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Issues: (i) Whether the petitioner could claim the concessional duty benefit under Notification No. 46/70 while also availing proforma credit under Rule 56-A and Notification No. 91/67; (ii) Whether the taking of proforma credit converted the raw material into non-duty paid material; (iii) Whether the expression "has already been paid" in Notification No. 46/70 was satisfied once duty had been paid at the time of clearance of the raw material.
Issue (i): Whether the petitioner could claim the concessional duty benefit under Notification No. 46/70 while also availing proforma credit under Rule 56-A and Notification No. 91/67.
Analysis: The Notifications operated in different spheres. Notification No. 46/70 granted a reduced rate of duty on the finished goods if the prescribed duty had already been paid on the raw material. Rule 56-A and Notification No. 91/67 provided a special procedure allowing credit of duty already paid on inputs to be adjusted against duty on the finished product. The mere absence of an express exclusion in Notification No. 46/70, when other notifications specifically contained such exclusions, indicated that simultaneous availment was not prohibited. In tax law, exemption conditions must be applied according to their plain terms and cannot be curtailed by intendment.
Conclusion: The petitioner was entitled to claim both the concessional benefit under Notification No. 46/70 and the proforma credit under Rule 56-A and Notification No. 91/67.
Issue (ii): Whether the taking of proforma credit converted the raw material into non-duty paid material.
Analysis: The duty on the raw material had been paid at the time of its clearance, and the later grant of proforma credit was only an adjustment at the stage of clearance of the finished product. The credit did not amount to a refund of duty and did not alter the character of the raw material as duty paid. The procedure under Rule 56-A was designed to avoid double levy and could not retrospectively make the input non-duty paid.
Conclusion: Availment of proforma credit did not make the raw material non-duty paid.
Issue (iii): Whether the expression "has already been paid" in Notification No. 46/70 was satisfied once duty had been paid at the time of clearance of the raw material.
Analysis: The phrase referred to the point in time when duty was payable on the raw material, namely its clearance from the factory of manufacture. Once that duty was paid, the condition in the notification stood satisfied. The subsequent utilization of credit under Rule 56-A did not operate retrospectively to negate the fact that duty had already been paid.
Conclusion: The condition "has already been paid" was satisfied by payment of duty at the time of clearance of the raw material.
Final Conclusion: The demand notices and the orders confirming them could not be sustained, and the petitioner was entitled to the relief sought by reason of concurrent availability of the exemption notification and the proforma credit procedure.
Ratio Decidendi: Where an exemption notification requires that duty on inputs has already been paid, subsequent availing of proforma credit under a separate procedure does not destroy the duty-paid character of the inputs, and both benefits may be concurrently availed unless the notification expressly bars such simultaneous operation.
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