1983 (5) TMI 244 - AT - Central Excise

Summary

Issues:
1. Denial of credit of auxiliary excise duty under Rule 56A for payment of duty on O.S.A.A.
2. Interpretation of the provisions of Rule 56A and Notification No. 99/66.
3. Whether auxiliary duty paid on optical bleaching agent can be utilized for the payment of duty on O.S.A.A.
4. Applicability of penal provisions under Rule 56A.

Analysis:

Issue 1: Denial of credit of auxiliary excise duty under Rule 56A for payment of duty on O.S.A.A.
The appeal was filed against the denial of the appellant's claim for credit of auxiliary excise duty under Rule 56A paid on optical bleaching agent for the manufacture of O.S.A.A. The authorities had denied the credit on the grounds that O.S.A.A. did not carry auxiliary duty of excise. The appellant contended that the denial was incorrect, arguing that auxiliary duty is collected as a percentage of the basic duty and should be nil when the basic duty is nil. The appellant sought permission to utilize the auxiliary duty paid on the optical bleaching agent towards the payment of duty on O.S.A.A.

Issue 2: Interpretation of the provisions of Rule 56A and Notification No. 99/66
The appellant relied on Notification No. 99/66, dated 17-6-1966, which reduced the basic duty on optical bleaching agent to nil when used for the manufacture of organic surface active agent. The appellant argued that the auxiliary duty should also be nil in such cases. The appellant emphasized that Rule 56A does not distinguish between types of duties for the purpose of granting credit and referred to relevant judgments to support their interpretation.

Issue 3: Utilization of auxiliary duty paid on optical bleaching agent for duty on O.S.A.A.
The department opposed the appellant's submissions, arguing that basic and auxiliary duties are separate, and the credit of auxiliary duty cannot be used for the payment of basic duty. The department contended that Rule 56A has penal provisions and supported the decisions of the Assistant Collector and the Appellate Collector. However, the Tribunal found that auxiliary duties are also excise duties, and the credit of auxiliary duty on the optical bleaching agent should be allowed for the payment of duty on O.S.A.A.

Issue 4: Applicability of penal provisions under Rule 56A
The department argued that Rule 56A has penal provisions and claimed that the denial of credit was correct. The Tribunal, however, held that after the issuance of Notification No. 4/78, dated 10-1-1978, the credit of auxiliary duty could be utilized for the payment of duty on any finished excisable goods. The Tribunal set aside the orders of the lower authorities and directed that the proforma credit of auxiliary duty paid on the optical bleaching agent be allowed for the payment of basic duty on O.S.A.A., thereby allowing the appeal.