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TMI Blog2015 (2) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... a unit in free trade zone are exempted goods within the meaning of Rule 57C of the erstwhile Central Excise Rules, 1944? (b) Whether the amendment to Rule 57C of the erstwhile Central Excise Rules, 1944 by Notification No.4/92 dated 1.3.1992 was clarificatory and retrospective in nature? (c) Whether goods supplied to a unit located in free trade zone without payment of duty under Notification No.272 of 1979 against the imprest licence is covered Rule 57C of the erstwhile Central Excise Rules, 1944 or Rule 191BB of the erstwhile Central Excise Rules, 1944? (d) Whether the goods cleared to a unit located in free trade zone are intermediate produces and as such not covered by Rule 57C of the erstwhile Central Excise Rules, 1944? 3. The facts necessary for appreciating the arguments of Mr Shah, learned counsel appearing for the appellants are that the appellants manufacture, inter alia, Multilayer Plastic Laminates Tubes falling under Chapter Nos. 39 and 76 of the Central Excise Tariff Act, 1985 (for short "the Tariff Act"). The appellants rely upon the Import Export Policy 1990-93 under which any supplies made in India / Kandla Free Trade Zone are considered as exports as per par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit was not admissible. The clearances were not permitted in terms of the Rule as applicable and when the show cause notices were issued. The amendment to the rule came later on and with effect from 1st March, 1992. The benefit of this amendment cannot be availed of by the appellants-assessee. 4. The credit has been reversed pursuant to the order passed by the Assistant Commissioner. The assessee, however, appealed against the orderin- original to the Commissioner of Central Excise (Appeals). He passed an order on 26th May, 1998 rejecting the appeal and agreeing with the Assistant Commissioner that the amendment to Rule 57C was effective from 1st March, 1992. It was not of a clarificatory nature. Hence, it did not have any retrospective effect. Holding thus he dismissed the appeal of the assessee on 5. Being aggrieved by the orders of the Assistant Commissioner and the Commissioner of Central Excise (Appeals) the assessee preferred the appeal to the Tribunal and which has been allowed partially by the impugned order. 6. Mr Prakash Shah, learned Counsel appearing on behalf of the appellants, firstly took us through Rule 57C as was prevailing when the show cause notices were issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He would submit that in the case of this Notification as well and the proviso of the same being worded identically, it was held by the Hon'ble Supreme Court in the case of Indian Transformers Ltd Vs. Commissioner of Central Excise Cochin that the revenue has accepted the Tribunal verdict. The Tribunal verdict is reported in 2002 (146) ELT 309. For the principle that a clarificatory amendment will have a retrospective effect, Mr Shah places strong reliance on a judgment rendered by three Judge Bench of the Supreme Court in the case of WPIL Limited Vs. Commissioner of Central Excise 2005 (181) ELT 359. 10. On the other hand, Mr Rao appearing for the Revenue would submit that there is no merit in this appeal. The view taken by the Tribunal is the only view possible. The order of the Tribunal may not be elaborate and detailed but it does make reference to the relevant material. It also makes reference to the order of the Tribunal in the case of Kelkar & Co. Ltd (supra) and distinguishes it. Mr Rao would submit that once the assessee is relying upon the amendment brought to Rule 57C with effect from 1st March, 1992 and terming it as clarificactory, then, it would not be open for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final product is exempt from the whole of the duty of excise leviable thereon or if chargeable to nil rate of duty. We would not allow the assessee, now, to canvass an argument before us that though the clearance effected by it to M/s Hindustan Lever Ltd. is for purpose of their unit located in Kandla Free Trade Zone, as far as the appellants go, their final product is not exempted from whole of the duty of excise leviable thereon or is chargeable to nil rate of duty. That argument of Mr Shah is premised on the fact that the clearance is to Hindustan Unilever Limited (HUL). That HUL may have a unit and located in Kandla Free Trade Zone. That HUL may receive the final product of the assessee as inputs for the HUL's final product intended to be exported. But HUL executed a bond which would denote that the exemption in favour of HUL was conditional. In other words, the export of goods by HUL was not entirely duty free. The receipt of inputs by HUL for manufacture in use and export may be duty free but all this is conditional. The condition is, if this goods received by HUL as duty free are not used in export, HUL would have to be pay duty on the same as if they have been cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of manufacture or storage was permitted without payment of duty. There, the Central Government is empowered to notify from time to time the excisable goods whose removal may be permitted by the Collector without payment of duty from the place of their manufacture or storage if that goods are supplied for the manufacture or articles specified in the said notification to be exported. In execution of one or more export orders or for replenishment of duty paid excisable goods used in the manufacture of the articles already exported for the execution of such orders or both. This would not denote that a distinct availment or benefit and of credit on inputs has no relation to the removal without payment of duty envisaged by Rule 191BB. That is only facilitating removal from place of manufacture without payment of duty. Rule 57C enables availment of credit on inputs in the manufacture of final product. Thus, this Rule will not assist the argument that amendment to Rule 57C was retrospective. 19. Then, reliance placed upon Exemption Notification, General Exemption No.21 also cannot be of any assistance. In exercise of the powers conferred by Rule 8 (1) of the Central Excise Rules, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the conclusion can, still, be supported. 22. The amendment itself has been brought to our notice. That is contained in the Notification copy of which is at page 42 of the additional compilation Volume No.1 handed in by Mr Shah. The same reads as under: Notification: 4/92CE (NT) dated 1 March 1992 Central Excise (3 rd Amendment)Rules, 1992 - Modvat rules In exercise of the powers conferred by section 37 of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to amend the Central Excise Rules, 1944, namely:- 1. (1) These rules may be called the Central Excises (Third Amendment) Rules, 1992. (2) These rules shall come into force on the date of their publication in the Official Gazette. 2. In the Central Excise Rules, 1944 (hereinafter referred to as the said rules), (i) in rule 57C, for the words "in the manufacture of a final product", the words "in the manufacture of a final product (other than those cleared either to a unit in a Free Trade Zone or to a hundred per cent ExportOriented Unit)" shall be substituted; (ii) in the proviso to rule 57D, for the words "in the manufacture of a final product", the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the earlier position. Now, the credit is not to be denied if the clearances are in the above terms. Thus, not all clearances but specific and to units in free trade zone or hundred per cent exportoriented unit, which would enable the assessee and parties like it to claim credit of duty paid on inputs used in the manufacture of final products which are exempt from payment of duty of excise. The intent and purpose was obvious. A free trade zone or units therein or exportoriented unit undertake activities which would facilitate the country in earning foreign exchange and which is considered extremely valuable. In that regard and to encourage such units to undertake the activities noted above, frequently, that this rule was amended. That was also enabling the suppliers of such duty free products and received in the free trade zone to claim credit on the basis of the clearances made. If such is the intent and purpose and the departure is specifically made from a particular date, then, such amendment cannot but be held to be prospective. 24. Reliance placed by Mr Shah on a similar attempt and made in relation to another Central Excise Notification No.217 of 1986 with effect from 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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