GRASIM INDUSTRIES LTD. Vs. CCE

JUDGEMENT

(1.) The appellant manufactures wood pulp which is liable to Central Excise duty under item 68 of the erstwhile Central Excise Tariff and uses it as inputs in the manufacture of Viscose Staple Fibre. Under Notification No. 201/79 dated 4.6.79, exemption was allowed on final product equivalent to the duty of excise already paid on components or raw materials falling under item 68 and used in the manufacture of final product. Appellant availed of this facility in respect of Viscose Staple Fibre produced by it. On 1.3.86 Notification No. 201/79 was rescinded. Under the impugned proceedings, lower authorities have demanded an amount of about Rs. 45 lakhs from the appellant on the ground that the benefit taken by the appellant as on 1.3.86, was in excess of the benefit available to it with regard to the duty paid on wood pule used by them. The basis of computation was that the appellant had a particular stock of wood pulp and Viscose Staple Fibre manufactured out of wood pulp as on 1.3.86; but duty amount outstanding in the set off account is much less than the duty paid on the wood pulp in stock as well the wood pulp present in the Viscose Staple fibre. Therefore, it has been held that the set off utilization was disproportionate to the duty payable on the wood pulp vised in the production of the staple fibre removed. The appellant resisted the claim based on several decisions of Courts and Tribunal and also contested the demand on the ground of time bar; but to no avail. The adjudicating and appellate authorities relied on Clause 10 of the scheme under Notification No. 201/79 and held that the demand was justified. The present appeal challenges this finding.

(2.) The contention of the appellant is that they have correctly claimed and utilised the set off available under Notification No. 201/79 during the period when that notification was in force. It is being contended that there was no one -to -one co -relation between duty paid on the raw material used in the production of final product and the set off of duty to be availed of. It is, therefore, contended that the set off was correctly availed of during the validity of the notification and the set off once availed of cannot be claimed back when the notification is rescinded. The appellant has also submitted that this legal position remains settled by the decision of this Tribunal in the case of Commissioner of Central Excise Rajkot v. Ashok Iron & Steel Fabricators, 2002 (140) ELT 277 and the decision of this Tribunal under Order No. C -III - - 716 to 729 WZB/2003 dt. 17.4.2003 in the case of Shilpa Rerollers Ltd. v. CCE, Nagpur in Appeal No. E/1847/2002 Mum etc.

(3.) We have perused the records and have considered the submissions made by both sides. The issue that arises for consideration is whether set off availed of under Notification No. 201/79 was required to be returned, upon the rescinding of that notification on account of the fact that the set off utilised was in excess of the duty payable on the quantity of raw material utilised in the manufacture of final products already removed. We find that this issue had come up for consideration before the Apex Court, High Courts and this Tribunal time and again. A Larger Bench of this Tribunal considered the correct legal position and held in the case of CCE, Rajkot v. Ashok Iron and Steel Fabricators (supra) that the credit that had been correctly availed and utilised cannot be reclaimed on the basis that some inputs remained in stock. This decision was rendered after considering the decision of the Apex Court in the case of Super Cassettes Industries Ltd. v. UOI, 1997 (94) ELT 302 (All.) and other decisions. The appeal against this decision has been dismissed by the Apex Court reported in 2003 (356) ELT A212 (SC). We find that appellants' case is covered by the ratio of the decision of the Larger Bench of this Tribunal, notwithstanding the fact that appellant was availing of the exemption under Notification No. 201/79 and not facility of Modvat scheme. In this legal view, demand made under the impugned order is not sustainable. The apart, the lower authorities were also in error in relying on condition 10 of the Notification No. 201/79 for claiming the amount, inasmuch as that condition related to a manufacturer desiring to "discontinue availing of the exemption" and not to a situation when the notification itself is rescinded.