1. This appeal arises out of the Order-in-Appeal No. 1138/79 dated 6-11-1979 passed by the Appellate Collector of Central Excise & Customs, Bombay by which he confirmed the order-in-original bearing No.V. 14D (30) 406/TB/78/23, dated 1-1-1979 passed by the Assistant Collector of Customs by which he rejected the appellant's claim for Proforma Credit of Rs. 18,475.14.
2. The undisputed facts are that the appellants M/s. Chemiequip Ltd. are the licensed manufacturers of Synthetic Organic Dyestuffs falling under Excise T. Item 14-D. They were using indigenous as well as imported duty paid raw materials and were availing proforma credits in respect of the excise duty/countervailing duty paid on such raw materials in accordance with the permission granted to them under Rule 56-A of the Central Excise Rules, 1944 (to be hereinafter referred to as the Rules).
3. On 11-4-1978, the appellants received a consignment of 993 kgs. Of imported Alpha Napthol a raw material used in the manufacture of inished S.O. Dyes viz., Brown Black T. Supra. The appellants cleared the consignment on payment of Customs duty amounting to Rs. 25,136.25.
After a period of three months after the import the appellants received a less charge demand for countervailing duty amounting to Rs. 18,475.14 from the Assistant Collector of Customs. The appellants paid this countervailing duty on 7-8-1978. In the meantime, the appellants made use of the imported raw material in the manufacture of finished product. The appellants approached the Jurisdictional Supdt. of Central Excise and requested to allow them to avail of credit in respect of CVD paid by them. Their request was turned down by the Supdt. on the ground that they had not followed the procedure laid down under Rule 56A.Their representation to the Asstt. Collector did not bear fruit.
Thereafter, they preferred an appeal to the Appellate Collector unsuccessfully. Feeling aggrieved they filed a Revision Application before the Govt. of India which statutorily stood transferred to the Tribunal for being heard as if an appeal filed before the Tribunal.
4. Shri V.N. Deshpande Learned Advocate for the appellants contended that the authorities below were unjustified in rejecting the request of the appellants on the sole ground that the appellants have failed to furnish D-3 intimation. Shri Deshpande contended that the authorities below failed to take into consideration the circumstances under which D-3 intimation could not be given. Elaborating his contention he pointed out that when they imported 993 kgs. they were not called upon to pay any countervailing duty therefore, there was no question of availing proforma credit as such. Sending of D. 3 intimation to the jurisdictional Excise Officers did not arise. The availing of proforma credit arose only when there was less charge demand and when that damand was complied with. The less charge demand was on 26-6-1978 after a period of nearly three months after the raw materials were received in the factory and the demand was complied with on 7-8-1978. By that time considerable quantity of imported raw material were consumed in the manufacture of the finished product. In the said circumstances, the appellants could not send D-3 intimation. He therefore prayed that the orders passed by the authorities 4below may be set aside and that the appellants may be permitted to avail of proforma credit in respect of countervailing duty of Rs. 18,475.14 paid by them on 7-8-1978.
5. Shri N.K. Pattekar, for the Respondent Collector submitted that Sub-rule (3) of Rule 56-A makes it obligatory for a manufacturer to give prior notice to a Proper Officer before the excise duty paid or countervailing duty paid material are received in his factory to enable the Proper Officer to be present at the time of receipt of such material and that admittedly the appellants have failed to give prior notice and thus they have not complied with the mandatory requirement of Rule 3(1) and in the said circumstances the Asstt. Collector as well as the Appellate Collector were justified in rejecting the request of the appellants.
6. I have carefully considered the submissions made on both sides. The only ground on which the appellant's request to allow them to avail the proforma credit for the countervailing duty paid by them were rejected by the Supdt., Assistant Collector and the Appellate Collector was that the Appellants had failed to furnish D-3 intimation. It was not in dispute and not disputed now that the appellants received the consignment of 993 kgs. of imported Alpha Napthol in their factory on 11-4-1978 and that they paid only Customs duty in respect of the said quantity on 31-3-78. At the time of clearance they were not called upon to pay countervailing duty. The proforma credit was admissible in respect of excise duty/countervailing duty paid by the manufacturer for the raw materials consumed in the finished goods. The sine qua non for the availment of proforma credit by the manufacturer was the prior payment of excise/countervailing duty for the raw materials which were to be consumed in the finished product. Since the appellants did not pay any countervailing duty when they cleared the imported goods they could not avail of the proforma credit. If they were not availing of proforma credit there was no obligation to send intimation to the Proper Officer, as to the receipt of the goods. The availment of proforma credit arose when there was less charge demand and when that demand was complied with on 7-8-1978. The appellants have contended that by that time they had consumed the imported raw material in the manufacture of the finished product. The Department did not dispute the said contention of the appellants.
7. The D-3 intimation or giving of prior notice to the Proper Officer was to enable the Proper Officer to be present in the factory at the time of receipt of the raw material in the factory. This verification is not impossible even after the receipt of the raw material in the factory. A manufacturer under Central Excise Act and Rules is required to maintain accounts not only of the raw materials but also of the finished product. There was no allegation against the appellants that they did not receive 993 kgs. of imported Alpha Napthol in their factory on 11-4-1978. There was also no allegation that that quantity was not consumed in the manufacture of the finished product. The payment of countervailing duty on the imported raw material after the same was received in the factory was never in dispute. There is considerable force in the contention of Shri Deshpande that the authorities below were not justified in rejecting the appellant's claim.
8. Sub-rule (3) of Rule 56A provides for the procedure to be followed by a manufacturer who has been permitted to avail the facility of proforma credit. The Rules of Procedure are intended to further justice and not to hamper justice. In a given case, if the authorities were satisfied as to the receipt of duty paid raw materials and its utilisation in the finished product the authorities would not be violating the rules if they allowed a manufacturer to avail of the proforma credit even though the manufacturer had not trictly complied with the procedural aspect. It is not the letter of law that is important but the spirit behind it. The Asstt. Collector as well as the Appellate Collector overlooked the circumstances under which the appellants could not send prior notice or D-3 intimation to the Proper Officer before the receipt of the raw material in their factory. The Assistant Collector as well as the Appellate Collector appeared to have proceeded in a mechanical manner. The subsequent amendment made to Rule 56A also goes to show that prior notice or D-3 intimation is not a must in all circumstances. Sub-rule (2B) was amended on 30-1-1982 and this Sub-rule reads :- "Where a manufacturer was not in a position to make the application under Sub-rule (2) on the date of the notification issued under Sub-rule (1) or Rule 8 and has made such application subsequently, the Collector may. for reasons to be recorded in writing, condone the delay in filing of such application and allow the manufacturer to take credit of the duty already paid on the material or compenent parts even though the procedural requirements laid down under this rule have not been complied with".
The above provision amply justifies my conclusion that compliance of procedural requirement is not a must in all circumstances. I am satisfied that the authorities below have failed to take into consideration the circumstances under which the appellants could not give prior notice or D-3 intimation.
9. In the result for the reasons stated in the preceding paragraph I allow this appeal and direct that consequential relief be granted to the appellants within three months from the date of receipt of this order.