G.A. Brahma Deva, Member (J)

1. This is an appeal preferred against the Order-in-Appeal No. 1/CE/IND/91 dated 21-3-1991 passed by the Collector of Central Excise (Appeals), Indore.

2. The appellants had filed classification list No. 134/88-89 wherein they have classified M.S. angles of short length under Heading 7216.10 and M.S. defective Angles and plate under Chapter Heading 7216.10 but the same were approved under Chapter Heading 7216.90. The appellants had removed M.S. defective plates quantity 2.140 M.T. @ Rs. 365/- P.M.T., M.S. defective plates quantity 1.960 M.T. @ Rs. 385/- P.M.T. and M.S. Angles of short length @ Rs. 365/- P.M.T. Since higher rate of duty was in force at the time of removal, according to the department, duty was payable on these items in question at Rs. 500/- P.M.T. Rs. 600/- P.M.T., and Rs. 500/- P.M.T. respectively plus Special Excise duty as provided under Notification No. 64/89 dated 1-3-1989. The contention of the appellants that inputs on which credit was taken can be removed on payment of duty under Rule 57F(1) at the same rate of duty at which the credit was taken, was negatived by the authorities below and raised differential duty amounting to Rs. 19,778.11. Hence this appeal.

3. Shri Satya Sheel, learned Advocate, appearing for the appellants, submitted that Rule 57F(1) allows removal of inputs as such from the factory for home consumption on payment of appropriate duty of excise levied thereon. Once excisable goods have been cleared from the factory of the manufacture on payment of duty at the appropriate rate under Rule 9, the same cannot be subjected to any enhanced rate of duty when removed from the factory of the assessee who had kept the goods under Modvat Scheme since the Assessee is not manufacturer of the inputs. He drew my attention to Sub-rule (1) of Rule 57F of the Central Excise Rules, 1944 which reads as under :-

The inputs in respect of which a credit of duty has been allowed under Rule 57A may

(i) be used in, or in relation to the manufacture of final products for which such inputs have been brought into the factory; or

(ii) be removed, subject to the prior permission of the Collector of Central Excise, from the factory for home consumption or for export on payment of appropriate duty of excise or for export under bond, as if such inputs have been manufactured in the said factory:

provided that where the inputs are removed from the factory for home consumption on payment of duty of excise, such duty of excise, shall in no case be less than the amount of credit that has been allowed in respect of such inputs under Rule 57A.

He emphasised on the wordings used under Rule 57F(l)(ii) and said that it follows therefrom that where the goods are removed from the factory for home consumption on payment of duty of excise, such duty of excise would not be more than the amount of credit that has been allowed in respect of such inputs under Rule 57A. He said that under Rule 9A(ii) of the Central Excise Rules, the rate of duty and tariff valuation, if any, applicable to any excisable goods shall be the rate of valuation in force on the date of the actual removal of such goods. The fiction of the words "as if such inputs have been manufactured in the said factory" occurring in Clause (ii) of Rule 57F(1) is not applicable to the excisable goods which have been manufactured and cleared from the factory of the original manufacturer on payment of duty at the rate in force on the date of the actual removal of the goods in terms of Rule 9A(ii). He referred to the decision of the Tribunal in the case of H.M.T. Ltd. v. Collector of Central Excise, Chandigarh, reported in MANU/CE/0054/1989 : 1990 (45) E.L.T. 579 (Tri.), wherein it was held that the goods obtained under Chapter X Procedure of the Central Excise Rules, 1944 and subsequently sold as such for home consumption, are liable to duty on the value declared by the original manufacturer of the goods. He also cited the decision in the case of Mahin