9911796707
TMI Blog1991 (6) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... of both the kinds viz. imported as well as indigenous in the manufacture of the aforesaid dyes. We are told that now the petitioner has discontinued manufacturing of the aforesaid items. The Central Government in exercise of its powers under Rule 8(1) of the rules had issued notification dated 20-4-1961 which was subsequently amended from time to time granting certain exemptions. That notification is at annexure D to the petition. It is captioned `Exemption notification relating to set off of Countervailing duty'. It deals with dyes made from countervailing customs duty paid intermediates and states that they are exempted from excise duty equivalent to the duty already paid. The notification then proceeds to recite that in exercise of the powers conferred by Rule 8(1) of the Rules, the Central Government hereby exempts synthetic organic dyestuffs manufactured wholly or partly out of the imported intermediates, from so much of the duty of excise leviable thereon as is equivalent to the amount of the countervailing customs duty paid on such imported intermediates. This notification underwent an amendment on 16-6-1980 by amendment Notification No. 109/80-C.E. By the said amendment, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit of countervailing duty shall be allowed in respect of any material or component parts used in the manufacture of finished excisable goods, if countervailing duty has been paid in respect of such material, or component parts, as fall under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944)." The petitioner's contention is that benefit of the exemption notification at annexure `D' is not lost by the finished product viz. S.O. dyestuffs manufactured by the petitioner even though the material or components parts used in the manufacture of this finished excisable goods fell under T.I. 68 of the First Schedule. In short, it is contended that the proviso to exemption notification at Annexure D only imports procedural provision of Rule 56A but did not attract substantial provision in connection with no credit rule as envisaged by the second proviso of Rule 56A(2). 3. The aforesaid contention of the petitioner was not found favour with the departmental authorities, the respondents herein who have taken the view that after insertion of the aforesaid proviso to exemption notification at annexure D from 16-6-1980, the final product manufactured by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption from payment of excise duty subject to the conditions laid down therein and if these conditions are satisfied, the finished goods would earn exemption as provided therein. That, insertion of the proviso to the said notification on 16-1-1980 would make no difference. All that the proviso has provided is that in relation to exemption, the procedure set out in Rule 56A has to be followed by the concerned parties. That procedure deals with the method and manner of application and the competent authority before whom such application has to be moved. It has nothing to do with the substantive provision laid down in Rule 56A for earning benefit of the proforma credit separately under Rule 56A. The petitioner does not claim any benefit under Rule 56A at all. All that the petitioner claimed is the benefit of exemption notification. It was further submitted that the Central Tribunal in two decisions in the case of Sandoz (India) Ltd. v. Collector of Central Exicse, reported in 1988 (37) E.L.T. 299 and between the same parties reported in 1990 (50) E.L.T. 403 has in terms taken this view in connection with this very product in the light of this very exemption notification read with Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said exemption notification and from 16-6-1980 onwards, therefore, the petitioner's product S.O. dyestuffs lost the benefit of exemption notification issued under Rule 8(1) as it did not answer the requirements of procedure laid down by Rule 56A inasmuch as the second proviso to Rule 56A(2) disentitled the petitioner from getting credit of countervailing duty for the simple reason that countervailing duty was paid by the petitioner in respect of the raw material and component parts which fell under T.1. 68 and hence on the express language of the said proviso, no credit of countervailing duty would be available to the petitioner by the thrust of the said proviso to Rule 56A(2). It was also contended that as provided by Rule 56A(1), the said provision operated notwithstanding any other rule and hence notification issued under Rule 8 also got superseded by the provision of Rule 56A(1). It was, therefore, submitted that the stand taken by the respondent department while issuing the impugned communications at annexures B and C was quite justified and called for no interference. 7. We shall now proceed to deal with the moot question which has been posed for our consideration in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ambit of Rule 56A. It is true that under Rule 56A(1), S.O. dyestuffs are mentioned as specified excisable goods and consequently the special procedure laid down under Rule 56A for proforma credit has to be available for such products subject to the requirements of sub-rule (2) being complied with. A mere look at sub-rule (2) of Rule 56A shows that it consists of two parts, the first part deals with procedure to be followed by a party claiming benefit of the said procedure. An application has to be made by the manufacturer of excisable goods concerned. Application has to be made to the Collector. On the permission being granted by the Collector, the manufacturer will be permitted to receive material or pass on which countervailing duty has been paid. He could receive such goods in his factory. This is the procedure to be followed by the concerned manufacturer. When we turn to the proviso to Rule 56A(2), we find engrafted certain prohibitions against grant of such proforma credit in the circumstances covered by the proviso. These two provisos have been interpreted by the Division Bench of this court in Digvijay Cement (supra) as laying down no credit rule and being substantive pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read as under : "It is contended that once the Central Government specifies excisable goods for the purpose of benefit of Rule 56A as per sub-rule (1) thereof, the Collector, on the mandate of sub-rule (2) has to make available the benefit of the proforma credit procedure to such specified commodity subject to the conditions mentioned in sub-rule (3) of Rule 56A. Consequently, the fetters imposed by the proviso to sub-rule (2) cannot be projected in the working of sub-rule (2) of Rule 56A. It is not possible to agree with this contention for the obvious reason that the conditions mentioned in sub-rule (3) are all procedural conditions indicating how a manufacturer of specified excisable goods can apply for being given the benefit of proforma credit. But the proviso to sub-rule (2) of Rule 56A enacts substantive `no credit rule' and cuts across the general sweep of sub-rule (2) of Rule 56A. Consequently, even though the provisions laid down by the proviso may not be imposing any procedural conditions, as these provisions impose substantive fetters on the rights to earn benefit of proforma credit procedure qua any specified excisable commodity, these fetters enacted by the rule maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner from claiming any benefit of Rule 56A for the said product and no credit rule laid down by both the said parts of the first proviso would apply to the facts of the present case. Mr. Shah for the petitioner also conceded to this position and submitted that he cannot claim and does not claim any benefit directly under Rule 56A and his only contention is that benefit of the exemption notification which was available to his product all throughout had not stood withheld or rescinded only because the proviso was added to the said notification under which a manufacturer like the petitioner had to follow the procedural provision of Rule 56A for continuing to get benefit of the exemption notification during its currency till 1984. We find considerable substance in the aforesaid stand of the learned advocate for the petitioner. No proforma credit would ever be available to the petitioner's product under Rule 56A as the 2nd part of the very first proviso ruled out such benefit on the facts of the present case. It has been laid down by the first proviso to Rule 56A(2) that no credit of duty shall be allowed in respect of any material or component parts used in the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l under T.I. 68 as it is not in dispute that these components if not imported and were manufactured indigenously, would have attracted duty under T.I. 68. The petitioner claims no such benefit directly under Rule 56A. Consequently, it is not possible for us to read the provisions of the proviso to the exemption notification in the way the learned advocate for the respondents wanted us to read. In this connection, we may mention that the Tribunal in the case of Sandoz India Ltd. v. Collector of Central Excise, 1988 (37) E.L.T. 299 has taken the same view which we are inclined to take on the interpretation of the exemption notification in the light of the proviso engrafted therein on 16-6-1980. The said decision is rendered in connection with an identical commodity produced by the concerned manufacturer. In connection with the said product, it has been observed as under : "The only proviso to the notification relates to the Rule 56A procedure to be followed as aforesaid. The procedure provides for the mechanics of availing of the exemption and the extent of exemption given cannot be reduced or nullified by reading the prohibition of Rule 56A into it unless it was specifically warran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned advocate for the respondents to the effect that the non obstante clause in Rule 56A(1) overrides Rule 8. It is not possible to agree with this contention. All that this clause ensures is that if under any other rule a provision is made for a specified commodity to the effect that benefit of set-off will not be available to it on duty paid on inputs, such a provision will stand superseded by notification under Rule 56A(1). The purport of such a non obstante clause is to avoid otherwise head-on conflict between the two on competing and contradictory provisions operating in the same field. Such a clause cannot cover provisions operating in different fields. As seen earlier, Rules 8 and 56A operate in independent fields of their own. They do not overlap. Hence provisions of Rule 56(A)(1) cannot be said to have by themselves overridden Rule 8. It is not the contention of any one that Rule 8 notification has ever suggested that benefit of Rule 56A procedure will not be available to the petitioner's product which is specified under Rule 56A(1). Hence, the non obstante clause therein has no role to play on the facts of this case. Before parting with the aforesaid discussion, it is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that only procedural aspect of Rule 56A and not substantive provisions of the proviso to Rule 56A can be attracted for interpreting the exemption notification or for deciding eligibility of the concerned manufacturer manufacturing S.O. Dyestuffs for getting exemption under the said notification. These explanatory notes do afford a general background under which the said amendments were brought about in the exemption notification for achieving the intended purpose and these background facts also run parallel to the interpretation which has been placed by us on the exemption notification especially the proviso thereof and do not run counter thereto. 8. In view of the aforesaid discussion, therefore, the conclusion is inevitable that the communications issued by respondents Nos. 1 and 2 at annexures B and C were clearly misplaced and they run counter to the real scope and ambit of the exemption notification under Rule 8(1) and had proceeded on a total misconception of the real purport of this exemption notification read in the light of Rule 56A. Hence, these communications at annexures B and C are liable to be quashed and set aside. We order accordingly. Prayer (A) shall stand grante ..... X X X X Extracts X X X X X X X X Extracts X X X X
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