The appellants companytended that in case of proforma credit proce dure under rule 56 A of the Central Excise Rules, clarifica tion had been issued by the Collector of Central Excise, under trade numberice No.
Collectors order and the demands.
201/79 entitling the manufacturer to obtain credit of the duty of excise already paid on the inputs resulting in waste or by products or refuse which arose in the manufacture of excisable products which used the inputs that the trade numberice issued pertained to rule 56 A and number to the numberifi cation that the rule and numberifications were different enactments and the provisions of one companyld number be read into another even after 11th April, 1981 that the exemption was only in respect of duty on inputs in the manufacture of excisable goods and their waste, by product or refuse and that since methanol was number excisable, it was number eligible for set off of duty on the glycol companytent in its manufac ture.
13th May, 1981.
201/79 entitling the manufacturer to obtain credit of the duty of excise already paid on the inputs resulting in waste or by product or refuge which arose in the manufacture of excisable products which used the inputs.
It was the case of the revenue that prior to 1 Ith April, 1981 there was numberprovision in numberification No.
The classifica tion list submitted by the appellants was modified in terms of the said letter.
72 CE/80 dt.
In response to the appellants seeking set off the duty paid on ethylene glycol, they received a letter from the Assistant Collector of Central Excise, Ghaziabad, dated 6th August, 1980 by which the Asstt.
methanol results out of the reaction of DMT and glycol and that the Government always maintained parity between rule 56 A and numberification No.
Hence, it is the case of the appellants that from 11th April, 1981 even though some part of the input may be company tained in any waste, refuge or by product which is charge able to nil rate of duty, the credit of the duty paid on the inputs companyld number be denied.
On behalf of the appellant, however, it was companytended that glycol was used totally in the production of polyester fibre that methanol resulted out of the reaction of DMT and glycol and that the Government always maintained parity between rule 56 A and numberification No.
The period mentioned was 17.7.1979 to 10.4.1981.
Similarly, duty paid on ethylene glycol which was used for recovery of DMT was held number to be allowable while paying duty on polyester fibre.
The appellants were further directed to furnish the exact percentage of ethylene glycol companytent used companysumed in the methanol, the ethylene glycol residual waste and polyes ter fibre waste and that number to utilise the proforma credit or set off credit till the data was furnished and the same was authenticated by the Chemical Engineer.
201/79.
102/81 dt.
The question that the tribunal had to decide was whether the set off of duty paid on inputs was admissible only if the finished excisable goods manufactured therefrom, was number exempted from duty.
201/79 dt.
This waste is recycled with glycol for the recovery of DMT in DMT recovery plant, within the factory.
The excisable goods, namely, polyester fibre, were number wholly exempt from duty number chargeable to nil rate of duty.
The order companyered the period from 17.7.1979 to 10.4.
As mentioned before, the numberification was amended from 11th April, 1981 whereby the credit of the duty on any inputs was number to be denied to any waste, refuse or by product arising during the manufacture of the output irre spective of whether the waste, refuse or by product was chargeable to nil rate of duty or number.
By an order dated 17th November, 1981 the Asstt.
The aforesaid three appeals were decided by the Collec tor of Central Excise Appeals , by passing a single order dated 15th December, 1983, wherein he observed that the procedure under numberification No.
Hence, it was argued that the duty element in the quantity of glycol which was companytained in the glycol residual waster, polyester fibre waste and methanoi by product which was number excisable, did number qualify for credit which companyld be subsequently used for discharging duty liability on dutiable finished product.
23.6.1979.
Collec tor held that the appellants were entitled to credit of duty paid on the ethylene glycol only to the extent of the per centage companytent as determined by the Chief Chemical Engi neer, CRCL, New Delhi.
201/79 was materially the same as the procedure under rule 56 A and companysequently the amending numberification deemed to have retro spective effect was number, in the absence of any such indica tion, acceptable.
v. A.K. Bandyopadhyay Ors.,
Collector disallowing the set off of duty credit paid on ethylene glycol companytent in methanol and ethylene glycol waste and polyester fibre waste.
On behalf of the appellants, however, it was companytended that glycol is used totally in the production of polyester fibre.
590 592/1988 dated 18.8.1988 of the Customs Excise and Gold Control Appellate Tribunal, New Delhi in Appeal Nos.
The process of manufacture and the out companye of ethynol are number in dispute.
There was a second appeal preferred to the Collector of Central Excise, Delhi, against the order dated 17.11.1981 of the Asstt.
15,42,740.16 as set off which was inadmissible.
These were number exempted from the whole of duty of excise or chargeable to nil rate of duty whereas the sub rule pre scribed that the credit is admissible if the material is used in the manufacture of finished goods which are exempt from duty or are chargeable to nil rate of duty.
1980 ELT 146.
Hence, the entire set off of duty was to be allowed since numberpart of DMT produced was diverted for any other use other than production of polyester fibre number was it taken outside the factory.
It was submitted that since methanol was number excisable, it was number eligible for set off of duty on the glycol companytent in its manufature.
15.42,740.16.
was companytended on behalf of the revenue that prior to 11th April, 1981 there was numberprovision in numberification No.
20 1/79 was materially the same as the procedure under rule 56A and in the circum stances allowed all the appeals and set aside the Asstt.
On behalf of the appellants reliance was placed on the decision of the High Court of Bombay in Indian Aluminium Co. Ltd. Anr.
The provision company tained in numberification No.
The Tribunal was of the opinion that the Collectors observation that the procedure under numberification No.
Central Board of Excise Customs issued Circular No.
15,41,673.60 was inadmis sible.
The Tribu nal was of the opinion that the factual backgroundof the case before the Bombay High companyrt was different and there fore, it was of the opinion that the said decision was number applicable in the instant case.
Col lector held that numberproforma credit was allowable in respect of ethylene glycol for the following Methanol which is number excisable and is cleared without pay ment of duty b Glycol residual waste which was being destroyed by the appellants by throwing in the field and Polyester fibre waste which was used in the recovery of DMT and exempt from payment of duty under Central Excise Notification dt.
By a letter dated 27th November, 1981 the appellants were informed that set off for Rs.
1980 to the effect that proforma credit is permissible even where at an in termediate state of manufacture, a final product which is fully exempt from duty companyes into being, provided that the fully exempted product is companysumed in the production or manufacture of the finished product.
Allowing the appeals, this Court, HELD 1 On an analysis and companyparison of the numberifi cations No.
The Tribunal was of the opinion that the revenue was right that rule 56A and numberification No.
Aggrieved thereby, the revenue went up in appeal before the tribunal.
Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35L of the Central Excises Salt Act, 1944 hereinafter referred to as the Act against the judgment and order dated 18th August, 1988 passed by the Customs, Excise Gold Control Appellate Tribunal, New Delhi hereinafter re ferred to as the tribunal .
The appellants case was that this related only to ethylene glycol companytent in methanol.
It was further submitted that the rule and numberifications are different enactments and the provisions of one cannot be read into another even after 11th April, 1981 and the exemption was only in respect of duty on inputs in the manufacture of excisable goods and their waste, by product or refuge.
201/79, hence, the appellants were eligible to full set off.
By this order the set off of duty in respect of duty paid ethylene glycol was allowed from 11th April, 1981 onwards except in the case of ethylene glycol used companysumed in polyester waste used for recovery of DMT on the ground that this polyester waste was charge able to nil rate of duty.
During the companyrse of manufacture of polyester fibre, two basic raw materials DMT and Glycol interact and thereby certain waste companyes into existence.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Aggrieved thereby, an appeal against the said order to the Collector of Central Excise, Ghaziabad was filed.
By this amended numberification, a second proviso was added which provided that the credit of the duty allowed in respect of inputs companyld number be denied or varied on the ground that part of thee input was companytained in any waste, refuge or by product arising during the manufacture, irrespective of the fact that such waste, refuse or byproduce was exempt from the whole of duty of excise leviable thereon or was chargeable to nil rate of duty.
In the premises, the Tribunal allowed the appeals, of the Revenue.
From Order No.
19th May, 1976.
A third appeal was filed before the Collector Appeals against the duty demand of Rs.
102/81 was number available prior to 11th April, 1981 it was submitted on behalf of revenue.
Thereafter, classification list was filed claiming set off of duty on ethylene glycol falling under tariff item 68 under exemption numberification No.
The main companytentions of the appellants were that the ethylene glycon received in the factory after payment of duty was companysumed in the manufacture of polyester fibre only.
Consequently, since the ethylene glycol companytent in the methanoi, wherein the ethylene glycol companytribute only H positive and number OH negative ions, the amount of inadmissi ble set off would stand reduced to Rs.90,749,76.
Thereafter, the appellants received a letter dated 23rd April, 1983 from the Superintendent of Central Excise which stated that the stand of the appellants that the ethylene glycol companytribute only H positive and number OH negative, has been accepted by the Chief Chemical Engineer, CERL, New Delhi.
283/ 84 D. Lakshmikumaran, Madhava Rao and V. Balachandran for the Appellant.
201/79.
201/79 as amended by numberi fication No.
By a subsequent letter of the Superintendent of Central Excise, Ghaziabad, dated 17th December, 1981 it was stated to the appellant that they had received Rs.
The tribunal after examining the aforesaid companytentions numbered the companytention of the parties.
E 375/84 D, S.A. No.
398890 of 1988.
It was further submitted that the trade numberice issued by Pune Collectorate pertained to rule 56 A only and number to the numberificaion.
In the present case, the excisable goods, namely, polyester fibre were number wholely exempt from duty number chargeable to nil rate of duty.
102/81 dated 11th April, 1981 is as follows Provided also that credit of the duty allowed in respect of the inputs shall number be denied or varied on the ground that part of such inputs is companytained in any waste, refuse or by product arising during the process of manufacture of the said goods, irrespective of the fact that such waste, refuse or by product is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty or is number mentioned in the declaration referred to in the Appendix to this numberifica tion.
178/77 Central Excise, dated the 18th June, 1977, the Central Government hereby exempts all excisable goods hereinaf ter referred as the said goods , on which the duty of excise is leviable and in the manufacture of which any goods falling under Item No.
991/88 D 992/88 D with C.O. No.
The appellants claimed set off of duty on ethylene glycol used in the manufacture of polyester fibre under numberification No.
K. Ganguli and P. Parmeshwaran for the Respondent.
The appellant was at all relevant times engaged in the manufacture, inter alia, of polyester fibre man made failing under tariff item 18 of the erstwhile Central Excise Tariff.
The numberification No.
68 of the erstwhile Central Excise Tariff received by the appellant and used in the manufac ture.
201/79 dated 4.6.79, mentioned hereinafter, exempted, according to the appellant, all excisable goods on which duty of excise was leviable and in the manufacture of which any goods falling under tariff item 68 had been used, from so much of the duty of excise as was equivalent to the duty of excise paid on the inputs.
68 of the first Schedule to the Central Excises and Salt Act, 1944 1 of 1944 hereinafter referred as the inputs have been used, from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs Provided that the procedure set out in the Appendix to this numberification is followed Provided further that numberhing companytained in this numberification shall apply to the said goods which were exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty.
The amending numberification No.
In the manufacture of the aforesaid, the appellant was using, amongst other inputs, ethylene glycol and DMT Dimethyl Tetraphthalate duty paid ethylene glycol falling under tariff item No.
201/79 were differ ent enactments and the amendment to one companyld number be read into the other.
20 1/79 prior to 1 Ith April, 1981 in so far as relevant for the present purpose was as follows Set off of duty on all exciseable goods on use of duty paid goods falling under Item 68 Tariff Items I to 68 In exercise of the powers companyferred by sub rule 1 of rule 8 of the Central Excise Rules, 1944, and in supersession of the numberification of the Gov ernment of India in the Ministry of Finance Department of Revenue No.
