9911796707
TMI Blog1991 (12) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ered from an external source of electricity or by electric accumulators 15% 86.02 8602.00 Other rail locomotives; locomotive tenders 15% 86.03 8603.00 Self-propelled railway or tramway coaches, vans and trucks, other than those of Heading No. 86.04 15% 86.04 8604.00 Railway or tramway maintenance of service vehicles, whether or not self-propelled (for example, workshops, cranes, ballast tampers, tract-liners, testing coaches and "track inspection vehicles) 15% 86.05 8605.00 Railway or tramway passenger coaches not selfpropelled; luggage vans, post office coaches and other special purpose railway or tramway coaches not self-propelled (excluding those of Heading No. 86.04) 15% 86.06 8606.00 Railway or tramway goods vans and wagons, not self-propelled 15% 86.07 8607.00 Parts of railway or tramway locomotive or rolling stock 15% 86.08 8608.00 Railway or tramway track fixtures and fittings; mechanical (including electro mechanical) signalling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields; parts of the foregoing. 15% 86.09 8609.00 Containers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) Goods classifiable under any headings of Chapters 28, 29, 30, 32, 33, 34, 35, 36, 37, 38, 39, 40, 70, 72, 73, 74, 75, 76, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95 or 96 (other than those falling under Headings Nos. 36.03 or 37.05) of the Schedule to the Central Excise Tariff Act, 1985 (5 1986). NOTIFICATION No. 452/86-CENTRAL EXCISES 2. In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 214/86-Central Excise, dated the 25th March, 1986, namely:- In the said notification, in the opening paragraph-(i) The existing Explanation shall be numbered as Explanation I; and (ii) after Explanation I as so numbered, the following Explanation shall be inserted, namely :- Explanation: .... Exemption to specified goods falling under Chapter 86. - In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts the goods o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not take any credit of the duty paid on any of the inputs used in the manufacture of the said wagons under Rule 56A or 57A of the 1944 Rules. 7. Sometimes the Railway Board fails to supply the required Free Supply Items in time. In such cases, the Company obtains payments from the Railway Board to overcome financial constraints against the incomplete wagons. For the sake of convenience such incomplete wagons are called Stabled Wagons". Such instances of stalling and/or holding up of further manufacturing process are however rare and occur only in exceptional cases when the Railway Board is not in a position to supply the required Free Supply Items as per Schedule. As soon as the remaining Free Supply Items are supplied by the Railway Board, the incomplete wagons (called Stabled Wagons) are completed and are then cleared on payment of appropriate central excise duty at the reduced rate in terms of the said Notification No. 452/86-C.E. 8. On February 25, 1991, the respondent No. 1 issued a Notice to show cause alleging, inter alia, that the said incomplete wagons called "Stabled Wagons" are independent and different marketable commodities and that the same are classifiable as parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents have not made out any prima facie case against the petitioner's company. 12. It is not necessary to go into any disputed question of fact to decide this writ petition. The petitioner is right in its contention that even if the allegations of fact made in the show cause notice are assumed to be true and correct even then the respondents have failed to make out any prime facie case against the petitioner and the show cause notice and the proceedings pursuant thereto must be struck down on the ground that the entire approach of the respondents is vitiated in law and without any legal basis. 13. The allegations made in the show cause notice, in substance are as follows :- "M/s. Texmaco Ltd., Sodepur Works, have manufactured/fabricated Bodies of open and covered wagons out of steel materials supplied by Rly Deptt. free of cost for mounting on the Railway Bogies in the manufacture of Railway Box Wagons falling under sub-heading No. 8606.00. Such Railway Box Wagons are cleared on payment of specific rate of duty vide Notification No 452/86-C.E., dated 20-11-1986 which denies the input duty relief u/r. 57A. But they have not paid any Central Excise duty on such bodies of wag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g under Chapter 86 including parts and components under sub-heading No. 8607.00 whereas Notification No. 452/86-C.E. applies only to finished wagons and coaches falling under sub-heading Nos. 8604.00,8605.00 and 8606.00. 15. All the conditions laid down for getting the benefit of the Notification No. 217/86-C.E. were fulfilled by the Company. The Company manufactures completed wagons, and pays duty on these products. Chapter 86 of Excise Tariff Act deals not only with completed wagons but also wagons which have not been completed and can be described as uncompleted wagons or stabled wagons. Both fall under Chapter 86 and are inputs and final products respectively specified in columns 2 & 3 of the Table to the said notification. The said inputs are used in the factory of production itself in the manufacture of the said final products, namely, the said completed wagons. The final products are not exempt from the whole of the duty nor are chargeable to 'nil' rate of duty. 16. The first proviso to Notification No. 452/86-C.E. requires that for availing the benefit thereunder no credit of duty on any of the inputs used in the manufacture of the goods namely coaches or wagons should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot confer any such power. Rules 56A and 57A on the other hand envisage a procedure to be followed whereby the cascading effect of levy of duty at different stages from raw material to finished products is avoided. Such effect is avoided by giving credit for the duty already paid at the earlier stages on the inputs against the duty payable on the final manufactured product. The credit for the duty paid at earlier stages cannot be granted by way of refund. Such duty paid at the earlier stages either on the raw materials or on components can only be adjusted only if such components or raw materials are used in the further manufacturing process. Such credit has to be utilised only for payment of the duty on the finished goods which would be made from such raw materials or components. The very fact of allowing the credit postulates a discharge of the liability of duty at the earlier stage. 21. The entire confusion appears to have been caused by reason of the marginal note given to the Notification No. 217/86-C.E. by a popularly used publication wherein it is mentioned "Exemption to Modvat items". This marginal note does not form any part of the notification itself. Secondly, it is well ..... X X X X Extracts X X X X X X X X Extracts X X X X
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