Proforma credit prevents double duty where intermediate and final goods fall under the same tariff sub-item.

Where an intermediate aluminium wire and the final AAC/ACSR conductors both fell under the same tariff sub-item, duty could not be effectively levied twice without giving credit for duty already paid at the wire stage. Rule 56A proforma credit required deduction of the earlier duty from the duty payable on the final conductors, so no further net duty remained recoverable. The demand for additional duty on the intermediate wires was therefore unsustainable, and the show cause notice was discharged.

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Issues: Whether aluminium wire manufactured at an intermediate stage and the final AAC/ACSR conductors, both falling under Item 33B(ii), could be subjected to duty twice, and whether the assessee was entitled to proforma credit under Rule 56A.

Analysis: The duty structure under Item 33B and the availability of proforma credit under Rule 56A were decisive. Even assuming that the intermediate aluminium wire was a distinct finished product, the same tariff sub-item covered both the wire and the final conductors. In such a situation, the department could not collect and retain full duty at both stages without giving credit for the duty already paid on the wire stage. The mechanism of Rule 56A required deduction of the wire duty from the duty payable on the final conductors, and on that basis no further net duty remained payable.

Conclusion: The demand for additional duty on the intermediate wires was unsustainable and the assessee succeeded.

Final Conclusion: The appeals failed, and the show cause notice was discharged because no further duty was recoverable beyond the duty already paid on the final product.

Ratio Decidendi: Where an intermediate and final product fall under the same tariff sub-item and proforma credit is available, duty cannot be effectively levied twice without allowing credit for duty already paid at the earlier stage.

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