TaxTMI 
TaxTMI 
1999 (6) TMI 104
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....d under Notification 243/80. He has also imposed a penalty under Rule 173Q. 2. It will be appropriate for us to consider separately the liability (the liability) to tow on the different grounds referred to in the order. We shall first consider together the case of tow cleared under Rule 191BB and used in the manufacture of products which are cleared for export without payment of duty including tow consumed in the manufacture of PSF so cleared for export without payment of duty. 3. The assessee had contended before the Commissioner that the clearances in each of these cases would be covered by sub-clause (3) of the proviso to sub-rule (1) of Rule 9 and Clause (4) of Rule 49. The relevant provisions of Rules 9 and 49 are reproduced below : "Rule 9. Time and manner of payment of duty. - (1) No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is ....
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....ecorded in writing, permit such person to withdraw the amount in accordance with such procedure as the Collector may specify in this behalf.] [(2) If any excisable goods are, in contravention of sub-rule (1), deposited in, or removed from, any place specified therein, the producer or manufacturer thereof shall pay the duty leviable on such goods upon written demand made (within the period specified in Section 11A of the Act) by the proper officer, whether such demand is delivered personally to him, or is left at his dwelling house, and shall also be liable to a penalty which may extend to two thousand rupees, and (such goods) shall be liable to confiscation.] [Explanation. - For the purposes of this rule, excisable goods produced, cured or manufactured in any place and consumed or utilised - (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity; Whether in a continuous process or otherwise, in such place or any premises appurtenant thereto, specified by the Collector under sub-rule (1), shall be deemed to have been removed from such place or premises immediately before such consumption or utilisation....
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.... are consumed or utilised in the same factory either as raw material or as component parts for the manufacture of any other commodity which - (i) is excisable goods specified by the Central Government by notification under sub-rule (1) of Rule 56A, [(ii) is classifiable under heading No. or sub-heading No. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as may be specified in the notification issued under sub-rule (1) of Rule 56A, and] (iii) is neither exempt from the whole of the duty of excise leviable thereon nor is chargeable to nil rate of duty.] Explanation. - For the purposes of this rule, excisable goods made in a factory and consumed or utilised - (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity, whether in a continuous process or otherwise, in such factory or place or premises specified under Rule 9 or store-room or other place of storage approved by the Collector under Rule 47, shall be deemed to have been issued out of, or removed from such factory, place, premises, store-room or other place of storage, as the case may be, immediately before such....
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....sessee contended that both these objections would not be valid in view of the decisions of the Tribunal in Orissa Synthetics Ltd v. C.C.E. - 1995 (77) E.L.T. 350 and Hindustan Petroleum Corporation Ltd. v. C.C.E. - 1995 (77) E.L.T. 256 and the Delhi High Court judgment in Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise, Mirzapur - 1981 (8) E.L.T. 642. The Tribunal accepted this contention. It said that the East Regional Bench had held in Orissa Synthetics Ltd. that removal of final product without payment of duty under Rule 191BB was not clearance of goods either exempted or at nil rate of duty and hence not attracting the provisions of Rule 57C. It noted that the Tribunal in deciding C.C.E. v. Hindustan Aluminium Corporation Ltd. v. Supdt. of Central Excise apply the same view with regard to Modvat credit under Rule 56A similar to the provisions of Rule 57C in the case of the goods cleared without payment of duty after export under Rule 191B and Rule 191BB. It held that on the ratio of these decisions the Delhi High Court judgment in Hindustan Aluminium Corporation Ltd. v. C.C.E. - 1981 (8) E.L.T. 642 and views of the Board itself it could not be said that....
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....e 12 empowers the Central Government to grant rebate of duty paid on excisable goods to be exported outside India subject to the extent and conditions as may be specified. In Hindustan Aluminium Corporation v. Supdt. of Central Excise - 1981 (8) E.L.T. 642, the question that the Delhi High Court found raised was whether the goods which were exported under bond were liable to payment of excise duty totally exempted. The petitioner before the Court had exported aluminium without payment of duty under a bond given under Rule 13. Notice was issued to it claiming the differential duty between duty leviable on aluminium under the tariff and the amount notified as rebate by notification issued under Rule 12. The assessee contended that by virtue of the provisions of Rule 13 which was independent of Rule 12 the goods could be exported from bond without payment of duty and the notification issued under Rule 12 would not apply to such clearances. The Court did not accept this contention. It said that Rules 12 and 13 are supplementary and deal with the same matter and the goods exported out of India. The difference between Rules 12 and 13 was only the mode and manner of payment of duty, Rule ....
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....tion under Section 5 of the Act. The distinction between such exemption under Rule 8 continue undisturbed irrespective of the quantity of the rebate. The goods exported under Rule 13 and by virtue of the Explanation (2) to this rule goods cleared for making the yarn exported cannot therefore be considered to be goods exempted from payment of duty. 14. It is no doubt true that the Tribunal's decisions were on the applicability of Rule 57C relating to Modvat credit taken on inputs. In Machine Buildings v. C.C.E. - 1996 (86) E.L.T. 576, the Tribunal had, while construing the provisions of the orders of the Government of India issued under Rule 57G relating to deemed credit, interpreted the words "wholly exempted from payment of duty" as taking in cases of unconditional exemption of the whole of the duty payable and also conditional exemption of such duty were the conditions were satisfied. The Tribunal in that order, however was not concerned with goods which were exported. It considered in para 19 only four contingencies in which duty was not paid - this being were no nil rate of duties prescribed in the tariff; goods are wholly exempted; not cleared by the manufacturer and c....
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....re of specified low cost fabrics under the programme approved by the Textile Commission. It is contended for the appellant in this regard that on the true construction of this notification it is clear that the exemption contained in tow in respect of which duty has to be paid either at the tow stage or at the PSF stage, and that therefore the exemption is in respect of duty which will ultimately be relatable to PSF. Advocate for the appellant relies upon the decision in Indian Organic Chemicals Ltd. v. C.C.E. - 1997 (91) E.L.T. 180. 17. The question before the Tribunal in the decision cited by the appellant was the same one with which we are now concerned the duty payable on tow from which PSF was manufactured and cleared under Notification 191/85. The assessee claimed the benefit under Notification 84/87 which exempts tow from payment of duty if used in the manufacture of PSF cleared on payment of duty. The department has denied this benefit on the ground that the fibre was cleared under an exemption notification without payment of duty. The contention raised on behalf of the assessee was that demanding duty on the tow will defeat the object of the notification which was t....
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....mission by Notification 191/85 would be nullified if the tow out of which that fibre is manufactured has to pay duty. Whatever the correctness of this view, it is not possible to conclude that therefore Notification 76/92 has retrospective effect because it amended Notification 191/85. Notification 76/92 amended not by Notification 191/85 but by Notification 53/95. This notification again has no direct relation to the Notification 191/85. The view that the object of the notification was to subserve the same purpose as that of Notification 191/85 may or may not be correct. Even if it is correct, it does not confer a retrospective operation upon Notification 76/92. This conclusion of the Bench therefore, in our view, requires reconsideration. The question of the liability to duty on such goods as was supplied under notification therefore will on merits have to await the result of that reconsideration if the demand is sustainable on limitation. 21. The question of limitation has now to be considered. The notice to show cause which demanded duty is dated 10-2-1994 and was issued for clearances between 25-7-1991 and 30-6-1992. It invoked the extended period contained in the prov....
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.... these factors. Thus contravention of the rules by itself will not attract the proviso; for that to be applied, it must be shown that the contravention resulted in non-payment or short payment of duty. Thus, it would mean that for the extended period to apply, it must be shown that the duty was not collected because of the contravention of the provisions of the Acts and Rules alleged. The notice to show cause cites Section 6 of the Act, Rules 9(1), 52A, 53, 54 and 174. Section 6 of the Act and Rule 174 related to licensing provided that any person manufactures excisable goods must be licensed. It is not denied that the appellant was licensed for manufacture of excisable goods. Rule 9(1) prescribes payment of duty before goods are removed. Rule 52A provides for issue of gate passes. Rule 53 prescribes maintenance of the daily stock account. Rule 54 provides for the monthly return. Sub-rule (2) of Rule 9(1) itself provides that any contravention of Rule 9 provides for recovery of duty on goods removed without such payment within the period specified in Section 11A of the Act. Thus, the mere fact of contravention of Rule 9(1) would not justify invoking the extended period. If that wer....
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....ets are to be kept. Paragraph 219 provides for check by the sector or Range Officer on the raw materials and says that the Section Officer must gets acquainted with the proportion of raw materials used and the product manufactured. Checks are prescribed every weighing machine, filling, production or the packing section, delivery or loading. Challenge of stock must be conducted and checks made from account. 26. Specific checks are prescribed in what are called commodity supplement relating to a particular industry. 27. If the checks were carried out in the manner prescribed, by the departmental officers having jurisdiction, it is impossible for them not to be aware that the appellant was manufacturing and clearing tow and waste, and that such clearance was without payment of duty. This is the same conclusion that has been arrived in various decisions of this Tribunal cited by the appellant to the effect that the extended period contained in proviso to Section 11A (1) would not be available in the cases of factories under physical control. It is however true that the question in those decisions did not revolve around the point now canvased by the department i.e. the c....