1.Appeal under Section 35B of the Central Excises and Salt Act, 1944 praying that in the circumstances stated therein, the Tribunal will be pleased to set aside the Order No. 155/82(M) of April, 1982 passed by the Appellate Collector of Central Excise, Madras.
2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri A. Vijayaraghavan authorised representative for the appellant and upon hearing the arguments of Shri J.M.K. Sekhar, Sr. Departmental Representative for the respondent, the Tribunal makes the following Order : 3. Aggrieved by the aforesaid order of the Appellate Collector of Central Excise, Madras, the appellant filed a revision application before the Government of India which stands transferred to the Tribunal in terms of Section 35P of the Act.
Madras Industrial Linings Ltd., Madras (appellant herein) brought into their licensed factory items such as tubes, vessels and tanks, on which duty had been paid at the appropriate rates for the purpose of rubber lining and eventual clearance after payment of duty on the rubber linings; they had been permitted the facility under Rule 56A of the Central Excise Rules, 1944 in respect of the articles brought into the factory. It was noted by the Department that D. 3 intimation had not been given in respect of the goods received in the factory for the period 31-10-79 to 2-12-80 within 24 hours from the time of receipt of the goods in the factory, the delay being from 2 days to 21 days. For this infirmity the Assistant Collector of Central Excise, Madras VII Division held that there was violation of Rule 56A(3)(i)(a) and hence disallowed the credit availed of by the appellant vide his Order C. No. V/68/3O/74/81-T 6 dated 1-3-82.
The Appellate Collector of Central Excise, Madras confirmed this order of the Assistant Collector when the matter was raised before him.
5. Before us the authorised representative of the appellant points out that the show cause notice C. No. V/68/30/74/81 T 6 dated 17-9-81 was issued to the appellant for violation of Rule 56A(3)(i)(a) and a demand was made under Rule 56A(3)(v) that sub-rule refers to material or component parts, in respect of which credit has been allowed but which are not actually accounted for as having been disposed of in the manner authorised in the Rules. From the factual narration it would be seen that there is no improper accountal of the goods in respect of which credit had been taken. The violation is in not giving intimation in time. This would not be covered by the provisions of Rule 56A(3)(v). In support he referred to the judgment of the Andhra Pradesh High Court in the case of Jay Engineering Works Ltd., Hyderabad v. Government of India reported in 1979 E.L.T. (J 307). In para 10 of that judgment Their Lordships of the Andhra Pradesh High Court have held that in somewhat similar circumstances provisions of Rule 56A(3) would not be applicable. He next referred to the decision of this Tribunal in Indian Aluminium Company Ltd., Kalamassery v. Collector of Central Excise, Cochin Appeal No. ED(T)(MAS) 20/80 dated 6-7-83 in which it has been held that where proforma credit has been availed of due to error etc.
notice had to be issued within the period specified (6 months, extendable to five years under specified circumstances) as warranted in terms of Rule 56A(5). Here too he urged that allowance of credit was not on account of error or omission or misconstruction; hence the provisions of that Rule will not apply.
6. Continuing, the authorised representative urged that when the goods are received in the factory they are subjected to sandblasting, inspection and cleaning to see whether there are any defects which have to be attended to before proforma credit is taken; when the article received is found to be defective it is liable to be returned. This process of sandblasting and cleaning sometimes takes time and the appellant genuinely thought that intimation could be given after the process of cleaning by way of sandblasting and inspection is over. In terms of Trade Notice No. 191/84 dated nil December 1984 issued by the Collector of Central Excise, Madras, delay in the filing of D. 3 intimation could be done in suitable cases; he urged that the present one was such and asked for condonation.
7. Sr. Departmental Representative, on the other hand, generally supported the order of the Appellate Collector.
8. We have examined the matter in detail. We agree that the provisions of Rule 56A(3)(v) would not be applicable to a case of wrong credit, under the circumstances which we have before us. Even Rule 56A(5) refers to credit being allowed on account of an error, omission or misconstruction on the part of an officer. Here there is no such error, omission or misconstruction on the part of the officer and of the demand. We would therefore be inclined to hold that even the provisions of Rule 56A(5) would not be applicable. However, it cannot be that failure on the part of the assessee to comply with the provisions of law would enable him to take the benefit of such failure. We would be inclined to hold that in the circumstances such as the present one in the absence of proper intimation within time to the department taking of credit was not authorised, and the Department is justified in common law to ask for that amount back.
9. However, we take note of the provisions of the Trade Notice No.191/84 of December 1984 issued by the Collector of Central Excise, Madras, according to which late filing of D. 3 intimation could be condoned. The nature of the articles, in the present case, shows that they are more or less specialised units sent by customers of rubber lining; the process of sandblasting etc. seems to be the initial phase of preparing the article received for the purpose of rubber lining and in this sense it could be deemed to have been taken into use for the purpose of further processing. The nature of the articles vis-a-vis the persons who supplied them and the operations involved would suggest that their identity could be established and the procedure under Rule 56A could be broadly observed. In this view of the matter, and taking note of the relaxation available under Trade Notice No. 191/84, we condone the delay in the filing of the D. 3 intimation in which the present case has arisen and allow the appeal with consequential relief.