REXIN SEA INDIA Vs. UNION OF INDIA

JUDGEMENT

(1.) AS both the appeals have been preferred by common petitioner against common respondents, they were heard together and disposed of by this common judgment.

(2.) THE appellant applied to the Assistant Commissioner of Central Excise, Virudhunagar, seeking permission to utilise the excess credit available in the statutory RG 23-A account and the Central Excise Act, 1954. Having not permitted, while it challenged the rejection order dated 12th March, 1998, also challenged the validity of clause (3)of 2nd Proviso to Notification No. 5/94 C. E. (NT) dated 1st march, 1994, issued in exercise of powers conferred by Rule 57-A of the Central Excise Rules. Having not granted substantive relief by learned single Judge, the present two appeals have been preferred.

(3.) AS the case could be disposed of on a short point, it is not necessary to discuss all the facts, except the relevant ones, as discussed hereunder : the appellant is engaged in the manufacture of coated fabrics falling under heading 59. 03 of the Central Excise tariff Act, 1985. The essential raw material for making coated fabric is Poly Vinyl Chloride, which is an excisable article under heading 39. 04 of the schedule appended to the central Excise Tariff Act. The Government of India, since 1st March, 1986, introduced schemes vide Chapter V AA for the utilisation of the credit paid in respect of inputs and utilised in or in relation to the manufacture of the final product. The scheme was so made to ensure that the duty paid on raw materials is set off or utilised to reduce the duty payable on the manufactured product so that the manufactured produce, even while suffering full excise duty, may not be needlessly prejudiced by the escalation, consequent to the duty paid on the raw materials. Since 1st March, 1989, the textile fabrics were brought within the Modvat Scheme by Notification No. 10/89 CE (NT)dated 1st March, 1989 with the result that the duty paid on poly Vinyl Chloride was also made available to discharge the duty payable on the textile fabrics, including coated fabrics. The said notification was issued under Rule 57-A of the Central Excise Rules, 1944. It provides that the credit utilised for payment of duty on the final product for the inputs falling under heading 39. 04 shall not exceed rs. 3. 50 per sq. mt. , and the excess credit available under RG 23-A account shall not be refunded or adjusted or utilised for payment of duty under any excisable goods. The RG 23-A is an account prescribed by Rule 57-G for maintaining a record of duty paid on inputs with a record of credit utilised for payment of duty utilised on the product. Subsequently, notification No. 18/90 CE (NT) dated 16th may, 1990 was issued substituting Rs. 5. 25 sq. mt. , in place of Rs. 3. 50 per sq. mt. By another notification No. 39/91 CE (NT) dated 16th Dec. , 1991, Rs. 5. 25 was substituted by rs. 5. 50 per sq. mt. It followed by notification No. 5/94 CE (NT) dated 1st March, 1994, which by clause (3) of 2nd proviso, made the following stipulation :