TaxTMI 
TaxTMI 
2015 (3) TMI 746
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....s in respect of clearances exceeding Rs. 75,00,000/- in the current financial year, could still avail of the benefit of the Government of India Order No.TS/36/94-TRU dated 1st March, 1994. In other words, whether they could continue with the benefit of deemed credit without production of documents evidencing the payment of duty even when they had ceased to avail of the benefit of Notification No.1/93-CE. 3. Tax Appeals No.56/2005 to 74/2005 which are filed at the instance of the assessees have been admitted on the following substantial questions of law: (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that whatever interpretation was put on Notification No.1/93 would affect the availment of the benefit of the notification and hence, whether the issue was not specifically mentioned in the show cause notice or not, would not be material? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that whether the benefit of deemed credit available under order No.TS/36/94-TRU dated 1-3-1994 passed by the Central Government in exercise of powers conferred under Rule 57G (2) of the erstwh....
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....receding financial year. 7. The assessees on the basis of the said order availed the benefit of deemed credit. However, with respect to the credit availed by the assessees, show-cause notices came to be issued raising demand as regards the deemed credit availed by the assessees. Such demand was raised on the ground that re-rollable materials with regard to which deemed credit had been availed of had originated from breaking of ships, boats and floating structures and were obtained either partly or directly from the ship-breakers from their ship-breaking units which were situated in Customs area or through traders. It was alleged that as per proviso (2) to rule 57G(2), credit of duty could be allowed without production of documents evidencing payment of duty but the existence of such documents was necessary. It was also alleged that vide Finance Bill, 1994, Headings No.72.30 and 73.23 were omitted and with such omission, in fact, there did not exist any duty paying documents evidencing duty payment on re-rollable materials. The assessees filed their replies in response to the show-cause notices. Vide separate Orders-in-Originals, the Deputy Commissioner of Central Excise confirme....
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....l, accordingly, held that the re-rollers whose aggregate value of clearances in the financial year exceeded Rs. 75,00,000/- and when they were paying the applicable rate of excise duty on the clearances beyond the value limit of Rs. 75,00,000/-, were not eligible for the benefit of Ministry's Deemed Credit Order No.TS/36/94 TRU dated 1st March, 1994. Mr. Dave submitted that the expression "availing of exemption" in the deemed credit Notification dated 1st March, 1994 cannot be read to mean availing of concessional rate of duty. It was submitted that if the benefit under the said Notification was to be curtailed to the extent of Rs. 75,00,000/-, it would have been specifically so mentioned in the notification. According to the learned counsel, the condition that re-rollers availing the exemption under Notification No.1/93 would be entitled to the benefit of the order is only for identifying the manufacturers who would be entitled to the benefit of the said order. It was submitted that the restriction of deemed credit to the extent of clearances up to Rs. 75,00,000/- was neither intended under the order nor is it justified. The attention of the court was invited to the fact that the ....
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....According to the learned counsel, considering the fact that raw materials used by small scale manufacturers were not purchased from manufacturers on account of which they would not have documents evidencing payment of duty, the benefit of deemed credit came to be extended to the small scale manufacturers under the Notification dated 1st March, 1994 for a period of one year to adjust to the new regime. Thus, the period of one year during which the assessees were given benefit of deemed credit was in the nature of a buffer period. It was submitted that it was never the intention to limit the benefit of the Government of India order under rule 57G(2) of the rules to the extent of clearances of Rs. 75,00,000/- only. It was urged that in the aforesaid backdrop, the only construction that can be put on the expression "availing of exemption" has to be small scale manufacturers who in the previous financial year had clearances of less than Rs. 200 lakhs. 9.2 It was pointed out that various Tribunals had referred similar questions to the High Courts and the Himachal Pradesh High Court in the case of Sood Steel Industrial (P) Ltd. v. Commissioner of Central Excise (supra)) had held that t....
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.... hence, as and when a manufacturer crosses the exemption limit, as provided in the said notification, he is not entitled to the benefit of deemed credit order dated 1st March, 1994. In other words, under the Notification No.1/93 different slabs have been prescribed, and an SSI is initially entitled to the benefit of deemed credit, but once it reaches clearances of more than Rs. 75,00,000/-, it is no longer entitled to the benefit thereunder. It was contended that the Himachal Pradesh High Court in the case of Sood Steel Industrial (P) Ltd. v. Commissioner of Central Excise (supra) has not considered the intention behind providing slabs in Notification No.1/93 and has arrived at an erroneous interpretation of the order dated 1st March, 1994. It was argued that the Himachal Pradesh High Court has read an eligibility concept in Notification No.1/93 which was not provided thereunder and that the court should have interpreted the notification to mean it limits the benefit to the extent of Rs. 75,00,000/- . It was accordingly urged that the expression "availing of exemption" is required to be so interpreted that the benefit of deemed modvat credit benefit would be available only so long ....
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....enefit of deemed credit under the order dated 1st March, 1994 is available only to assessees availing exemption under Notification No.1/93-CE, they are not entitled to the benefit of deemed credit beyond clearances of goods worth Rs. 75,00,000/-. 14. From the facts and contentions noted hereinabove, it is apparent that the goods manufactured by the assessees namely, bars and rods were exempted from payment of central excise duty right from the year 1963 till 1994 when the Notification No.202/88 dated 20th May, 1988 came to be rescinded with effect from 1st March, 1994. However, at the same time, while rescinding the said notification, the items falling under Tariff Heading No. 72 came to be brought within the purview of Notification No.1/93-CE effective from 1st April, 1994 whereby exemption for first clearances of specified goods up to the value of 30 lakhs and concessional duty thereafter, in case of SSI units having clearances not exceeding rupees two crores in the preceding year came to be granted. The said notification provided for different slabs for availment of the benefit thereunder; however, such benefit was available in the aggregate, to clearances of Rs. 75,00,000/-.....
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....eads thus: RULE 57G. Procedure to be observed by the manufacturer.- (1) Every manufacturer intending to take credit of duty paid on inputs under rule 57A, shall file a declaration with the Assistant Collector of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the Assistant Collector may require, and obtain a dated acknowledgment of the said declaration. (2)A manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgment aforesaid, take credit of the duty paid on the inputs received by him: Provided that no credit shall be taken unless the inputs are received in the factory under the cover of a Gate Pass, and A.R.1, a Bill of Entry or any other document as may be prescribed by the Central Board of Excise and Customs [constituted under the Central Boards of Revenue Act, 1963] in this behalf evidencing the payment of duty on such inputs: Provided further that having regard to the period that has elapsed since the duty of excise was imposed on any inputs, the posit....
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....ary, 1993 will be deemed to have paid duty, and the credit of duty under Rule 57A of the said Rules in respect of such ingots and rerollable materials used without undergoing the process of melting, in the manufacture of goods falling under Chapter 72 or 73 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), may be allowed at the rate of Rs. 920/- per tpnne, without production of documents evidencing payment of duty. 2. This Order shall come into force on the 1st day of April, 1994." 19. Thus, what the above Order dated 1st March, 1994 envisages is grant of benefit of deemed credit to re-rollers availing of the exemption under Notification No.1/93. The next question that arises for consideration as to what meaning can be attributed to the words "availing of exemption under Notification No.1/93", which is the principal controversy arising in the present case. 20. For this purpose it would be germane to refer to the contents of Notification No.1/93. By the said notification which has been issued in exercise of powers under section (1) of section 5A of the Central Excise Act, 1944 the Central Government has exempted the excisable goods of the description speci....
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....also extends to the Government Order dated 1st March, 1994 as is sought to be contended on behalf of the revenue. In the opinion of this court, the provision whereby the benefit of notification No.1/93 is limited to the aggregate value of clearances of specified goods to the extent of rupees seventy five lakhs relates to the extent of benefit that can be claimed under the said notification. However, the same is not an eligibility criteria for availing of the benefit of the said notification. A reroller who avails of the benefit of Notification No.1/93 is by dint of such fact eligible for the benefit of deemed credit under the Order dated 1st March, 1994 and the benefit under the said order is not qualified by the limit provided for availment of the benefit of Notification No.1/93. The decision of the Tribunal in the case of Digambar Foundary v. Commissioner of Central Excise (supra), whereby it is held that the eligibility to avail of the benefit under the order would be only to the extent the clearances do not exceed Rs. 75,00,000/-, is, therefore, an incorrect interpretation of the Order dated 1st March, 1994 as well as the Notification No.1/93. 23. The above view taken by thi....
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....t to various conditions and limitations as provided in that exemption Notification. The exemption under that Notification was not available if the aggregate value of clearances of all excisable goods for home consumption (a) by a manufacturer from one or more factories; or (b) from any factory by one or more manufacturers had exceeded Rs. 200 lakhs in the preceding financial year. Notification No.1/93-C.E., dated 28-2-1993 did not deal with availing of credit. Whereas the Ministry's Deemed Credit Order TS/36/94-TRU dated 1-3-1994 is that goods should be lying in stock on or after 1-4-1994 with the re-rollers. As per the Ministry's Deemed Credit Order dated 1-3-1994, re-rollers availing exemption under Notification No.1/93-C.E., dated 28-2- 1993 will be deemed to have paid the duty. 16. In the present case, Appellant has not crossed the value of clearance of Rs. 200 lakhs during the preceding financial year and availed full exemption under Notification No.1/93-C.E., dated 28-2-1993 up to 24-12- 1994 and thereafter started paying duty. Therefore, Appellant cannot said to be not availing exemption under Notification No.1/93-C.E., dated 28-2-1993 during the year 1994-95. The Deputy ....