TMI Blog2015 (3) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... argument, as already held above, fails to take note of the fact that one is the additional duty on goods of special importance, whereas later on is only additional duty on textiles and textile articles. Independent of this order, the Appellant has addressed us extensively on the construction/interpretation of the Rule 57AB. Once we are not in agreement with the Appellant, then, any further reference to these Rules or decisions of the Tribunal is unnecessary. We also need not enter into the controversy as to whether the Tribunal erred in not following or applying its decision in the case of Reliance Industries Limited and Ors. [2002 (7) TMI 168 - CEGAT, MUMBAI] while deciding the Appeals by the impugned order. Once our independent satisfaction enables us to reach the conclusion as above, then, we are not required to go into this question any further. The inputs and the final product dealt with by 1957 Act and the 1978 Act are not one and the same. This aspect is clear if note is taken of the nature of the goods specified in the Schedules to these Acts. As the title indicates one category is of goods of special importance whereas the other is textiles and textile articles. The fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set aside. - Decided partly in favour of assessee. - C.E.A NO. 101 OF 2014, C.E.A NO. 102 OF 2014, C.E.A NO. 103 OF 2014 - - - Dated:- 5-3-2015 - S. C. Dharmadhikari And Sunil P. Deshmukh, JJ. For the Appellant : Mr. V. Sridharan - Senior Counsel with Mr. Prakash Shah i/b. M/s. PDS Legal For the Respondent : Mr. Pradeep S. Jetly with Mr. S. D. Bhosale JUDGMENT Per S.C.Dharmadhikari, J.) These Appeals involve common questions of law and therefore they were heard together and by consent are being disposed of by this common Judgment. After having perused the impugned order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Mumbai dated 2nd January, 2014, we proceed to admit these Appeals on the following substantial questions of law: ( a) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in holding that the credit of Additional Excise Duty (Textile and Textile Articles) paid on the inputs was always allowed to be utilised for payment of Additional Duty of Excise (Textiles and Textiles Articles) and for no other purpose? (b) Whether in the facts and circumstances of the case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Versus CCE - 2000 (49) RLT 579 (b) SRF Ltd. Versus CCE - 2002 (147) ELT 851 (c) Madura Coats Versus CCE - 2001 (44) RLT 191 (T) (d) MRF Ltd. Versus CCE - 2004 (164) ELT 202 (T) 6) The fourth proviso to Rule 57F(4) of the erstwhile Central Excise Rules 1944, as inserted by Notification No. 11/95CE( NT) dated 16th March, 1995, reads as under: Provided that, notwithstanding anything contained in subrule (1) of Rule 57A and the Notifications issued thereunder the credit of specified duty allowed in respect of any inputs may be utilised towards payment of duty of excise on any other final product, whether or not such inputs have actually been used in the manufacture of such other final product, if such inputs have been received and used in the factory of production on or after the 16th day of March, 1995. 7) When Modvat Rules were redrafted in lucid manner, similar provisions were contained in provisions to Rule 57F(12). 8) With effect from 3rd September, 1996, the Appellants became entitled to avail credit of duty paid on the inputs used in or in relation to the manufacture of fabrics falling under Chapter 55. 9) The Appellant, inter alia, took the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately ₹ 1.7 crores as unutilised balance in AED (T TA). Further, credit of ₹ 1.2 crores (approximately) was taken by the Appellant as AED (T TA) on polyester tops during the period from 1st April, 2000 to 30th June, 2001. 16) The AED (T TA) balance was not utilised by the Appellants till January, 2003. Between January 2003 to April, 2003, the Appellants utilised this AED (T TA) credit for payment of BED and AED (GSI) to the extent of ₹ 2.9 crores. The dispute in the present appeal relates to this utilisation of AED (T TA), which was held to be impressible by the Respondent, is sustained by the Appellate Tribunal vide the impugned order. 17) Significantly, during the period from April, 2000 to June, 2001, the Appellant has paid AED (GSI) approximately 6.48 crores in cash on manmade fabrics. The Appellants filed an affidavit dated 4th June, 2013 of their General Manager (Indirect Taxation) before the Tribunal stating the aforesaid facts on oath and annexing to the said affidavit details of payment of various duties duly certified by the Superintendent of Central Excise. 18) By a notification No. 31/2001 dated 21st June, 2001, the Central Government promulga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of other duties and that they were not liable to pay the amount mentioned in the said letter dated 13th May, 2003 through the PLA. 24) Statements of Mr. R. K. Shriyan, the Deputy General Manager (Administration) of the Appellants were recorded on 16th May, 2003 and 21st May, 2003 under section 14 of the Act, wherein he stated that the Appellants had utilised the accumulated credit of additional duty (T TA) towards the payment of basic excise duty and additional duty (ST). 25) By a notice to show causecumdemand F. No. Prev/VII/05/Raymond/03 dated 13th August, 2003 the Assistant Commissioner of Central Excise, called upon the Appellants to show cause as to why ( a) the amount of duty of ₹ 2,65,76,666/paid through Additional Duty of Excise (T TA) should not be disallowed and recovered from them under section 11A of the Central Excise Act, 1944; (b) the amount of duty of ₹ 7,85,336/resulted as short payment of duty on denial of specified duties through additional duty of (T A) should not be demanded and recovered under the provisions of section 11A of the Act; (c) interest at appropriate rate should not be demanded and recovered from them on the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty demanded and penalties imposed pursuant to order of the Respondent. 31) By its final order No. A/459/WZB/05/CI dated 10th May, 2005, the Appellate Tribunal set aside the demand of Additional Excise Duty of ₹ 66,79,179/holding that there is force in the Appellant's submission that the additional excise duty paid under the Additional Duties of Excise (Textile and Textile Articles) Act, is available for utilisation towards payment of additional excise duty under the Additional Duties of Excise (Goods of Special Importance) Act in the light of the Tribunal's decision in the case of Reliance Industries Ltd. Versus CCE reported in 2002 (150) ELT 479 (T) and Grasim Industries Ltd. Versus CCE reported in 2003 (54) RLT 288. However, as regards the issue regarding the Basis Excise Duty, the Appellate Tribunal held that the Respondent has not recorded his findings on one of the two contentions raised by the Appellants before him and in the absence of any finding on the said two contentions as regards the demand of basic excise duty, it has no alternative but to remand the case to the Respondent and accordingly remanded the case to the Respondent for his fresh decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Appellant receives polyester woolen blended fibre as input. On this input, the Appellant inter alia pays AED(T TA) under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. The appellant has then taken credit of the said AED (T TA) paid on polyester top. From the polyester top, the Appellant manufactures polyester yarn. Polyester yarn is then consumed in the manufacture and clearance of manmade fabrics. On manmade fabrics, AED(GSI) under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 is levied. However, on manmade fabrics, no AED(T TA) is leviable. 37) Mr. Sridharan relies upon Notification No. 21 of 1999 issued under Rule 57A of erstwhile Central Excise Rules, 1944. He submits that in terms of this Notification AED (T TA) paid on input can be utilised for payment of AED (T TA) on the final product. Similarly, AED(GSI) paid on input can be utilised for payment of AED(GSI) on the final product. Mr. Sridharan submits that similar provision was earlier contained in Notification No. 5 of 1994 (T T) dated 1st March, 1994 which is also issued under Rule 57A. Mr. Sridharan invites our attention to the Cenvat Credit Rules prevailin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position, according to the Revenue and the Tribunal, has undergone a change and in that regard, he has also referred to Rule 3(6)(b) of the Cenvat Credit Rules, 2001, which came into effect on 1st July, 2001. Mr.Sridharan would submit that addition of the word respectively in Rule 3(6)(b) of Cenvat Credit Rules, 2001 is w.e.f. 1st March, 2001. However the prefix said continues to figure in the Rule. This establishes the position that prefix said is not synonymous with word respectively . This argument is canvassed to fault the approach of the Tribunal in not following its earlier decisions in the impugned order and taking a contrary view. If the Tribunal wanted to differ from binding precedents, it ought to have referred the matter to the Larger Bench. In the impugned order, the Appellate Tribunal has relied upon the use of the phrase under the said twice in Rule 57AB(2) to hold that AED(T TA) could not have been utilised for payment of AED(GSI) even during 1st April, 2000 to 30th June, 2000. In other words, the restriction having come by the insertion of the word respectively after 1st July, 2001, this view of the Tribunal cannot be sustained. 39) Mr. Sridharan has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise on any final product. He then invites our attention to Rule 3(6)(b) of the Cenvat Credit Rules, which restricts utilisation of credit of AED(T TA) and AED(GSI) which is notwithstanding Rule 3(1) and Rule 3(3). Relying upon the wording of Rule 3(7) and the nonPage obstante clause therein, Mr. Sridharan would submit that Cenvat Credit Rules, 2004 have similar SubRules as the 2002 Rules and therefore, between 1st March, 2002 to 9th September, 2004, the credit of AED(T TA) can be used for payment of any of the specified duty referred to in SubRule (1) of Rule 3. 42) Mr. Sridharan submits that in any event, no provision in Additional Duties of Excise (Goods of Special Importance) Act, 1957 provides for levy of interest. The provisions in relation to interest in Central Excise Act, 1944 and Rules thereunder are not borrowed. Therefore, no interest is payable on the utilisation of credit by the Appellant. In that regard, Mr. Sridharan invites our attention to the Finance Act, 1994. Finally, it is submitted that in the absence of any such provision relating to levy of interest, the impugned order to the extent it directs payment of interest, should be quashed and set aside. 43) M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arliament in the Eighth Year of the Republic of India as follows: SECTION 1. Short title and extent - (1) This Act may be called the Additional Duties of Excise (Goods of Special Importance) Act, 1957. (2) It extends to the whole of India SECTION 2. Definitions. In this Act, ( a) additional duties means the duties of excise levied and collected under subsection (1) of Section 3; (b) State does not include a Union territory SECTION 3. Levy and collection of Additional Duties. ( 1) There shall be levied and collected in respect of the goods described in column (3) of the First Schedule produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto duties of excise at the rate or rates specified in column (4) of the said Schedule. (2) The duties of excise referred to in subsection (1) in respect of the goods specified therein shall be in addition to the duties of excise chargeable on such goods under the Central Excise Act, 1944 (1 of 1944), or any other law for the time being in force. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SECTION 2. [*****] SECTION 3. Levy and collection of additional duties of excise on certain textiles and textile articles . ( 1) When goods of the description mentioned in the Schedule chargeable with a duty of excise under the Central Excise Act, 1944 (1 of 1944), read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable (not being a notification providing for any exemption for giving credit with respect to, or reduction of duty of excise under the said Act on such goods equal to any duty of excise under the said Act, or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), already paid on the raw material used in the production or manufacture of such goods), are assessed to duty, there shall be levied and collected a duty of excise equal to fifteen per cent of the total amount so chargeable on such goods. (2) The duties of excise referred to in subsection (1) in respect of the goods specified in the Schedule shall be in addition to the duties of excise chargeable on such goods under the Central Excise Act, 1944 (1 of 1944), or any other law for the time being in force and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Sridharan overlook the fundamental distinction between these two additional duties and which have been imposed by two different enactments on goods of special importance and textiles and textile articles. Both are additional duties and over and above those chargeable and leviable on such goods under the Central Excise Act, 1944 or any other law for the time being in force. However, it has been clarified in the case of 1978 Act as to how these dues are leviable for the purpose of Union and the proceeds thereof shall not be distributed among the States. 49) Now, if one peruses the scheme of credit of duties paid on excisable goods used as inputs under the Central Excise Rules, 1944, one finds that in Rule 57A as was prevailing in 199596 and thereafter until the Notification was issued by the Government, the credit of these duties was not permissible. In that regard, our attention has been invited to the changes brought about by Notifications under Rule 57A of the Central Excise Rules, 1944. In this behalf, in the compilation handed over by Shri. Sridharan at page 15 is one of the Notifications, which provides for availment of input credit in relation to the duties which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing of such final products but if the inputs have been used and received in the factory of production on or after 1st March, 1997, the credit can be availed. This is the position even with regard to the further Notifications and which are to be found in the Central Excise Manual of 199798 from page 27 of the compilation. Thereafter, even the Notification dated 28th February, 1999 does not alter this position. All that the Cenvat Credit Rules or the Central Excise Rules prevalent clarify is that credit of specified duty insofar as it relates to duty paid under the 1957 and 1978 Acts can be availed of and subject to the restrictions. The position remains the same even under the Notifications subsequently issued. We do not see how this position is altered just by nonreference or even deletion of paras 2(a) and (b) of the Notification No. 21/99CE( NT) dated 28th February, 1999. 51) Mr. Sridharan places heavy reliance on a Notification bringing about changes and bearing No. 37 of 2000 dated 3rd May, 2000 and a corrigendum dated 13th April, 2000. Rule 57AB reads as under: RULE 57AB CENVAT credit - (1) A manufacturer or producer of final products shall be allowed to take cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India; or (ii) by a hundred per cent exportoriented undertaking or by a unit in an Electronic Hardware Technology Park or Software Technology Parks and used in the manufacture of the final products in any place in India, shall be restricted to the extent which is equal to the additional duty leviable on like goods under section 3 of the Customs Tariff Act, 1975 paid on such inputs; (b) credit in respect of ( i) the additional duty of excise under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978); (ii) the additional duty of excise under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); and (iii) the additional duty under section 3 of the Customs Tariff Act, 1975, equivalent to the duty of excise specified under clauses (i) and (ii) above shall be utilised only towards payment of duty of excise leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act or under the said Additional Duties of Excise (Goods of Special Importance) Act, on any final products manufactured by the manufacturer of for payment of such duty on inputs themselv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978); (iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); (v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001); and (vi) the additional duty leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975), equivalent to the duty of excise specified under clauses (i), (iii), (iv) and (v) above, paid on any inputs or capital goods received in the factory on or after the first day of July, 2001, including the said duties paid on any inputs used in the manufacture of intermediate products, by a jobworker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number GSR 547 (E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final products, on or after the first day of July, 2001. Explanation.Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware Technology Park or Software Technology Park and used in the manufacture of the final products in any place in India, shall be restricted to the extent which is equal to the additional duty leviable on like goods under section 3 of the Customs Tariff Act, 1975 (51 of 1975) paid on such inputs or capital goods; (b) CENVAT credit in respect of ( i) the additional duty of excise under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978); (ii) the additional duty of excise under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); (iii) the National Calamity Contingent duty under section 136 of the Finance Act, 2001 (14 of 2001); and (iv) the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975), equivalent to the duty of excise specified under clauses (i) , (ii) and (iii) above, shall be utilized only towards payment of duty of excise leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, or under the said Additional Duties of Excise (Goods of Special Importance) Act, or the National Calamity Contingent duty under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of special importance, whereas later on is only additional duty on textiles and textile articles. 55) Mr. Sridharan also relied upon Rule 3(6) to urge that the word respectively appeared in Rule 3(6) clause (b) in 2001 and that would not therefore affect the prior utilisation. We are unable to agree with him because all throughout it has been clarified by the legislature that availment of Cenvat Credit in respect of additional duty of excise under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, Additional Duties of Excise (Goods of Special Importance) Act, 1957 shall be utilised only towards duty of excise leviable under the said Acts. That means the respective Acts. The word respectively only denotes the duties of excise leviable under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, Additional Duties of Excise (Goods of Special Importance) Act, 1957 or the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 and the additional duty under section 3 of the Customs Tariff Act, 1975. Therefore, it is not as if the word respectively having been inserted that the position prevailing prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the opinion that independent of this order, the Appellant has addressed us extensively on the construction/interpretation of the aforereferred Rules. Once we are not in agreement with the Appellant, then, any further reference to these Rules or decisions of the Tribunal is unnecessary. We also need not enter into the controversy as to whether the Tribunal erred in not following or applying its decision in the case of Reliance Industries Limited and Ors. while deciding the Appeals by the impugned order. Once our independent satisfaction enables us to reach the conclusion as above, then, we are not required to go into this question any further. The inputs and the final product dealt with by 1957 Act and the 1978 Act are not one and the same. This aspect is clear if note is taken of the nature of the goods specified in the Schedules to these Acts. As the title indicates one category is of goods of special importance whereas the other is textiles and textile articles. The fact that these goods are separately and distinctly classified in the Schedules to these Acts and equally in the Central Excise Tariff is enough to reject the submissions of the Appellant. 57) We are also of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng No. 87.01 or motor vehicles falling under Heading No. 87.02 and 87.04 or chassis of such tractors or such motor vehicles under Heading No. 87.06. Prior to budget of 199596 the credit of BED was allowed to be used for payment of duty on the final products, in which the inputs were used. In 199596, the Modvat claim was liberalised/ simplified and condition that credit of duty paid on the inputs could have been used for discharging duty liability only in respect of above final products was removed. The credit then can be utilised for payment of duty on any final product manufactured in that factory. That is how the subject Rule providing for lapsing of credit unutilised with the manufacturer of tractors was referred. The Assessee contended that this amounts to taking away a vested right acquired by the manufacturer under the existing law and taking away such right by Rule 57F(4A) is beyond powers of the Central Government. It is in that context that the Revenue's stand was negatived by the Hon'ble Supreme Court. We cannot read the observations and conclusions of the Hon'ble Supreme Court dehors this factual position and controversy. Once we have arrived at a conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise (Textiles and Textile Articles) Act, 1978 and similar provision in section 3(3) of Additional Duties of Excise (Goods of Special Importance) Act, 1957. In fact subsection (3) of section 3 of Additional Duties of Excise (Goods of Special Importance) Act, 1957 was substituted by section 63(a) of the Finance Act, 1994. That clearly states that the provisions of Central Excise Act, 1944 (1 of 1944) and the Rules made thereunder including those relating to refunds, exemptions from duty, offences and penalties, shall, so far as may be apply, in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in subsection (1). The Judgment of the Hon'ble Supreme Court, which Mr. Sridharan relies upon, is not, on his own showing, dealing with the provision of interest. The decision in the case of Commissioner of Central Excise vs. Orient Fabrics Private Limited reported in (2004) 1 SCC 597 deals with a case of imposition of penalty or confiscation of goods for non payment of AED(GSI). Recourse to these powers was taken on the basis that provisions of Central Excise Act, 1944 and the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arket rate even though the deed contains no mention of interest. Applicability of the rule to award interest in equity is attracted on the existence of a state of circumstances being established which justify the exercise of such equitable jurisdiction and such circumstances can be many. 20. We may refer to the decision of this Court in Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa Ors. v. Lrs Ors. (2001)2 SCC 721, wherein the controversy relating to the power of an arbitrator (under the Arbitration Act, 1940) to award interest of prereference period has been settled at rest by the Constitution Bench. The majority speaking through Doraiswamy Raju, J. has opined that the basic proposition of law that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation by whatever name it may be called, viz., interest compensation or damages and this proposition is umistakable and valid; the efficacy and binding nature of such law cannot be either diminished or whittled down. It was held that in the absence of anything in the arbitration agreement, excluding the jurisdiction of the arbitrator to award in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the court; the test is whether on account of an act of the party persuading the Court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the Court and the act of such party. The quantum of restitution, depending on the facts and circumstances of a given case, may take into consideration not only what the party excluded would have made but also what the party under obligation has or might reasonable have made. There is nothing wrong in the parties demanding being placed in the same position in which they would have been had the Court not intervened by its interim order when at the end of the proceedings the Court pronounces its judicial verdict which does not match with and countenance its own interim verdict. Whenever called upon to adjudicate, the Court would act in conjunction with what is the real and substantial justice. The injury, if any, caused by the act of the court shall be undone and the gain which the party would have earned unless it was interdicted by the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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