TaxTMI 
TaxTMI 
1996 (7) TMI 253
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....t parts or finished product under the rule immediately before the commencement of the Central Excise Tariff Act, 1985. The learned Collector has held that the appellants were not eligible for credit under Rule 56A prior to 1-3-1986 and hence they do not qualify for credit under Rule 56A(8) and hence upheld the Assistant Collector's order. 2. The appellants have sought the case to be decided on merits. The appellants are relying on the judgment of the South Regional Bench rendered in the case of Kottukulam Engg. (P) Ltd. v. Collector of Central Excise as reported in 1989 (40) E.L.T. 379. 3. The learned DR submitted that the ratio of the judgment is not applicable to the present case as the inputs were classifiable under T.I. No. 13 while the final goods were assessable under T.I. No. 68. For claiming the benefit of Notification, both input and final goods should fall under T.I. No. 68. 4. We have carefully considered the submissions made by both the sides. The plea of the learned DR that the input and the output has to be under the same Tariff item does not appear to be correct, on a plain reading of the amended Notification. The appellants were availing set off of....
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....ir support, it is seen that Central Excise Rules (7th Amendment), 1986 was published under Notification No. 176/86, dated 1-3-1986. This inserted sub-rule (8) under Rule 56A of the Central Excise Rules, 1944 with the following wordings : "Notwithstanding anything contained elsewhere in this rule or any change in the nomenclature of classification of any goods consequent to the commencement of the Central Excise Tariff Act, 1985 (5 of 1986) the credit of duty paid on any material, component parts, or finished product shall be allowed if the credit of duty was allowable in respect such material, component parts or finished product under this rule or under a notification issued under Rule 8 of these rules requiring the procedure set out in Schedule to be followed, immediately before the commencement of the Central Excise Tariff Act, 1985 (5 of 1986)." In the case of appellants, they were admittedly not enjoying the proforma credit under Rule 56A prior to 28-2-1986 as they were working under Notification No. 201/79, only on set-off of input duty. A perusal of the sub-rule shows that facility of continued credit is available for those enjoying the proforma credit before 1-3-1986, and ....
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....t my inability to agree with his findings and hence record mine separately. I am doing so, notwithstanding the fact that the amount involved in the case is only Rs. 24,158/- since interpretation of Rule 56A(8) is involved requiring decision as to whether Rule 56A(8) of Central Excise Rules as it existed for one day on 28-2-1986 or as amended from 1-3-1986 onwards is applicable. As the facts involved have been set out already by my learned Brother, I am only setting out the legal position as it unfolded during the relevant period in Chronological sequence and proceed to deal with the matter.  DATE EVENT (1) 28-2-1986 Commencement of Central Excise Tariff Act, 1986. Sub-rule (8) under Rule 56A of Central Excise Rules introduced as below : - "(8) Notwithstanding anything contained elsewhere in this rule or any change in the nomenclature or classification of any goods consequent to the commencement of the Central Excise Tariff Act, 1985 (5 of 1986), the credit of duty paid on any material, component parts, or finished product shall be allowed if the credit of duty was allowable in respect of such material, component parts or finished product under this rule or under a notifi....
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....,158/- in respect of set-off availed by the appellants for the period from 1-3-1986 to 13-8-1986. Rule (8) of 563 only specified that credit shall be allowable if the credit of duty was allowable in respect of such material, component parts or finished product under the rule immediately before the commencement of the C. Excise Tariff Act, 1985. If the appellants were not eligible for credit under Rule 56A prior to 1-3-19864 as stated by the Asstt. Collector then the appellants do not qualify for credit under Rule 56A(8) and Asstt. Collector is correct in confirming the demand." The correct dates and other provisions against the entries marked 1, 2, 3 and 4 in the above extract of the Collector's order should be as follows : Notes : (1) The dates of Notification 201/79 is 4-6-1979 and not 4-7-1979. (2) Notification Number is 186/86, dated 1-3-1986 and not 186/88. (3) Sub Rule (8) of Rule 56A should be read instead of Rule 8 of 56. While these are typographical errors and have been corrected only for the sake of record, the error in respect of the date 1-3-1986 marked (4) is more serious and has, apparently, been committed due to incorrect application of the provisions. As indi....
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....l or component parts used in the manufacture of finished excisable goods unless duty has been paid for such material or component parts under the same item as the finished excisable goods. This problem did not actually arise in the Kottukulam Engg. (P) Limited v. Collector of Central Excise reported in 1989 (40) E.L.T. 379 relied upon by learned Brother Peeran as, in that case, both the materials and the final products fell under the same Tariff Item 68 and hence in that case credit was also allowable under Rule 56A before the commencement of the Central Excise Tariff Act, 1985 and hence Rule 56A(8) was attracted. In view of this vital difference, it was not correct, according to me, to apply the ratio of the Kottukulam decision to the present case. In that decision, part of which has been extracted in the order prepared by him it has been stated that facility of continued credit is available for those enjoying the proforma credit before 1-3-1986. As already stated above, this cut off date 1-3-1986 has been incorrectly referred to. No specific date, in terms, has been referred to in Rule 56A(8) as was in force on and from 1-3-1986. The cut off is only shown as "immediately before t....
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....No. 201/79, dated 4-7-1979 at a time when old tariff was in force. The Central Excise Tariff Act, 1985 came into force with effect from 28-2-1986. Notification No. 201/79 which related to inputs falling under old T.I. 68 therefore became redundant. Notification No. 201/79 rescinded with effect from 1-3-1986 vide Notification No. 176/86. There is no dispute that as Rule 56A of the Central Excise Rules stood at the relevant time, appellant was not entitled to any benefit thereunder. Appellant enjoyed the benefit of set-off only under Notification No. 201/79. Relying on sub-rule (8) newly incorporated in Rule 56A, the appellant contended that all those who were availing benefit under Notification No. 201/79 continue to enjoy the benefit by virtue of sub-rule 8 of Rule 56A of the Rules. The A.C. and the Collector (Appeals) held against this claim. Sh. S.L. Peeran, Member (Judicial) concurred with the contentions of the appellants relying on the decision referred to earlier, while Sh. K. Sankararaman, Technical Member took the contrary view. 12. Kottukulam Engg. Pvt. Ltd. case was more or less similar to the present case on facts. The Division Bench which held that the appellant i....