1996 (7) TMI 253 - AT - Central Excise

Appeal dismissed as rescinded benefit not applicable post 1-3-1986.

KOTHARI OIL PRODUCTS CO. Versus COLLECTOR OF CENTRAL EXCISE, RAJKOT

KOTHARI OIL PRODUCTS CO. Versus COLLECTOR OF CENTRAL EXCISE, RAJKOT - 1996 (87) E.L.T. 400 (Tribunal) Issues Involved:1. Eligibility for credit under Rule 56A(8) of the Central Excise Rules.2. Applicability of Notification No. 201/79 after its rescindment.3. Interpretation of Rule 56A(8) as amended on 1-3-1986.4. Impact of the Kottukulam Engg. Pvt. Ltd. judgment on the present case.5. Divergence of opinion between the Judicial Member and the Technical Member.Detailed Analysis:1. Eligibility for credit under Rule 56A(8) of the Central Excise Rules:The appellant was availing set-off under Notification No. 201/79, which was rescinded on 1-3-1986. They continued to avail of Rule 56A credit from 1-3-1986 to 13-8-1986. The Collector (Appeals) upheld the Assistant Collector's order denying the credit, stating that the appellants were not eligible for credit under Rule 56A prior to 1-3-1986, and hence did not qualify for credit under Rule 56A(8). The appellant argued that they were eligible for the credit based on the amended sub-rule (8) of Rule 56A.2. Applicability of Notification No. 201/79 after its rescindment:The appellants contended that they continued to enjoy the benefits of Notification No. 201/79 even after its rescindment due to the provisions of sub-rule (8) of Rule 56A. The Government had declared that the benefit of set-off under any erstwhile scheme would be allowed to continue to the extent permitted by the revised tariff heading.3. Interpretation of Rule 56A(8) as amended on 1-3-1986:The sub-rule (8) of Rule 56A, as amended on 1-3-1986, specified that credit shall be allowable if the credit of duty was allowable under this rule immediately before the commencement of the Central Excise Tariff Act, 1985. The proviso excluded credit for materials if such credit was not allowable immediately before the commencement of the Act.4. Impact of the Kottukulam Engg. Pvt. Ltd. judgment on the present case:The appellants relied on the judgment in Kottukulam Engg. Pvt. Ltd. v. Collector of Central Excise, which held that the appellants were entitled to the benefit even before the amendment. The learned DR argued that the ratio of this judgment was not applicable as the inputs and final goods in the present case were classifiable under different tariff items.5. Divergence of opinion between the Judicial Member and the Technical Member:The Judicial Member, S.L. Peeran, held that the appellants were eligible for the credit from 1-3-1986 onwards, interpreting sub-rule (8) to mean that the appellants were covered by it immediately on the rescindment of Notification No. 201/79. The Technical Member, K. Sankararaman, disagreed, stating that the appellants were not eligible for credit under Rule 56A immediately before the commencement of the Central Excise Tariff Act, 1985, and thus did not qualify for the benefit under the amended sub-rule (8) from 1-3-1986 onwards.Majority Decision:Justice U.L. Bhat, the President, analyzed the provisions and concluded that the appellants were not entitled to the benefit of Notification No. 201/79 after its rescindment on 1-3-1986. The sub-rule (8) as amended did not protect those who were availing benefits under notifications issued under Rule 8. Consequently, the decision in Kottukulam Engg. Pvt. Ltd. was deemed per incuriam. The majority view upheld the order of the lower authorities, and the appeal was dismissed.Conclusion:The appeal was dismissed based on the majority view that the appellants were not entitled to the benefit of Notification No. 201/79 after its rescindment on 1-3-1986, and the amended sub-rule (8) of Rule 56A did not protect such benefits. The decision in Kottukulam Engg. Pvt. Ltd. was not applicable to the present case.