TMI Blog2013 (8) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... aid in India and hence, the condition which was contained in the said notification had to be fulfilled in order to get the benefit of the notification. The notification clearly states to which of those inputs it shall apply and to which of the inputs it shall not apply and what is the duty of the manufacturer of final inputs. Thus, when there is a prescribed procedure and that has been duly followed by the manufacturer of final products, we do not perceive any justifiable reason to hold that the assessee-appellant had not taken reasonable care as prescribed in the notification. Due care and caution was taken by the respondent. It is not stated what further care and caution could have been taken. The proviso postulates and requires “reasonable care” and not verification from the department whether the duty stands paid by the manufacturer-seller - When all the conditions precedent had been satisfied, to require the assessee to find out from the departmental authorities about the payment of excise duty on the inputs used in the final product which have been made allowable by the notification would be travelling beyond the notification, and in a way, transgressing the same - Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer under cover of an invoice declaring therein that the appropriate duty of excise had been paid on such inputs under the provisions of the Act. The appellate authority referred to the provisions of sub-rule (6) of Rule 57A and notification No. 58/97-CE(NT) dated 1.9.1997 and opined that the manufacturer of the inputs had not discharged the appropriate duty liability against the goods cleared vide the invoices and the respondent had not furnished the requisite documentary evidence which could controvert the said allegation made against the manufacturer of inputs. The appellate authority observed that unless and until payment of appropriate duty had been made, the assessee could not have availed the benefit. Expressing such an opinion, it concurred with the view taken by the adjudicating authority. However, it reduced the penalty from Rs.40,000/- to Rs.20,000/-. 5. The unsuccess in appeal compelled the respondent to prefer Appeal No. E/1474/04-SM before the Customs, Excise and Service Tax Appellate Tribunal (for short the tribunal ) and the tribunal placing reliance on the decision in Vikas Pipes v. CCE 2003 (158) ELT 680 (P H) came to hold that the declaration given by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of by the final manufacturer. The learned counsel would submit that the appropriate duty , as interpreted by this Court in Dhiren Chemical Industries (supra), supports the case of the respondent and the conditions prescribed in the notification having been satisfied, the adjudicating authority as well as the first appellate authority has erred in holding that there was a failure on the part of the respondent to satisfy the conditions. 10. To appreciate the rival submissions raised at the Bar and the bold assertion by Mr. Prasad, learned counsel for the Revenue, that it was the duty of the assessee-respondent, the manufacturer of the final products, to see that the manufacturer of the inputs had actually paid the appropriate duty on the inputs on the bedrock of law laid down by the Constitution Bench in Dhiren Chemical Industries (supra), it is necessary to understand how and under what circumstances the controversy travelled to the Constitution Bench. Be it noted, the Constitution Bench was required to resolve the conflict between the two pronouncements, namely, Collector of Central Excise, Patna v. Usha Martin Industries (1997) 7 SCC 47 and Motiram Tolaram and another v. Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Judges referred to the language employed in the exemption notification and opined that onus was on the assessee to prove and show that the conditions, as imposed in the exemption notification, had been satisfied. In that context the Bench proceeded to state that the condition for getting the benefit of the lower rate of duty is that on the raw material used appropriate amount of duty has been paid. If perchance or for any reason, the manufacturer of polyvinyl alcohol in India is unable to prove or show that the same has been manufactured from vinyl acetate monomer on which appropriate amount of duty of excise has been paid, then the said manufacturer would not be entitled to get the benefit of the said notification. 13. Thereafter, the Court referred to Section 3 of the Customs Tariff Act, 1975 and observed that one has to assume that the importer of polyvinyl alcohol had actually manufactured the same in India. One can further assume, possibly without any difficulty, that the said polyvinyl alcohol has been manufactured from vinyl acetate monomer, but it is not possible to assume or presume or imagine that the raw material used is the one on which appropriate amount of duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt was unable to agree. It said that the raw material being an item which was manufactured in India, a rate of excise duty was leviable thereon. On the raw material which had been imported, the appropriate amount of duty had not been paid. It was only if this payment had been made that the exemption notification would be applicable. 7. In our view, the correct interpretation of the said phrase has not been placed in the judgment in the case of Usha Martin. The stress on the word appropriate has been mislaid. All that the word appropriate in the context means is the correct or the specified rate of excise duty. 8. An exemption notification that uses the said phrase applies to goods which have been made from duty-paid material. In the said phrase, due emphasis must be given to the words has already been paid . For the purposes of getting the benefit of the exemption under the notification, the goods must be made from raw material on which excise duty has, as a matter of fact, been paid, and has been paid at the appropriate or correct rate. Unless the manufacturer has paid the correct amount of excise duty, he is not entitled to the benefit of the exemption notification. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs at such rates or such amount and subject to such conditions as may be specified in the said notification: Provided that the manufacturer shall take all reasonable steps to ensure that the inputs acquired by him are goods on which the appropriate duty of excise as indicated in the documents accompanying the goods, has been paid under section 3A of the Central Excise Act, 1944 (1 of 1944). [Emphasis supplied] 20. On a careful reading of Rule 57A(1), it is clear as crystal that a manufacturer of final products can avail the credit of any duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975, as may be specified by the notification in the Official Gazette subject to provisions of the Section and the conditions and restrictions that may be specified in the notification. The proviso further stipulates that the Central Government may specify the goods or classes of goods in respect of which the credit of specified duty may be restricted. Thus, the conditions and restrictions have been left to be prescribed by way of notification in respect of certain classes of goods. 21. Sub-rule (6) of Rule 57A commences with a non-obstente clause and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learance from his factory. [Emphasis supplied] 23. We have referred to the aforesaid notification in extenso as the controversy really rests on the understanding of the language employed in the notification. Clause (2) spells about the concept of deemed payment of duty on the inputs and further prescribes that it shall be equivalent to the amount calculated at the rate of twelve per cent of the price, as declared by the manufacturer, in the invoice accompanying the said inputs. Clause (3) deals with a different fact situation and, hence, it need not be dwelled upon. Clauses (4) and (5) are really relevant for the present purpose. On a plain reading of the said clauses it is clear to us that there are two mandates to avail the benefit of the said notification. One part is couched in the affirmative language and the other part is in the negative. As per the first part it is obligatory on the part of the assessee to produce the invoice declaring that the appropriate duty of excise has been paid on such inputs under the provision of section 3-A of the Act The second command, couched in the negative, is that the provisions of the said notification shall not apply to inputs where th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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