The proviso to sub-rule (2) of Rule 56a of the Central Excise Rules, 1944, is an exception to the main provisions of the rule, and a manufacturer is not entitled to the benefit of Proforma Credit Procedure unless the conditions specified in the proviso are satisfied.

Y. V. ANJANEYULU, J.

( 1 ) M/s Hyderabad Asbestos Cement Products Limited, hereinafter referred to as "the assessee" is petitioner No. 1 herein. Petitioner No. 2 is a shareholder in the above assessee-Company. They seek a writ of Certiorari to quash the order dated 30-9-1983 of the Assistant Collector, Central Excise, Hyderabad IV Division, Hyderabad, respondent No. 3 herein. They also seek directions to respondents Nos. 1 to 3 to grant the assessee the benefit of Proforma Credit Procedure under Rule 56a of the Central Excise Rules, 1944, hereinafter referred to as "the Rules" in respect of the Excise Duty/countervailing duty paid on cement and fiber used in the manufacture by the assessee of asbestos cement products at its factories at Sanatnagar, Ballabhgarh and Jasidh.

( 2 ) THE assessee Manufactures and sells asbestos cement products, such as sheets (corrugated or plain), pressure pipes and couplings etc. The Principal raw a materials used for the manufacture of the asbestos cement products are cement and asbestos fiber. In respect of these raw materials or components used in the manufacture, the assessee pays excise duty. Tariff duty is paid under Tariff Item 22f on asbestos fiber and under Tariff Item 23 of cement. In respect of imported asbestos fiber additional duty, i. e. countervailing duty, equal to Excise Duty, is paid.

( 3 ) THE products manufactured by the assessee are notified by the Central Government under Rule 56a (i) of the Rules as one of the specified excisable goods in respect of which the proforma Credit Procedure under Rule 56a (i) is applicable. The asbestos cement products are listed as Serial No. 11 of the list of Such Specified goods (Vide Notification No. 223/62, dated 29-12-1962 ).

( 4 ) THE assessee made an application dated 13-5-1983 to respondents No. 3 herein. In the said application the assessee requested that if may be permitted to avail the procedure under Rule 56a in respect of the aforesaid two duty paid materials and components received in its factory and used in the manufacture of asbestos and cement products. Respondent No. 3 rejected assessees application and refused to grant the assessee the Proforma of Credit Procedure under Rule 56a in relation to the specified manufactured goods to the extent of the excise duty/countervailing duty paid on cement and asbestos fiber. Respondent No. 3 held that the Rule 56a (2) of the Rules envisages that no credit of duty shall be allowed in respect of any material or component parts used in the manufacture of excisable goods, unless duty has been for each material or component parts under the same Tariff Item as per finished excisable goods. In other words, according to respondent No. 3, if the inputs and the finished goods fall under different Tariff Items, the benefit of Proforma Credit Procedure is not available. It was pointed out that asbestos fiber and cement, which are the raw materials used by the assessee in the manufacture of finished excisable goods, fell under Tariff Item Nos. 22f and 23 respectively for the purpose of payment of duty whereas duty is payable on the finished goods under Tariff Item No. 23c. In the above view, respondent No. 3 held that permission could not be granted to the assessee to avail credit of duty paid on the inputs, namely, asbestos fiber and cement used in the manufacture of cement products under Rule 56a of the Rules. The application filed by the assessee was accordingly rejected. The correctness of this order is challenged by the assessee in this writ petition.

( 5 ) WE have heard the learned counsel for the assessee, Sri K. Srinivasa Murthy, and Sri V. Jaggayya Sarma, learned Counsel for the respondents. Before referring to the contentions of the learned counsel for both sides, we may briefly trace the legislative history of Rule 56a of the Rules.

( 6 ) RULE 56a of the Rules was introduced on 8-12-1962. It deals with the special procedure for movements of duty paid or countervailing duty paid materials or c

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