply to the credit of the duty paid on the inputs lying in stock or contained in the finished product lying in stock as on 1-3-97; that by the aforesaid provisions of Rule 57F(17), the appellants were not allowed to utilise the credit which was given as rebate in RG 23A Pt. II account; that the appellants vide their letter, dated 26-3-1997 requested the Asstt. Commissioner to grant rebate in cash instead of granting it as credit; that the Asstt. Commissioner rejected their request; that they filed an appeal before the Commissioner (Appeals) who also rejected their appeal.
4. Ld. Consultant submitted that the ld. Commissioner (Appeals) has not given any decision on the submission of the appellants regarding inapplicability of Rule 57F(17) pertaining to lapsing of credit in respect of the amount sanctioned as rebate on goods exported under Rule 12 and credited in RG 23A Pt. II account. Ld. Consultant contended that provisions of Rule 57F(17) would apply to the credit of specified duty lying unutilised on 1-3-1997; that the amount of rebate sanctioned of the duty paid on goods exported under claim for rebate and rebate sanctioned and credited to RG 23A Pt. II is crediting of cash and not specified duty and hence on this amount the provisions of Rule 57F(17) would not apply and this amount lying in credit cannot lapse. Ld. Consultant submitted that the payment of duty in RG 23A Ft. II for clearance of goods for exports under rebate is to be treated as payment in cash, therefore, the payment of duty through debit entry in Modvat credit account has to be treated as payment of duty in cash for the purpose sanctioning rebate claim under Rule 12 of the Central Excise Rules, 1944. Ld. Consultant submitted that the appellants had specifically relied upon Ministry's letter No. F. No. 13/4/37/87/TRU, dated 20-1-1988, wherein it has been clarified that Modvat scheme does not draw a distinction between payment of duty through PLA or payment through RG 23A Ft. II account for discharging duty liability on the final product; that this Circular of the Ministry relied upon its earlier Circular No. 6/70-CX. 6 in file F. No. 8/1/70-C.Ex., dated 15-5-1970; that Central Board of Excise & Customs in their Circular, dated 15-5-1970 observed :-
"The matter has been considered in consultation with the Comptroller and Auditor General of India. The correct position is that payment of duty through a debit entry in the proforma credit account is to be treated as payment of duty in cash for the purpose of admissibility of rebate of duty under Rule 12 of the Central Excise Rules, 1944".
The entire payment of duty on final product cleared for export has to be treated as paid in cash. Therefore, ld. Consultant submitted that the entire rebate ought to have been sanctioned in cash to the appellants. Ld. Consultant also cited and relied upon the Order-in-Appeal No. 301/CE/APL/CHD/97 in the case of Montari Inds. Ltd. passed by the Commissioner of Central Excise (Chandigarh) wherein it was held that the entire amount of rebate claim in terms of Rule 12 of the Central Excise Rules, 1944 should be granted in cash. Ld. Consultant therefore, submitted that the provisions of Rule 57F(17) cannot be cited to hold that rebate cannot be given in cash. He, therefore, prayed that the impugned order may be set aside and the appeal may be allowed.
5. Shri Mewa Singh, ld. SDR submits that the authorities below have dealt with each point taken by the assessee before them. Reiterating the findings of the authorities below he prays that the appeal may be rejected.
6. We have heard the rival submissions. In the instant case we find that the appellants have been claiming rebate of Excise Duty under Rule 12(1)(a) of the Central Excise Rules, 1944 from time to time. The Departmental authorities have been admitting the rebate claims and sanctioning the amount of rebate. A part of this amount sanctioned as rebate was paid in cash to the appellants and part of it was credited by the appellants themselves in their RG 23A Ft. II. The amount so credited was being utilised by them for payment of duty on the final product as is evident from the debit entries made in RG 23A Ft. II. On 1-3-1997, the Govt. of India introduced Rule 57F(17) which inter alia provided that notwithstanding anything contained in Sub-rule (12) of Rule 57A, any credit of specified duty lying unutilised on the 1st Day of March, 1997 with the manufacturer, of bulk drugs falling under Chapter 28 or 29 shall lapse and shall not be allowed to be utilised for payment of duty on any excisable goods whether cleared for home consumption or for export. The appellants filed a letter on 26-3-1997 requesting the Asstt. Commissioner to grant rebate in cash instead of granting it as credit in RG 23A Ft. II account.
We find that this request was filed on 26-3-1997 rebate was being granted from time to time. It was not a one time affair. The appellants on their own have been accepting sanction of rebate partly in cash and partly as credit in RG 23A Ft. II. If it was not the credit of specified duty then how was it being used by the assessee for payment of duty on the finished products. In terms of Rule 57A Central Govt. may specify in this behalf for the purpose of allowing credit of any duty of excise or the Additional duty under Section 3 of the Customs Act, 1962 as may be specified in the said notification hereafter in this Section referred to as specified duty paid on the goods used in the manufacture of the said final product. Further Rule 57F(12) provides credit of specified duty allowed in respect of any inputs may be utilised by the manufacturer of the final products towards payment of duty of excise on any of the final product etc.... Reading the two together for harmonious construction shall indicate that it was the credit of specified duty which was taken by the assessee in his RG 23A Ft. II and from time to time utilised it for payment of excise duty on the final product. Since it was credit taken in RG 23A Ft. II, therefore, it had lapsed with the enactment of Rule 57F(17) w.e.f. 1-3-1997 and since the claim was made on 26-3-1997, we hold that the authorities below have rightly rejected this claim as there was no credit available in RG 23A Ft. II after 1-3-1997.
7. Ld. Consultant contended that the Commissioner (Appeals) has not given a decision on the applicability of Rule 57F(17). Rule 57F(17) is applicable to credit of amount in RG 23A Ft. II. This provides that Modvat credit of specified duty shall lapse on 1-3-1997. In the instant case rebate was sanctioned it was partly paid in cash and partly allowed to be credited in RG 23A Ft. II which was also payment in cash. Since this amount was credited in RG 23A Ft. II and as we have explained in the preceding paragraph about its being specified duty, therefore, it became an amount of specified duty and since the credit of specified duty lapsed w.e.f. 1-3-1997 therefore, we hold that the provisions of Rule 57F(17) have correctly been applied and the contention of the appellant that provisions of Rule 57F(17) are not applicable to their case, is not sustainable in law. The contention of the appellant that provisions of Rule 57F(17) would not apply in their case as the credit was not of specified duty is not tenable. We note that rebate is of specified duty and since part of the rebate was taken as credit by the appellant, therefore, the credit so taken became a part of specified duty and therefore, their contention that the credit taken by them in RG 23A after admission of their rebate claim is not a credit of specified duty is not sustainable in law. Once the appellants had on their own credited the part sanctioned as rebate, the amount for all purposes became a credit of specified duty and hence the contention of the appellant that it was not a credit of specified duty is not tenable.
8. The contention of the appellant that the amount of rebate sanctioned should have been given to them in cash is an after thought. The better course for them was that instead of accepting a part of the rebate sanctioned to be credited in their RG 23A Part II, they should have filed an appeal and agitated against that. Once they accepted the position, they cannot agitate this after the enactment of Rule 57F(17). We do not find any mistake in the circulars referred to by the appellant. In the Circular it was clarified that payment of duty through a debit entry in the proforma credit account is to be treated as payment of duty in cash for the purpose of admissibility of rebate of duty under Rule 12 of Central Excise Rules, 1944. We find that we are not dealing with a claim under Rule 12, we are dealing with the lapsing of credit as on 1-3-1997 and thus, there is nothing wrong in the circular, the only point is that the Central Board of Excise & Customs was dealing with rebate under Rule 12 and not with Modvat credit under Rule 57F(17). The appellants also have relied on an order of the Commissioner in the case of Montari Inds. Ltd. We find from that order of the Commissioner (Appeals) that the Commissioner (Appeals) observed :-
"I have considered the case of the appellants. I agree with the appellants in so far as their request for payment of rebate in cash is considered. The Asstt. Commissioner has not exercised his discretion with full justification as his all findings had been controverted by the appellants as discussed above. However, since he has allowed the rebate in RG 23A Pt. II the appellants plea that they should be paid interest @ 15% also under Section 11AB of the Central Excise Act, 1944 is not tenable. He should be paid the rebate in cash or by cheque. Appeal is allowed to this extent and order-in-original is set aside."
In that case we find that M/s. Montari Inds. had filed the appeal on 20-1-1997. On 20-1-1997, Rule 57F(17) was not a part of this statute and since it was before the date of amendment of Rule 57F, therefore, the facts in the two cases are different. The contention of the appellant that the Asstt. Commissioner instead of paying the rebate granted partly in cash and partly as credit in RG 23A Pt. II should have granted the entire amount in cash is not tenable at this stage inasmuch as Modvat credit was taken by the appellants in RG 23A Pt. II and utilised it for payment of further duty and thus, we do not find any infirmity in the order passed either by the ld. Asstt. Commissioner or the Commissioner (Appeals).
9. Having regard to the above findings, we do not find any legal infirmity in the impugned order. The impugned order is, therefore, upheld and the appeal is rejected.