UNIVERSAL CABLES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner, Universal Cables Ltd , is a company which carries on the business of manufacturing various limits of wires and cables in its factory at Satna. The petitioner also owns a Properzi Mill in which it converts aluminium ingots into aluminium redraw rods technically known as properzi rods. By a letter dated, 11th May, 1970 the Assistant Collector, Central Excise, Jabalpur, granted to the petitioner permission to avail of the procedure of Rule 56-A of the Central Excise Rules, 1944, made under the Central Excises and Salt Act. 1944. Between 24th September, 1970 to 3rd November, 1970 the petitioner received 12 consignments of duty paid aluminium ingots manufactured by the Hindustan Aluminium Co. Ltd. (Hindalco) for conversion into properzi rods. These consignments were sent to the petitioner by Messrs Metal Rolling Works Private Ltd. , Bombay, for and on behalf of Messrs Lallu Bhai Amichand Private Ltd. , Bombay. The Proper Officer, Central Excise, permitted the petitioner to take proforma credit of the duty paid on these consignments. After conversion of the ingots received under these consignments, the properzi rods were supplied to Messrs Lallu Bhai Amichand. The assessments of duty on properzi rods so manufactured were completed in 1970. In these assessments, the proforma credit of duty taken by the petitioner under Rule 56-A was not disputed. Nearly four years thereafter, the Collector of Central Excise, Nagpur issued on 15th February, 1974, twelve show cause notices to the petitioner in which it was stated that the proforma credit of duty taken by the petitioner in respect of the aforesaid 12 consignments of ingots was inadmissible. The Petitioner was required to show cause why a penalty under Sub-rule (4) of Rule 56-A be not imposed and why the unauthorised inadmissible proforma credit amounting in all to Rs. 1, 24, 144. 45 be not recovered from the petitioner. The petitioner replied to the show-cause notices. The Collector by 12 orders passed on 8th July, 75 imposed penalty to the due of Rs. 24,000/- (Rs 2000/- in each case ). The Collector further disallowed the proforma credit of duty Rs 1,24,144. 52 and ordered its recovery by adjustment in the petitioner's account current with the Collector and failing that by cash recovery from the petitioner. The petitioner thereafter filed this petition under Article 226 of the Constitution challenging the aforesaid orders and show cause notices.

(2.) RULE 56-A as amended by Rule 173-K and is so far as relevant reads as follows : * * * *

(3.) BY a Trade Notice No. 55/70, dated 20th July, 1970, the Collector of Central Excise communicated to the manufacturers the procedure laid down by the Central Board of Excise and Customs with regard to the movement of duty-paid material in the context of Rule 56-A. Sub-rule (3) (1) (b) of Rule 56-A requires that a manufacturer who is granted permission under Sub-rule (2) shall bring to the factory the duty-paid material in original packing "under the cover of A. R. I, or such other document as may be approved by the Central Board of Excise and Customs in this behalf" evidencing the payment of excise duty or the countervailing duty. The documents approved by the Board in this connection are the original Gate Pass in Form G. P. I, and failing that a certificate issued in accordance with the procedure given in the Trade Notice. The Gate Pass in form G. P. I, referred to here is the original Gate Pass of the primary manufacturer evidencing payment of duty and showing the name of the receiving manufacturer working under Rule 56-A as consignee. In a case where the consignment of duty-paid material moves first to another consignee and thereafter to a manufacturer working under Rule 56-Ar obviously the original Gate Pass in Form G. P. I, showing the name of the manufacturer working under Rule 56-A as consignee cannot be produced. In such cases, the instructions contained in the Trade Notice require production of a certificate from the Superintendent of Central Excise having jurisdiction over the factory or over the godown from where the goods are supplied to the manufacturer working under Rule 56-A. Further, Clause 7 of these instructions reads as follows: Where a manufacurer working under Rule 56-A receives duty paid materials or component parts without the cover of gate pass or a certificate mentioned above, the goods may be allowed to be taken in the stock of the receiving factory and also taken in use for further manufacture on the authority of an invoice issued by the supplier indicating the particulars of the original gate pass and/or the factory that he has applied for a certificate. In such cases proforma credit of duty may not be allowed until and unless gate pass G. P. I, or the certificate is produced. If the gate pass G. P. 1 or the certificate is not produced within one month of the receipt of the goods by such manufacturer, grant of proforma credit may be refused by the Superintendent having jurisdiction over such manufacturer after giving him an opportunity to explain the delay. "