Full Judgment Text
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PETITIONER:
LAL WOOLEN & SILK MILLS (P) LTD.
Vs.
RESPONDENT:
THE COLLECTOR OF CENTRAL EXCISE, CHANDIGARH
DATE OF JUDGMENT: 13/04/1999
BENCH:
A.P.Misra, R.P.Sethi
JUDGMENT:
DER
The short question raised for the assessee is
whether he is liable to pay excise duty on dyed worsted
woollen yarn when he has already paid the duty on the
worsted woolen grey yarn, if liable, whether he is entitled
for set off the difference of excise duty, which he paid for
the ’grey yarn’ while being taxed on the said dayed yarn?
The two Notifications imposing duty on the said two goods
are Notifications 235/76 and 236/76. It is not in dispute
for the first time separate rate of duties were imposed on
grey yarn and dyed yarn in 1966. Thereafter thought the
aforesaid Notifications different tariff values and separate
rates of duty were notified for the said two goods. In
spite of this the assessee continued to pay the differential
duty in view of the earlier practice without any objection
from the Department. It is only on 24th August, 1977 notice
was issued by the Department refusing such set off.
Department case is that woollen yarn is notified in the
schedule to Rule 56 A of the Central Excise Rules. Thus
under this Rule grant of proforma credit is permitted and
not any set off subject to the claim by the assessee under
sub-rule (2) of Rule 56A. As no such permission was
obtained by the assessee from the Assistant Collector under
Rule 56 A, thus the appellants were directed to show cause
why Central Excise Duty of Rs.4.08.789.96 should not be
recovered under rule 10 of the Central Excise Rules. The
Assistant Collector confirmed the said demand over-ruling
the assessee’s objections with reference to the past
practices. In appeal the Collector of Customs and Central
Excise (Appeals) New Delhi confirmed the order passed by the
Assistant Collector) New Delhi confirmed the order passes by
the Assistant Collector of Central Excise, Amritsar. The
Customs, excise and Gold (Control) Appellate Tribunal partly
dismissed the appeal of the assessee with majority of 2:1
relying upon the decision of this Court in Empire Industries
Limited Vs. Union of India (1985) 3 SCC. 314. Learned
counsel for the assessee attempted to distinguish this case
that the said decision related to ’cotton fabrics’ while our
case is of ’woollen yarn’. An attempt was made by the
learned counsel for the assessee that conversion of grey
yarn into dyed yarn did not amount to any manufacture hence
two separate duties are not leviable. We do not find any
merit in this submission. Admittedly both ’dyed yarn’ and
’grey yarn’ are covered by two separate distinct head of
tariff item with different duty. So this itself recognises
they to be two different goods with separate levy. In view
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of this it cannot be urged that there is no manufacture of
’dyed yarn’ from the ’grey yarn’.
Next the only short point pressed for decision is
whether appellant is entitled for set off under Rule 56A,
when he has not followed the procedure as laid down under
sub-rule (2) of the said Rule? It is true it is not in
dispute that assessee has paid the duty on both grey yarn
and dyed yarn. Assessee also qualifies for a proforma
credit in case he applies in terms of sub-section (2) of
Rule 56A. It is also not in dispute that assessee has not
applied and has not followed the procedure as contemplated
under sub-section (2) by making an application for proforma
credit. It is also true that the said rule was amended on
21st Feb.,1981 by introducing sub-rule 2B under which power
was entrusted to the collector both to condone the defect of
any procedure of sub-rule (2) and to confer benefit to such
assesses. But we find this rule was amended only on 21st
Feb.,1981 the period to which we are concerned is of the
year 1976-77. Hence, appellant cannot claim benefit of this
amendment. In view of this we do not find any error in the
Tribunal’s judgment . In view of this we do not find any
error in the Tribunal’s judgment when it did not grant set
off to the appellant. Admittedly, appellant never applied
or claimed for proforma credit of the differential amount,
hence claim was rightly rejected.
We are also informed the decision reported in 1985
(3) S.C.C. 314 Empire Industries Ltd. Vs. Union of India
on which the Tribunal relied has been upheld by the
Constitutional Bench in the case reported in 1989 (3) SCC
488. Hence for all these reasons we do not find any merit
in this appeal and is accordingly dismissed.