TaxTMI 
TaxTMI 
1996 (10) TMI 82
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....tories situated at different places in India in bulk containers. There, the Horlicks is put in unit containers/packages and cleared after paying the duty. 3.For the purposes of manufacturing Horlicks, the appellant purchases barley malt which was dutiable under Tariff Items 68. 4.On June 4, 1979, the Central Government issued the aforesaid notification (No. 201 of 1979) exempting "all excisable goods .................... on which the duty of excise is leviable and in the manufacture of which any goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 have been used, as raw materials or component parts (hereinafter referred as "the inputs") from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs." Controversy has arisen with respect to the application of the said notification and it is this : the appellant says that it is entitled to take credit of the entire duty paid on barley malt against the duty payable on the Horlicks cleared at Rajahmundry, notwithstanding the fact that the entire quantity of Horlicks manufactured out of the said barley malt is not cleared/removed at Ra....
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....ture of which any goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) have been used, as raw materials or component parts (hereinafter referred as "the inputs", from so much of the duty of excise levi- able thereon as is equivalent to the duty of excise already paid on the inputs : Provided that the procedure set out in the Appendix to this notification is followed : Provided further that nothing contained in this notification shall apply to the said goods which are exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty :............................................................................................................................ APPENDIX A manufacturer of the said goods shall give a declaration1. to the Superintendent of Central Excise having jurisdiction over his factory, indicating the full description of the said goods intended to be manufactured in his factory and the full description of the inputs intended to be used in the manufacture of each of the said goods. 9. (a) The credit of duty taken in respect of any inputs may be utilised towards....
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....which are received by him after submitting the declaration and utilise such credit for payment of duty of excise on the said goods (Rule 2). 7.These rules do not specifically lay down that the credit of duty taken by the manufacturer must be set-off against the duty payable on the goods actually manufactured utilising these inputs. The manufacturer is entitled to take credit of the duty already paid on the inputs as soon as he receives the inputs and submits the necessary declaration to the Excise Officer. He is, thereafter, entitled to utilise the credit for payment of duty of excise on the goods manufactured by him. The rules do not require any exact correlation between the inputs and the finished products for claiming credit for the duty paid on the inputs. It is not a condition-precedent for claiming set-off that the manufacturer must prove that - the credit was taken in respect of inputs; and that(a) these very inputs were utilised in the manufacture of the(b) goods on which duty is payable. 8.Rule 2 merely provides that the manufacturer may take credit of the duty already paid on the inputs and utilise such credit for payment of duty of excise on the manufactured ....
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....aken credit of, as explained in the illustration given hereinabove. On the other hand, the learned counsel for the appellant submits that the words in the body of the notification should be read alongwith the procedural rules mentioned in the Appendix. In particular, he relies upon Clauses (9) and (10) of the Appendix. The learned counsel also relies upon the instructions issued by the Central Board of Excise and Customs on 18-6-1979 to the following effect : "Central Excise - Simplification of procedure regarding Tariff Item 68 - Goods used as "inputs" in the manufacture of finished excisable goods. Attention is invited to Notification No. 201/79-C.E., dated the 4th June, 1979 (page ____) and a copy of the Press Note issued by the Board is appended. In the Press Note the need for simplifying the procedure of set-off granted in relation to Tariff Item 68 goods under Notification No. 178/77-C.E., dated 18-6-1977 has been explained. The revised procedure is based on the lines of Rule 56A of2. the Central Excise Rules, 1944. Consequently instructions of the Board issued with reference to Rule 56A will also `mutatis mutandis' be applicable here unless they are inconsistent wit....
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....e has been given up, and a self-contained procedure for claiming the exemption has been prescribed. This procedure is basically on the lines of the proforma Credit System prescribed under Rule 56A of the Central Excise Rules, 1944."(emphasis added)  11.With a view to explain the procedure obtaining under Rule 56A, the learned counsel for the appellant brought to our notice clause (VI) of sub-rule (3) of Rule 56A of the Central Excise Rules, as it obtained prior to 1973 and as it obtains now i.e., as substituted by the 1973 Amendment : Before Amendment After Amendment "(vi) Except to the extent provided in the second proviso to sub-rule (2), the credit allowed in respect of any material or component parts shall be utilised towards payment of duty on the finished excisable goods in the manufacture of which such materials or component parts are used or on the materials or component parts themselves and no part of such credit shall be refunded in cash or by cheque. (vi) (a) The credit of duty allowed in respect of any material or component parts may be utilised towards payment of duty on any finished excisable goods for the manufacture of which such material or com....