IMPORTANT POINT
An assessee who accumulated credits to his accounts on account of the incentive Notification issued by the Central Government in exercise of powers conferred under Rule 57K of the Rules by the date of the recession of the said notification on 25th August, 1989 cannot make adjustment towards payment of duty in addition to the credits earned, pursuant to Notification dated 11th of October, 1989 simultaneously.

Headnote:Central Excise Rules, 1944-Rule 57-K-Notification No. 27/87 and Notification dated 11th October 1989-Money credit scheme-Utilisation of accumulated credit-Notification No. 27/87 rescinded on 25.8.1989 and Notification dated 11.10.1989 came to effect-Appellant claiming that they would be entitled to utilise accumulated credit under rescinded Notification and credit available under New Notification-Department holding that appellant not entitled to utilise credit available under both Notifications simultaneously and credit would be utilised for payment of duty on manufactured product which should not exceed Rupees one thousand Per. M.T. in terms of condition No. 3 of 1987 Notification-Held, Excise Authorities rightly dealt with the matter of utilisation of accumulated credit-No infirmity in the order of Department.
Held : Chapter AAA of the Rules contains provisions, providing for credit of money in respect of certain raw materials used in the manufacture of certain excisable goods. Rule 57K(1) itself stipulates accumulation of credit of money for use of inputs in the manufacture of final products can be availed of only, when a notification is issued by the Central Government and that notification itself would provide the rates at which credit could be accumulated and also allowing such credit to be utilised for payment of duty on the final products and this must be subject to the conditions, if any, stipulated in the very notification itself. In the aforesaid scheme of the provision, the notification issued by the Central Government in exercise of powers conferred under Rule 57K, plays an important role. If the notification that had been issued in the year 1987 is examined, it would appear that paragraph (iii) unequivocally, provides that the amount of credit utilised for payment of duty shall not exceed Rs. 1000/- per tonne of vegetable products on any individual clearance. It is thus clear that credits may be accumulated in favour of a manufacturer of vegetable products, pursuant to the notification on the basis of rates provided in the notification on the inputs and that credit could be utilised for payment of duty while clearing the final product and the accumulated credit will not ipso facto get exhausted or lapsed on the rescinding of the notification issued under Rule 57K of the Rules, and therefore, notwithstanding the rescinding of the notification issued in the year 1987 by the notification dated 25th of August, 1989, a manufacturer would continue to utilise the credit accumulated in his favour for payment of duty, even after the recession of the notification, but subject to the provision, contained in Clause (iii) of the notification, which granted the accumulation of credit and utilisation of the same for payment of duty. When a fresh notification is issued as in this case, the notification dated 11th of October, 1989, certainly the manufacturer would be entitled to accumulate credits on the basis of the said notification and would also be entitled to utilise the same for payment of duty on the final products, but even under that notification, the similar provision as in the earlier one, namely clause (iii) is there, indicating, that the quantity of credit utilised for payment of duty on any individual clearance of the final products shall not exceed rupees one thousand per tonne of vegetable products cleared. This being the position, we really fail to understand as to how a manufacturer can contend that he would be entitled to the advantages of both the notifications simultaneously in respect of one transaction for payment of duty, while clearing the transaction in question. (Para 7)

JUDGMENT

Pattanaik, J.-This appeal is directed against the Division Bench Judgment of Andhra Pradesh High Court in Writ Petition No. 4059 of 1994, wherein, following the earlier judgment of the said Court in Writ Petition No. 11311 of 1991, the High Court dismissed the writ petition.

2. The appellant is the manufacturer of hydrogenated oil. The appellant filed a Reference before the Assistant Collector, Central Excise, Kurnool, claiming that they would be entitled to utilise the accumulated credit, available to them under the Money Credit Scheme, as per Rule 57K of the Central Excise Rules, 1944 (hereinafter referred to as the rules ), at the time of rescinding of the Notification No. 27/87 as well as the credit available to them under Notification dated 11th October, 1989, issued by the Central Government under Rule 57K of the Rules. The Assistant Collector disposed of the said Reference by his order dated 9.10.91, holding that the assessee-appellant is entitled to appropriate the credit available to him on the date of recession of the Notification of 1987, which stood rescinded on 25th of August, 1989 as well as the credit which gets accumulated, pursuant to Notification dated 11th of October, 1989, but not entitled to utilise the credit available under both the Notifications simultaneously and, therefore, the credit would be utilised for payment of duty on the manufactured product, which should not exceed Rupees one thousand per M.T. It is because of this order, the appellant filed the writ petition in the High Court of Andhra Pradesh to stay the recovery of excise duty contemplated under Notice dated 14.10.98 issued by the Superintendent of Central Excise, Kurnool. The identical question raised by the appellant in the writ petition filed before the Andhra Pradesh having been answered against the assessee in another writ petition, which stood disposed of on 28.4.98, the present writ petition by the appellant also stood dismissed. Be it be stated that in disposing of writ petition No. 11311 of 1991 on 28.4.98, the High Court also came to the conclusion that the assessee is not entitled to adjust the available credits under Notification of the year 1987 as well as the Notification of the year 1989, simultaneously, and therefore, there has been no illegality committed by the Excise Authorities. The question for consideration, therefore is whether an assessee like the appellant, who accumulated credits to his accounts on account of the incentive Notification issued by the Central Government in exercise of powers conferred under Rule 57K of the Rules by the date of the recession of the said notification on 25th August, 1989 can make adjustment towards payment of duty in addition to the credits earned, pursuant to Notification dated 11th of October, 1989 simultaneously.

3. Under the Rules, more particularly, Rule 57K, the Central Government is empowered by Notification in the Official Gazette to allow credit of money in respect of certain raw materials used in the manufacture of certain excisable goods. The Notification required to be issued under sub-Rule (1) of Rule 57K must specify the finished excisable goods to which the provisions of the sections would apply as well as the rates at which the credit of money is to be given for the use of such inputs in the manufacture of final products. Under Rule 57N the credit of money allowed in respect of any inputs pursuant to notification issued under Rule 57K would be utilised towards the payment of duty of excise on the final products in relation to manufacture of which such inputs are intended to be used in accordance with the declaration filed under Rule 57-O. Rule 57-O provides the procedure to be observed by the manufacturer. In accordance with the provisions contained in Rule 57K, the Central Government issued the Notification dated 20.3.1987, which is extracted herein below in extenso for better appreciation of the point in issue in this case :

"Notification No. 27/87-CE., dated 1

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2000 Supreme(SC) 977

Cases Referred (3)