TaxTMI 
TaxTMI 
1997 (10) TMI 272
X X X X Extracts X X X X
X X X X Extracts X X X X
....duty of excise, such duty of excise shall in no case be less than the amount of credit that had been allowed in respect of such inputs under Rule 57A of the said rules. The appellants had purchased their inputs from the small scale manufacturers who were eligible for the concessional rate of Central Excise Duty under Notification No. 175/86-C.E. The appellants themselves were not so eligible to the benefit of small scale exemption under the aforesaid notification. A part of the inputs was removed by them. They contended that the appropriate duty on such removal was the duty equivalent to the credit that had been taken by them when the inputs were brought in their factory. The Revenue had taken a view that the appropriate duty was the duty of excise which the appellants could have paid if the said inputs had been manufactured in their factory and as they were not eligible to the benefit of small scale exemption, the duty reduction for which the suppliers were eligible was not available to them. 2. Shri K.V. Sahasrabodhe, Consultant, submits that on similar facts and circumstances, there is another appeal by the same appellants which had been listed as Appeal No. E/3038/92-C ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich such inputs had been brought into the factory. It is further provided that after the credit had been allowed, the inputs with the prior permission of the Collector of Central Excise could also be removed as such. The factory in which the said inputs had been received for use in the manufacture of final products, insofar as the inputs removed as such are concerned will be deemed to be the factory manufacturing such inputs. The expression used in the Rules are `Payment of appropriate duty of excise.' The provisions introduce a legal fiction that the inputs will be deemed to have been manufactured in the factory in which they had been received. When a legal fiction is created for a specific purpose, then subject to the limitation and restrictions built in the provisions, full effect has to be given to such legal fiction. It is also provided in the said rule that the duty of excise in no case will be less than the amount of credit that has been allowed. This provision also makes it clear that the credit and the appropriate duty have been used separately in Rule 57F. The provision also makes it clear that the amount of appropriate duty could be higher. In no case, the demand will be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eviable and the Tariff valuation, if any, in respect of such material or component parts, shall be the rate and valuation in force on the date on which the duty is paid. Vide Notification No. 217/87-C.E., dated 15-9-1987 a proviso was inserted under sub-rule (3A) of Rule 9A of the Rules that where such material or component parts are removed from the factory for home consumption on payment of duty, such duty shall in no case be less than the amount of Credit that has been allowed in respect of such material or component parts under Rule 56A of the Rules. These provisions although in the context of the Rule 56A of the Rules, make it clear that the duty levied and paid on the material or component parts could be higher than the amount of credit that has been allowed on receipt of such material or component parts and that the payment of appropriate duty of excise was not the same as reversal of the credit. Similar provision is already there in Rule 57F of the rules insofar as Modvat credit was concerned. 6. The expression used in Rule 57F(1)(ii) is the `appropriate duty of excise'. The appropriate duty of excise is the duty of excise as applicable to the excisable goods when t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....transfer of the credit and the payment of duty at the rate and valuation in force at the date on which the duty is paid. Rule 57-I refers to the recovery of Credit wrongly availed of or utilised in an irregular manner. As is seen from the above discussion, Rule 57F refers to the payment of appropriate duty of excise and not to the recovery of the credit already availed of. 10. It is pertinent to note that vide Notification No. 28/95-C.E. (N.T.), dated 29-6-1995 the provisions were changed as under :- "Provided that where the inputs are removed from the factory for home consumption on payment of duty of excise such duty of excise shall be the amount of Credit that has been availed in respect of such inputs under Rule 57A." This change makes it clear that prior to 29-6-1995 the duty of excise applicable to the inputs removed as such without use in the manufacture of final products, for which purpose they had been brought; was not the amount of Credit availed in respect of inputs, but the amount of duty payable "as if such inputs have been manufactured in the said factory", as applicable on the date of removal from the receiving factory. Further, the duty of excise so pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e that in the facts of the case referred to supra, the Tribunal took note of the fact that in terms of the contract, before the goods are delivered, testing was one of the requirements and for that reason, without testing the goods, the goods were held to be as not marketable. In the case of the appellant's goods there is no plea of this nature in regard to sale of the goods and therefore, we hold that the ratio of the decision cited supra will not be applicable to the facts of this case. In view of above, we hold that the duty demanded is maintainable in law. The impugned order is therefore upheld and the appeal is rejected." Similar view had been expressed in the case of Collector of Central Excise, Madras v. Becon Weir Ltd. - 1994 (72) E.L.T. 657 (Tribunal). Para 5 from decision is extracted below :- 5. The latest in the line of decisions is that of the case of the Collector of Central Excise, Madras v. M/s. Chennai Bottling Co. Ltd., bearing Order No. 785/1993, dated 18-11-1993. In this decision we have referred to our earlier decision in the case of M/s. Shri Sarvaraya Sugar (Bottling Unit) Ltd., reported in 1992 (59) E.L.T. 125. In para 6 of this order we have held....