KONARK TELEVISION LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE Demand cum Show Cause Notice issued by the Collector of Central Excise and Customs dated 1.2.1991, annexed as Annexure 2, and the Circular Letter of the Government of India, Central Board of Excise and Customs, dated 21,6.1988, annexed as Annexure 1, are being assailed in this writ application.

(2.) ACCORDING to the excise authorities, the petitioner Company has contravened the provisions of Rule 9(1) read with Rules 173 F, 57A, 57F and 173G of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules'), inasmuch as it has cleared the colour T.V. sets without payment of appropriate central excise duty by misutilising the Modvat credit. According to the authorities, the credit accrued to the petitioner on the inputs of black and white T.V. sets has been misutilised towards payment of duty on colour T.V. which has resulted in short payment of appropriate duty on colour T.V. sets during the period 1.4.1986 to 31.3.1990 to the tune of Rs. 1,13,45,614.31. The petitioner has, therefore, been asked under Annexure 2 to show cause as to why the amount of Rs. 1,13,45,614.31 (basic excise duty) and Rs. 2,68,771.70 (special duty) should not be recovered from the petitioner under Rule 9(2) of the Rules read with Section 11 A of the Central Excises and Salt Act (hereinafter referred to as the 'Act') and why penalty should not be imposed on the petitioner under Rules 9(2) and 173Q of the Rules. Annexure 1 is the Circular of the Central Board of Excise & Customs, Government of India, clarifying the application of Modvat credit to black & white T.V. and colour T.V. and it has been stated therein that the credit taken on inputs can be utilised towards payment of duty on the final products in the manufacture of which such inputs are used and, therefore, Modvat credit taken on the parts meant to be used for black & white T.V. cannot be utilised towards payment of duty on colour T.V. So far as Annexure 1 is concerned, broadly the petitioner's stand is that the said circular infringes upon the quasi judicial power of the authorities under the statists and accordingly is vitiated. So far as the denial of Modvat credit is concerned, broadly the stand of the petitioner is that the Central Government having notified the finished product to be 'television receiver' without making any distinction between colour T.V. and black & white T.V. and the petitioner havind paid excise duty while importing the inputs and thereby being entitled to the Modvat credit, it has availed of the said credit accrued in releasing the colour T.V. and there has been no infraction of any statutory provision thereby.

(3.) WE shall now notice some of the relevant provisions necessary for adjudicating the dispute. Rule 57A stipulate that credit is available on basic excise duty, special excise duty or additional duty under the Customs Tariff Act, 1975, paid on specified goods which are used in or in relation to the manufacture of specified final products. Rule 57A makes the provision applicable to such finished 'excisable goods' which is referred to as the 'final product' as the Central Government may by notification in the Official Gazette specify in this behalf for the purpose of allowing credit of any duty paid on the goods. 'Excisable goods' has been defined in Section 2(d) to mean, goods specified in the Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt. The expression 'final product' has not been defined in the Act, but is a terminology used in Rule 57A itself which is co terminus with the expression 'excisable goods' in respect of which the Central Government by notification in the Official Gazette has specified allowing the Modvat credit. Under the Central Excise Tariff, Chapter 85.28 describes 'Television receivers (including video monitors and video projectors), whether or not combined in the same housing with radio broadcast receivers or sound or video recording or reproducing apparatus'. The entire Chapter 85 deals with electrical machinery and equipments and parts thereof; sound recorders and reproducers; television image and sound recorders and reproducers and parts and accessories of such articles. So far as the heading contained in Chapter 85.28 is concerned, there is only one heading and the same sub heading under which 'television receivers' have been included and the duty payable is 50 per cent, There is no dispute that in the notification issued by the Central Government, namely Notification No. 177/86 CE, dated 1.3.1986, specifying Modvat items, the final product eligible for receiving the credit has been mentioned as in Chapter 85.28 so far as television sets are concerned.