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Rallis India Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1984)(16)ELT264Tri(Mum.)bai
AppellantRallis India Ltd.
RespondentCollector of Central Excise
Excerpt:
.....the assistant collector of central excise on 9-1-1981 and they have utilised the credit of central excise duty paid on stampings and laminations amounting to rs. 20,138.37 towards payment of duty on electric fans manufactured and cleared by them. by means of a letter dated 11-6-1981, the assistant collector informed the appellants not to avail proforma credit permitted earlier. subsequently, supdt. of central excise issued a show cause norice on 12th june, 1981 calling upon the appellants to show cause as to why excise duty amounting to rs. 23,138.37 should not be recovered from them under section 11 of central excises and salt act, 1944, on the ground that the proforma credit in respect of electrical stampings and laminations used captively for the manufacture of electric fans was not.....
Judgment:
1. This appeal arises out of and is directed against Order-in-Appeal No. A-2067/BII-242/82, dated 29-11-82 passed by the Collector of Central Excise (Bombay) by which he rejected the appellants' appeal preferred against the Order-in-Original No. V(28A) Demand-54/82/ 7730, dated 13-7-1982 passed by the Assistant Collector of Central Excise, Bombay Dn. V, by which he confirmed the demand of Rs. 23,138.37 and directed the appellants to pay the said amount forthwith.

2. The facts necessary for the disposal of this appeal are few and simple. The appellants are the manufacturers of fans. They were permitted to avail proforma credit under Rule 56A of the Central Excise Rules, 1944 by the Assistant Collector of Central Excise on 9-1-1981 and they have utilised the credit of Central Excise duty paid on stampings and laminations amounting to Rs. 20,138.37 towards payment of duty on electric fans manufactured and cleared by them. By means of a letter dated 11-6-1981, the Assistant Collector informed the appellants not to avail proforma credit permitted earlier. Subsequently, Supdt. of Central Excise issued a show cause norice on 12th June, 1981 calling upon the appellants to show cause as to why Excise duty amounting to Rs. 23,138.37 should not be recovered from them under Section 11 of Central Excises and Salt Act, 1944, on the ground that the proforma credit in respect of electrical stampings and laminations used captively for the manufacture of Electric Fans was not admissible. The appellants in their reply contended, inter alia, that they have not contravened provisions of Rule 56A and therefore permission granted to them earlier cannot be withdrawn. They further contended that electric motors is an intermediate product which comes into being in the intermediary stage during the process of manufacture of electrical fans which is a notified product and therefore the motor assembly is exempted from duty in terms of Notification No. 28/69 as amended by notification 95/79. The Assistant Collector without assigning any reason rejected the contention of the appellants and confirmed the demand. Feeling aggrieved by the order, appellants preferred an appeal before the Collector (Appeals). The Collector (Appeals) found that the appellants have availed of total exemption in respect of electric motors during the relevant period and therefore the appellants are not eligible for proforma credit for the laminations and stampings which goes into the manufacture of motors. In support of his finding, the Collector (Appeals) relied upon the first proviso to Sub-rule (2) of Rule 56 A of the Central Excise Rules, 1944. In that view of the matter the Collector (Appeals), as stated earlier, rejected the appellants' appeal and hence this second appeal.

3. During the hearing of the appeal, Shri D.R. Kohli the learned Consultant who has been authorised by the appellants, urged the following grounds :- (1) The Assistant Collector has no jurisdiction to review his own order and therefore withdrawal of permission granted to avail proforma credit is bad in law.

(2) The Assistant Collector has not given any show cause noitce before withdrawing the permission of availing proforma credit and thus there was violation of principles of natural justice.

(3) According to the Notification No. 95/79 as amended, read with Trade Notice 100/80, dated 28-10-1980, issued by the Bombay Collectorate proforma credit can be had for excise duty paid on electrical stampings and laminations directly against excise duty payable on the finished product, viz., electrical fans, as the electric motor in their case is an intermediate product totally exempt from duty due to Notification No. 28/69, and (4) Denying and withdrawing the proforma credit to the appellants' factory when such permissions are given to other factories amounts to discrimination and is violative of the fundamental rights.

4. Shri N.K. Pattekar, learned J.D.R. contended that proforma credit on the laminations and stampings used in the manufacture of electric motors was availed of by the appellants and as such they cannot again claim such proforma credit in respect of the finished product, viz., fans, which according to him would amount to double benefit to which the appellants are not entitled. In other respects he supported the order passed by the Collector (Appeals).

5. Having regard to the rival contentions, the one and the only point that falls for determination to this appeal is whether the view taken by the Assistant Collector and confirmed by the Collector (Appeals) that the appellants are not entitled to claim the benefit of proforma credit on stampings and laminations towards payment of duty on electric fans manufactured and cleared by them is erroneous.

6. It is not disputed that electrical laminations and stampings are used an the manufacture of electrical motors. It is further not disputed that the appellants availed of the proforma credit in respect of laminations and stampings used in the manufacture of electrical motors. The appellants however contended that they are entitled for proforma credit on excise duty paid on stampings and laminations towards payment of duty on electrical fans manufactured and cleared by them. Shri D.R. Kohli conceded that Exemption Notification No. 95/79 referred to in the appeal memo does not permit such concession. He, however, wants to rely on the Trade Notice issued by Bombay Collectorate dated 28-10-80.and also the budget speech of the Finance Minister while presenting the Budget for 1980-81. According to Shri Kohli the Trade Notice dated 28-10-80 is sequence to the budget speech of the Finance Minister. Before considering this contention, we shall dispose of the other two contentions, viz., that the Assistant Collector has no power to review his own orders and that the withdrawal of concession earlier given is bad, for non-compliance with the principles of natural justice. It is a settled law that an authority created under a statute cannot review its own order unless the statute confers such a power of review. Admittedly, neither the Central Excises Act nor Rules made thereunder confers a power of review on the Assistant Collector to review his own orders. But then we are unable to accept the contention of Shri Kohli that the letter of withdrawal of the proforma concession amounts to review of the order by the Assistant Collector. A perusal of the letter dated 11th June, 1981 by which the permission was withdrawn makes it clear that the Assistant Collector has only intimated the appellants that the appellants should not utilise any credit taken in R.G. 23 on electrical stampings for payment of Central Excise duty on electric fans. This letter has not the effect of statutorily reviewing the earlier order. It is prospective in nature. The appellant was only informed that in future he should not avail of the permission granted earlier to that date. By this letter the appellants have not been called upon the refund the proforma credit availed of upto that date. In the said circumstances, it cannot be said that the Assistant Collector had reviewed his own order and hence this ground has to be rejected. As regards the non-compliance of the natural justice is concerned, suffice to say that the withdrawal of the permission by itself has not resulted in any civil consequence.

Subsequent to this letter, a show cause notice was issued to the appellants and the appellants have been given an opportunity to contest the demand made in the show cause notice. Therefore, it cannot be said that the appellant has been in any way prejudiced by the letter dated.

11-6-1981.

7. Now coming back to the contention of the appellants that the Finance Minister's speech and the Bombay Collectorate's Trade Notice permitted availing of proforma credit of the duty paid on Stamping and Lamination towards payment of duty on electric fans suffice it to say that both the documents are non-statutory and they cannot override statutory provisions. We have gone through the speech of the Finance Minister as well as Trade Notice. All that has been promised by the Finance Minister was that two procedures were in vogue, regarding the grant of relief to the manufacturers of excisable goods. One is called set-off procedure and the other is the proforma credit procedure under Rule 56A of the Central Excise Rules. The proforma credit procedure was generally recognised to be more beneficial and less irksome to the manufac-facturers and therefore Finance Minister proposes to replace the existing concessions based on the set-off procedure by similar concessions based on the proforma credit procedure. An extract of Trade Notice made available to us reads as under :- 1. The question was under the consideration regarding availability of proforma credit under Rule 56A where an intermediate product which is fully exempt from the excise duty, comes into being, during the process of a notified finished product.

2. It is clarified that the proforma credit in the type of cases referred to above, will be permissible, provided the product which comes into being at the intermediate stage during the process of manufacture of a notified finished product and is fully exempt from the payment of duty is consumed within the factory in the manufacture of the notified finished product. However, proforma credit will not be available if the fully exempted intermediate product is removed as such from the factory.

3. This facility will also be applicable to Notification No. 201/79-C.E,, dated 4th June, 1979 whereunder the procedure for claiming benefit of duty paid on the inputs falling under Tariff Item 68 is provided for." This Trade Notice has not the effect of permitting availment of proforma credit twice, in respect of duty paid on stampings and laminations once at the stage of manufacture of motors and again at the stage of manufacture of fans. Since appellants have availed this credit facility for the motors manufactured they cannot avail of this on the fans manufactured. This is clear from the Notification No. 95/83 which the appellants themselves have produced. This notification permits set-off of the duty paid on electrical stampings and laminations to the duty payable in respect of electric motors where stampings and laminations are used. Similarly, the duty paid on the electric motors is allowed set-off if the motors are used in the electric fans.

Admittedly, the appellants have not paid any duty on the electric motors because they are exempt from payment of duty. In the said circumstances, there is no scope to contend that the authorities below have unjustifiably made the demand. The order of the Collector (Appeals) discloses that it is based on the first proviso to Sub-rule (2) of Rule 56A of the Central Excise Rules, 1944. The interpretation of that Rule made by the Collector (Appeals) is unexceptional.

Therefore, the Order of the Collector is in accordance with the law.

8. The only other contention that remained for consideration is that the other manufacturers of the fans have been allowed proforma credit in respect of duty paid on stampings and laminations towards payment of duty on etectric fan. In support of this contention Shri Kohli has produced two letters which are at annexures 'B' and 'C'. Annexure 'B' is a letter dated 5-9-1980 written by Assistant Collector of Central Excise, Pune to M/s. Matchwel Elec. In this letter the Assistant Collector has allowed provisionally under Rule 56A of the Central Excise Rules to avail of the proforma credit of the Central Excise duty paid on the electrical stampings and laminations falling under T.I. 28A to be brought by the Company from outside for use in their factory in the manufacture of electric fans. Subject to the condition that the Company shall abide by provisions laid down in Rule 56A of the Central Excise Rules. Firstly, from the letter it is not clear that the Company in that case had availed proforma credit of Central Excise duty paid on electrical stampings and laminations used in the manufacture of motors.

Therefore, this letter is of no assistance to the appellants. Annexure 'C' is a letter dated 17-1-78 issued by the Assistant Collector of Central Excise, Calcutta to M/s. Mafsons Fan Industries. This letter no doubt supports the contention of Shri Kohli but then this letter also does not indicate as to whether the Company in that case did avail of proforma credit of the duty paid on stampings and laminations used in the manufacture of electric motors. In any case, Shri Kohli cannot lawfully contend that just because one of the Assistant Collectors has permitted another factory to avail a concession, the Appellant's factory will also be entitled to such concession even though the law does not provide for such a concession. We are afraid that we cannot have any jurisdiction to go into the question of alleged discrimination meted out by different Collectors to different manufacturers. Our duty is only to interpret the law correctly. As has been stated earlier, Shri Kohli has conceded that in terms of concession Notification the appellants are not entitled to claim proforma credit and therefore the demand is not illegal.

9. Having considered all aspects of the case, we are satisfied that there is no merit in this appeal and therefore we dismiss the same.


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