2000 (7) TMI 110 - AT - Central Excise

Summary

Issues Involved:
1. Conflict of decisions between Tribunal cases.
2. Constitution of Larger Bench by the Hon'ble President.
3. Interpretation of Rule 57F(1)(ii) of the Central Excise Rules, 1944.

Summary:

1. Conflict of Decisions Between Tribunal Cases:
The matter arose due to conflicting decisions between the Tribunal's judgment in the appellant's case and the Chandigarh Bottling Company case. The Single Member Bench observed a divergence of opinion and referred the matter to the President for constituting a Larger Bench to resolve the conflict.

2. Constitution of Larger Bench by the Hon'ble President:
The President constituted a Larger Bench following a referral order. The ld. Counsel argued that the decision in M/s. American Auto Services by a three-member Bench was binding and that the referral to a Larger Bench was beyond the President's competence. However, the ld. JDR cited the Apex Court's observations in Union of India v. Paras Laminates (P) Ltd. and Section 129C(5) of the Customs Act, 1962, to support the President's authority to refer cases to a Larger Bench. The Tribunal found no infirmity in the referral order or the constitution of the Larger Bench.

3. Interpretation of Rule 57F(1)(ii) of the Central Excise Rules, 1944:
Rule 57F(1)(ii) allows inputs on which credit has been taken to be removed for home consumption or export under bond. The proviso mandates that the duty paid should not be less than the credit allowed. The Tribunal considered various case laws, including SAE Ltd. v. CCE, Ponds India Ltd. vs. Collector of Central Excise, and the Larger Bench decision in Collector of Central Excise v. American Auto Services. The majority in American Auto Services held that the duty rate should be the rate at which credit was taken, not the rate at the time of clearance. The dissenting opinion argued for the rate at the time of clearance. The Tribunal concluded that the majority view in American Auto Services correctly interpreted Rule 57F(1)(ii), emphasizing the legal fiction created to ensure the manufacturer debits the same rate of duty at which credit was taken.

Conclusion:
The Tribunal concurred with the majority view in the American Auto Services case, reiterating it as the correct interpretation of Rule 57F(1)(ii). The reference was answered accordingly.