TMI Blog2001 (9) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... ector Undertaking. It is the view of the appellants that the exemption order issued under Section 5A(2) of the C.E. Act, 1944 should not be construed as permanent exemption granted to excisable commodity since exemption order was issued for the limited period and for a particular quantity considering the circumstances of exceptional nature viz., keeping the intrinsic value of a coin within the face value. They have therefore, requested that the exemption granted in a ad hoc order should not be construed as wholly exempted from duty or chargeable to nil rate of duty. They have also cited the decision of the Hon ble High Court of Calcutta in the case of Dinesh Kumar Nevatia v. CC, reported in [1988 (38) E.L.T. 606 (Cal.)] to the effect that in the case of exemption order issued under Section 25(2) of the Customs Act, the goods continue to be chargeable to duty but the manufacturer is only exempted from payment of such duty, was not considered by the Commissioner (Appeals). They have also cited the judgment of the Hon ble Delhi High Court in the case of Bombay Conductors and Electricals v. Collector reported in [1986 (23) E.L.T. 87 (Del.)] in which the Delhi High Court have given a ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to as SSP) are manufacturers of Cold Rolled Stainless Steel (CRSS for short)/sheets, waste and scrap of Stainless Steel falling under Chapter 72 of the Schedule to the CET, 1985 and Stainless Steel coin blanks falling under Chapter 73 of the Schedule to the CET, 1985. They have availed Modvat Credit of duty paid on the inputs in terms of the provisions of Rule 57A of the CE Rules, 1944. During the period from 1-1-94 to 12-10-94 they have cleared 1896.270 MT of Stainless Steel coin blanks on payment of duty and afterwards they have cleared 743.833 MT of coin blanks without payment of duty as the ad hoc exemption Order No. 11/11/94 CX. 4 dated 21-9-94 as amended, was issued by the Ministry of Finance. This order granted them exemption for a total quantity of 2,640 MT. Inasmuch as the appellants have cleared 743.833 MT of stainless steel coin blanks without payment of duty by availing the ad hoc exemption it was felt by the department that Modvat Credit availed on the inputs used for manufacture of 743.833 MT stainless steel coin blanks was inadmissible in terms of the proviso to Rule 57C of the CE Rules, 1944. Therefore, show cause notice bearing OC No. 794/95 dated 7-4-95 was iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit proposed to be disallowed, there is some arithmetical error. The quantity of stainless steel strips used in the manufacture of coin blanks is the actual quantity of strips that is consumed and not the input (SS strips) contained in the coin blanks that had merged and hence the actual consumption of strips alone has to be taken as consumption and not the 76.90% of the total consumption as mentioned in serial No. 1.4 and II of the Annexure to the show cause notice and he has drawn a revised work sheet showing the quantity of coin blanks cleared without payment of duty as 743.833 MT. He also gave a work sheet that the quantity of CRSS required for producing 1 MT of SS coin blank is 1.30039 MT and he worked out a quantity of 967.273 MT of CRSS strips for production of 743.8333 MT of SS coin blanks ( 743.833 x 1.30039). He also worked out in the corrigendum the total amount which is required to be expunged in the following manner : A. Amount to be expunged in respect of F 520.141 MT of CRSS (520.141 x Rs. 68100 x 15% adv) : 53,13,240.00 B. Amount of credit to be expunged in respect of Credit taken under RG 23A Part II Sl. 645/6, = .12.94 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he final product, no credit is admissible to the input used in the manufacture of the final product. He also held that Rule 57C does not differentiate between final products exempted from duty by a Notification issued under Section 5A(1) or 5A(2) of the C.E. Act, 1944. He also held that though the ad hoc exemption is applicable to a specific manufacturer, in case of the appellant what is exempted is only the product manufactured and not the manufacturer. He also held that ad hoc exemption was granted to M/s. SAIL for the manufacture and clearance of 2640 MTs of stainless steel coin blanks and as such no Modvat Credit is admissible on the inputs to the extent used in the manufacture of Stainless Steel coin blanks and he disallowed the Modvat Credit to the tune of Rs. 1,09,10,599/- availed by the appellants on the inputs used in the manufacture of 743.833 MT of SS coin blanks, cleared without payment of duty and confirmed the total quantum demanded in the Order-in-Original No. 175/75, dated 2-8-95 and the corrigendum dated 12-9-95 issued by the Assistant Commissioner. 4. We have heard Shri Ponnuswamy, Assistant Manager appearing on behalf of the appellants. He reiterated the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed was mentioned as Rs. 85,91,276/- and this was the amount disallowed by the order-in-original. We note that the Hon ble Supreme Court, the Hon ble High Courts and the Tribunal in a number of rulings have held that order confirming demand of duty cannot traverse beyond the scope of the show cause notice and therefore, on this ground we set aside duty demand arrived at by the authorities below in terms of the corrigendum issued. However, so far as the availability of the Modvat Credit is concerned, we uphold the view taken by the authorities below that when the final product is not dutiable, Modvat Credit is not admissible on the inputs in view of the provisions contained in Rule 57C of the Rules ibid. So far as availability of Modvat Credit is concerned, we have considered the whole matter and we find that in the show cause notice the credit amount of Rs. 85,91,276/- which was availed in their RG 23A Part II (as detailed in the Annexure to the show cause notice) was sought to be disallowed as ineligible credit under Rule 57-I of the Rules ibid. But no where, either the show cause notice or the Annexure attached thereto, mentioned the Modvat Credit (which was required to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
