TMI Blog1974 (3) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... Duty under Item No. 12 of the Central Excise Schedule. The oil is first converted into Alkyd Resin (Synthetic Resin) which, in its turn, is utlised for manufacturing paints and varnishes. This Alkyd Resin is also an excisable article. Under Rule 56A of the Central Excise Rule if duty paid material of component parts are brought in for the manufacture of finished excisable goods, a proforma credit is granted to the extent the duty has already been paid on such material or component parts and it is adjusted against the excise duty leviable on the finished product. Obviously this Rule has been inserted to avoid double taxation, once on the component parts and again on the finished products. In order to avail of this concession, an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1970 : The demand was raised when it was discovered that they have availed of proforma credit on quantities of processed V.N.E. Oil used in the manufacture of synthetic resins without proper permission from the competent authority. The factory was permitted to avail of proforma credit on materials used in the manufacture of paints and varnishes, but they do not possess any such permission for synthetic resin for the manufacture of which the party holds a separate licence . The party, therefore, is not entitled to avail of proforma credit on the processed V.N.E. Oil used in the manufacture of Synthetic resins. 3. Against these order the petitioner filed two Appeals as provided in Section 35 of the Act. The period of limitation for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) that the levy of the impugned excise duty is wholly unauthorised under the law and (2) that the demand of excise duty is time-barred. The authority which raised the demands did not pass any order. It merely issued two notices of demand. On the representations of the petitioner the Superintendent, Central Excise, Kanpur, passed an order which has already been extracted above. This order also does not indicate the provision under which the same has been passed. But in the Counter-Affidavit the order is sought to be justified under Rule 56H(3)(a) read with Rule 10A and Rule 56A (3) as it stood at the material time read :- * * * * 5. Rule 56A(3)(a) applies obviously to a case where a person after obtaining a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere it was produced for consumption, export or manufacture of any other commodity. On the other hand, it is admitted that the conversion of V.N.E. Oil into Alkyd is only an intermediatary stage in the manufacture of the paints and varnishes. As such no duty was leviable on Alkyd Resin and the credit allowed for the use of V.N.E. Oil in the manufacture of paints and varnishes was properly available to the petitioner. 7. Learned Counsel for the respondents has asserted that duty is leviable even on excisable article which is produced at an intermediary stage for the production of other article and it is not necessary that such an article should be put in the market for sale. He has relied upon Union of India v. Delhi Cloth and General Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereon. In view of this clarification it is not open to the respondents to say that the petitioner was not entitled to the credit in respect of V.N.E. Oil, merely because the same was converted at an intermediary stage into Alkyd Resin. 8. Now we pass on the alternative contention, namely, that the impugned duty was barred by time. Rule 10 deals with recovery of duties or charges short-levied or erroneously refunded and runs as under : * * * * To us it appears that the instant case is clearly covered by rule 10. It is a case of short levy of duty through inadvertence or error. The levy of duty under Rule 10 is permissible only if the demand is made within three months from the date on which the duty was char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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