TMI Blog1986 (6) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of milk foods is barley malt falling under Item No. 68 CET. HMM used to receive duty-paid barley malt and utilize the same in the manufacture of prepared or preserved foods, namely, Horlicks , Happiness etc. HMM were availing of the facility of set-off of the duty paid on barley malt towards payment of Central Excise duty on the finished goods in terms of Central Excise Notification No. 201/79 dated 4.6.79. They had filed the prescribed declaration with the Jurisdictional Superintendent for availing themselves of the procedure of set-off. 3. HMM has two factories - one at Nabha (Punjab) and the other at Rajahmundry (Andhra Pradesh) - manufacturing the aforesaid milk foods. Except for some small quantities cleared from these factories packed in unit containers, the goods are dispatched to several packing stations located at different places where they are packed in unit containers and cleared. The movement of the goods from the Rajahmundry factory (with which we are concerned) to the packing stations is regulated under Central Excise Rule 56B which lays down a special procedure for removal in bond of semi-finished goods for certain purposes . Duty is not required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of duty in terms of Rule 56B to their packing stations. It is this order which is now under challenge before us. 6. We have heard Shri D.B. Engineer, Advocate, assisted by Shri M.P. Baxi and A.C. Gulati, Advocates for HMM and Smt. Dolly Saxena, S.D.R., for the respondent. 7. Though Shri Engineer initially addressed some arguments in support of his contention that credit of input duty earned at the Rajahmundry factory could be utilised towards payment of duty on Horlicks (removed under Rule 56B from the said factory to the packing stations located elsewhere, such removals being without payment of duty) packed at the packing stations and cleared therefrom on payment of duty, he gave up this contention and narrowed down the dispute to this : Could the entire credit of input duty be utilised towards payment of duty on Horlicks cleared on payment of duty from the Rajahmundry factory? Though part of the input may have been used in the manufacture of Horlicks dispatched in bulk to the packing stations? The contention was that it could be so utilised without any co-relation between the input used and the output cleared. Utilisation would not be restricted to the input duty on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the submissions before us. Notification No. 201/79 dated 4.6.79 reads as follows : In exercise of the powers conferred by sub-rule (1) of 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Deptt. of Revenue) No. 178/77 Central Excises, dated the 8th June, 1977, the Central Government hereby exempts all excisable goods (hereinafter referred as the said 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 (1 of 1944) (hereinafter referred as the inputs ) have been used from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs". The aforesaid exemption is subject to the observance of the procedure set out in the appendix to the notification. The portions of the appendix relevant for the present purpose are : Clause 2 : A manufacturer may take credit of the duty already paid on the inputs which are received by him after submitting the declaration, and utilise such credit for payment of duty of excise on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne v. CCE, Pune, 1984 (16) E.L.T. 294 (Tribunal) = 1984 ECR - 1404. The tribunal held that if there is substantial compliance with the procedure prescribed in the Appendix to Notification No. 201/79, the appellants would not be debarred from availing themself of the proforma credit procedure even after notification No. 166/79 was rescinded on 1.8.80. The import of the decision is that technicalities cannot have the result of negating relief under the notification if there is substantial compliance with the procedure. We do not see the relevance of this decision to the facts of the present case. 13. In Collector of Central Excise, Bhuvaneshwar v. Titagarh Paper Mills - 1985 (21) E.L.T. 901 (Tribunal) = 1985 ECR 1152, the Tribunal has held that a raw material is a material that is put into the manufacturing system to help in the formation of the finished product. There is no authority to say that an input or raw material must go directly into the finished product. As long as it is consumed and utilised in a way that results or helps in the production or manufacture of the article in which the system is engaged, it is a raw material and is an input for that finished product. Again, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished product (Fertilizers), so long as there was complete utilisation. In the case before the Madras High Court, the entire output was being cleared on payment of duty. The situation which we are confronted with in the present case, namely, a part of the finished product was only being cleared on payment of duty, the remaining part being removed under Rule 56B without payment of duty from the factory to the packing stations for being packed into unit containers, was not there in the case before the High Court. Therefore, this decision against is no authority for Shri Engineer s proposition. 16. Yet another decision is of that the Tribunal in Vikrant Tyres Ltd. v. CCE, Bangalore - 1985 (21) E.L.T.-620. In that case, the raw materials were used for manufacturing dutiable tyres as well as exempted tyres. The appellant s contention was that, at the time of taking the inputs into the factory and taking credit of the duty paid thereon, the appellant could not possibly say which of the raw materials would be used for manufacturing dutiable tyres and which exempted tyres. No fault could be found with the appellants for taking credit of the entire duty on the inputs. Once credit had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complicated than in the present case. There was a question of transfer of credit from one factory to another. More importantly, the inputs in respect of the appellants factory at Madras felt under Item No. 16A CET and not 68 CET. In the latter event alone, Notification No. 201/79 would come into play. The facts and circumstances being different, these two decisions are of no help in resolving the dispute before us. 18. Thus, on a consideration of all the decisions placed before us and on a reading of Notification No. 201/79, we are of the view that the credit of the duty suffered by the input, namely, malted barely, could be utilised by the Rajahmundry factory of the appellant, only to the extent of the duty suffered by the input used in the manufacture of the finished product cleared from the factory on payment of duty. Duty suffered by the input used in the manufacture of finished product which was moved from the Rajahmundry factory to the packing stations located elsewhere, in terms of Rule No. 56B, without payment of duty, could not be utilised towards payment of duty on the finished product cleared on payment of duty from the Rajahmundry factory. 19. As stated earlier, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
