TaxTMI 
TaxTMI 
2001 (10) TMI 91
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....ts to the tune of Rs. 62,53,023/- for the period 1-3-1984 to 14-3-1986 and Rs. 5,64,236/- for the period November 1984 to February 1986 utilised in respect of tyres, tubes and flaps cleared at nil rate of duty was reversed/debited under protest, presumably at the instance of Excise Authorities. Later, the respondent claimed refund thereof. The case of the respondent was that the Notification No. 95/79 (as amended from time to time) nowhere prescribed that the proforma credit of duty paid on the inputs was available only in relation to duty-paid outputs. The respondent contended that the relevant notification did not envisage any link between inputs and outputs. By a reasoned order dated 11-12-1989, the Assistant Collector of Central Excise, Meerut, rejected the assessee's claim for refund. He held that the assessee was not entitled to avail of the benefit of proforma credit on the inputs used in the manufacture of final products i.e. tyres, tubes and flaps which were cleared at nil rate of duty. The Assistant Collector concluded that the proforma credit was correctly debited/reversed by the assessee and, therefore, the question of refund did not arise. In this context, the followin....
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....ication is extracted hereunder :- "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 95/79-Central Excises, dated the 1st March, 1979, the Central Government hereby exempts excisable goods of the description specified in column (5) of the Table hereto annexed (such goods being hereinafter referred to as 'final products') and falling under such Item No. of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), as is specified in the corresponding entry in column (4) of the said Table from so much of the duty of excise leviable thereon under the said Act, as is equivalent to the duty of excise leviable under the said Act, or the additional duty leviable under the Customs Tariff Act, 1975 (51 of 1975), as the case may be, already paid on the goods of the description specified in the corresponding entry in column (3) of the said Table (such goods being hereinafter referred to as 'inputs') and falling under such Item No. of the said First Schedule as is specified in the corresponding entry in column....
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....y arising in the present case depends on the interpretation of that notification. 5.The interpretation of the Notification No. 95/83 does not present any difficulty. The Notification provides for exemption of excisable goods described in column (5) of the Table (extracted supra), referred to as 'final products'. The extent and amplitude of exemption is set out in clear terms. The exemption is to the extent of duty of excise already paid on the goods of the description specified in column (3) of the Table, that is to say, on inputs. Proviso I in explicit terms enjoins that the inputs specified in column (3) of the Table should have been used in the manufacture of final products specified in corresponding entry in column (5). What is exempted is "so much of the duty of excise leviable thereon". The expression 'thereon' is referable to excisable goods described in column (5) - known as 'final products'. The extent to which it is exempted is limited to the duty of excise leviable and already paid on the goods of the description specified in column (3) - known as 'inputs'. In other words, the duty paid on the inputs is adjusted against the duty payable on the final products manufactu....
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....iculty in pin-pointing that all the inputs were utilised only in the manufacture of non-dutiable finished products because no dutiable tyres and tubes were cleared at all during the relevant period. If so, the respondent cannot derive any benefit under the Notification No. 95/83. The notification issued under Rule 8 (1) deals with duty exemption on final products. The exemption is worked out with reference to the duty paid on the inputs by adjusting the input duty against the duty payable on final products. Such adjustment is not possible when no duty at all is payable on the finished product. Input duty relief and the duty payable on finished goods are thus inter-linked. There is nothing in the notification which enables input duty credit to be maintained and availed of merely because the inputs are used in the manufacture of specified finished products. The further premise is that the finished products are such that are subjected to duty. Any other interpretation would confer an unintended benefit on the assessee. The idea underlying the Notification No. 95/83, as already noted, is to check or minimise the cascading effect of duties which are otherwise payable at various stages. ....
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....tons of Horlicks from the Rajahmundry factory on paying duty. The remaining 750 tons is sent to the factory situated at Bangalore without paying duty under a bond. The 750 tons is put in unit containers and packages at the Bangalore factory and cleared from there on payment of excise duty. According to the appellant, he is entitled to take credit for the entire duty of Rs. 10,000/- (paid on 100 tons of barley malt) from out of the duty payable on 250 tons of Horlicks cleared from Rajahmundry factory, whereas according to the Revenue, since the quantity cleared at Rajahmundry on payment of duty is only 1/4th of the total quantity manufactured using 100 tons of barley malt, the appellant is entitled to take credit of only Rs. 2,500/- against the duty payable at Rajahmundry. Revenue also says that the respondent is not entitled to take credit of balance of Rs. 7,500/- (duty paid on 75 tons of barley malt) from out of the duty paid on 750 tons at Bangalore. The question is who is right?" 11It is obvious that in that case, duty was payable. on the entirety of finished product, namely, Horlicks, whether cleared at Rajahmundry factory or despatched to Bangalore factory under a bond. Th....
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....duct."' It was then observed :- "In fact, the scheme provides that the credit can be utilised for payment of duty, against any excisable products, that are brought from the factory. No debit can be claimed after the credit has been taken on goods, brought into the factory. Once raw materials enter the factory of petitioner company, credit is to be taken in accordance with the procedure, prescribed in the Rules, without any correlation to the end product. The credit can be utilised by petitioner, for the payment of duty on any goods, for which credit is taken. These goods need not be exempted goods, but will be those goods, on which duty is payable under the Act." 14.Far from coming to the aid of the respondent the view expressed by the Delhi High Court makes it clear that the question of utilising the credit on inputs would arise only where the duty is payable on finished product. 15.In the case of Jaysynth Dyechem Pvt. Ltd. v. Union of India [1991 (51) E.L.T. 246], the Bombay High Court was construing an exemption notification in which a proviso similar to the one which is contained in Notification No. 95/83 was construed by the High Court. The High Court held that the....