1. This is an appeal to the Tribunal under Section 35B of the Central Excises & Salt Act, 1944, arising out of Central Excise Order in Appeal No. 365/BR/82 dated 30.9.82 passed by the Collector (Appeals), Calcutta.
2. A refund claim for Rs. 9,882.43 in respect of the duty on goods falling under Item 68 and used in the manufacture of the cement filed on 9.5.81 by the manufacturer was rejected in an order dated 24.2.82 by the Assistant Collector of Central Excise, Dhanbad. He held that the relevant supplier's bills, showing the amount of Excise duty levied and collected by the Central Government or the excisable goods used as inputs, in the manufacture of cement, related to the year 1981, whereas the Notification No. 178/ 77 as amended by Notification No. 295/77, under which the above claim was filed, had been superseded by Notification No. 201/79 dated 4.6.79 and no refund was admissible on the ground claimed.
3. Aggrieved by this order, an appeal was filed to the Collector. It was stated that the appellants had, 16 cement factories all over India, including one at Sindri in Bihar. This factory utilised Calcium Carbonate Sludge, the waste product of the Sindri Fertiliser Plant and also used Granulated Slag and Phospho-Gypsum, which are the by-products of steel and fertiliser plants. Central Excise duty is chargeable under T.I. 68 on these three inputs. Subject to certain conditions the Government of India authorised set-off of Excise duty paid in such cases under Notification No. 201/79 dated 4.6.79. Accordingly, permission was sought from the Assistant Collector to avail of the proforma credit facilities and this was granted on 20.2.81. In the absence of clear instruction/guidance from the local Central Excise Authorities regarding the procedure, however, it was claimed that the facility could not be availed of and they, therefore, submitted claim for refund of duty paid on the inputs that were consumed for manufacturing cement from February, 1981 to March, 1981. They pointed out that in their cement factory at Porbandar they had been allowed proforma credit with retrospective effect, by the Collector, who condoned their failure to give D3 intimation and maintain the record.
They also submitted a statement certified by Chartered Accountants regarding the ratio of T.I. 68 inputs and the output of cement. The operative portion of the findings of the Appellate Collector is reproduced below : The so-called permission dated 20.2.81 of the Assistant Collector reads as follows -- The proforma credit facility is permitted if you(i) receive the raw materials from a Central Excise licensee under cover of G.P.I., (ii) maintain proper account as prescribed and (iii) observe other terms and conditions as prescribed.
The appellants admit that they did not observe any of the formalities prescribed. They did not submit D3 intimation regarding the receipt of the materials and at the time of hearing of their appeal only they filed the statement of the ratio of input and output certified by the Chartered Accountants in the appeal stage in this office. They are, therefore, clearly not entitled to get the credit of duty in respect of the T.I. 68 inputs utilised for manufacture of cement during February and March 1981. The appeal is, therefore, rejected.
4. In the present appeal, it is contended that all necessary registers, records etc. for the receipt and consumption of inputs falling under T.I. 68 had been maintained and D-3 in terms of Notification No. 201/79 had been filed. The Appellate Collector was clearly wrong in rejecting the appeal because Notification No. 201/79 does stipulate the condition regarding the ratio of inputs and output. In a similar case relating to Gypsum, the Collector of Central Excise, (Appeals) Bombay, by Order Nos. 1429-1431 of 1980, dated 24.9.80 allowed them the benefit of the Notification in their Dwarka Cement Factory, observing: "In a revision case decided by the Government of India it has been held that the benefit of this particular Notification should not be denied to a manufacturer who had not been able to fulfil this condition in the strict sense. In other words, mere technical lapse should not stand in the way of granting the benefit if it was otherwise admissible to a manufacturer." The appellants claimed that they had fulfilled all the conditions of the Notification and that they maintained proper records for the purpose which could be inspected by the Department at any time to establish the genuineness of the claim. The appellants request that the impugned order be set aside or such further order be passed and directions be given as the nature and circumstances of the case may require.
5. Shri N S. Avery, Manager, Legal, explained the case for the appellants which has been set out above. He stated that the Govt. of India in the Chaliha Rolling Mills Case, 1979 Cen Cus 329D, extract of which had been mentioned in the order dated 24.9.80 of the Collector of Central Excise (Appeals), Bombay, had clearly laid down that a mere technical lapse should not stand in the way of granting the benefit otherwise admissible. It was not correct on the part of the Appellate Collector to have rejected the Appeal. He should have remanded the case to the Assistant Collector for examination in the light of the principle laid down by the Government. He requested that the appellants should be now given proforma credit to be utilised against goods which would be cleared in future. For the department Shri Saha stated that certain conditions had to be fulfilled as prescribed in Notification No. 178 of 1977 as amended by Notification No. 295 of 77. Sine; this had not been complied with and the claim had also been made under Notification No. 201 of 79 which was not in existence during the relevant period February and March 1981, the claim had been rightly rejected.
6. The Tribunal observes that Notification No. 178 of 77 merely grants an exemption to excisable goods from so much of the duty as is equivalent to the duty already paid on the inputs. The only proviso is that where the duty on the goods is less than the duty paid on the inputs, the extent of exemption shall be restricted to the duty leviable on the excisable goods manufactured. That Notification was amended by Notification No. 295 of 77 dated 28.9.77 requiring the manufacturer to furnish to the proper officer a statement showing the quantity of inputs used in the manufacture of every unit of the said goods. These two Notifications were superseded by Notification No.201/79 dt. 4.6.79 which has been amended by 264/79 dt. 29.9.79, 275/79 dt. 10.11.79, 126/80-CE dt. 2.8.80, 5/81-CE dt. 21.1.81. Therefore, further amendments vide Notification Nos. 102/8-CE dt. 17.4.81-199/81 CE dt. 10.12.81, 1C5/82-CE dt. 28.2.82. and 19/83-CE dt. 11.2.83 were issued. The Notification as it stood on 20,2.81 when permission was granted, prescribed a procedure and the appellant's contention that in the absence of guidance or instructions from the department, the facility could not be availed of, seems to be without substance. The said procedure allows the manufacturer to take credit of duty on inputs after making a declaration as to the excisable goods being manufactured and the excisable (duty paid) inputs intended to be received. The credit can be varied and recovered in cash or refunded, if there is change in the duty on the inputs and wrong credits are to be disallowed by the proper officer. The manufacturer should give prior notice, bring the goods in original packing under cover of gate pass or other authorised documents and produce the inputs for verification. Among other provisions, credit may be utilised for payment of duty on the said goods or inputs if cleared without use and no refund in cash or by cheque is permissible. The various amendments are not of relevance except Notification No. 5/81 dt. 21.1.81 which reads : 2A. The Collector may, for reasons to be recorded in writing and subject to such terms, conditions and limitations as may be imposed in this regard, relax the provisions regarding giving of declaration (under paragraph 1) for claiming credit of duty already paid on inputs.
7. The procedure laid down is designed to safeguard revenue because once proforma credit is given to duty paid inputs it has the effect of making them non-duty paid and if they are diverted the duty would be lost. In the present case, none of the required conditions were complied with nor was relaxation of any kind sought from the Collector.
The appellant has also not given any convincing reasons for non-compliance. The input-output Statement furnished was not required under Notification No. 201/79. The Appellate Collector was, therefore, fully justified in not allowing the appeal. For these reasons, the Tribunal sees no force in this appeal and rejects it.