1983 (10) TMI 262 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 56A of the Central Excise Rules regarding proforma credit facility.
2. Classification of imported raw materials as resins or chemicals under Item No. 15A of the Central Excise Tariff Schedule.
3. Competency of the Asstt. Collector to withdraw permission under Rule 56A.
4. Retroactive application of Rule 56A(5) and Notification No. 104/79.
5. Discrepancy in classification and assessment practices between Bombay Customs and Madras Customs.
6. Jurisdiction of Central Excise authorities to re-open assessments done by Customs authorities.
7. Applicability of Central Excise Notification No. 178/77 for exemption of dutiable inputs under Item 68 CET.
8. Prohibition on tax authorities to deny consequences of their incorrect assessments.

Detailed Analysis:
1. The appeal involved the interpretation of Rule 56A of the Central Excise Rules regarding the proforma credit facility. The appellants had been availing themselves of this facility for countervailing duty on imported raw materials towards payment of duty on the finished product, Polyurethane Foam (P.U.F). The Asstt. Collector held that the concession under Rule 56A was not admissible to the appellants, leading to the withdrawal of the concession and a demand for re-crediting the proforma credit availed of by them.

2. The classification of imported raw materials as resins or chemicals under Item No. 15A of the Central Excise Tariff Schedule was in question. The appellants imported polyesters and polyether for manufacturing P.U.F. While Bombay Customs assessed these raw materials to countervailing duty as resins under Item No. 15A, the Central Excise authority in Hyderabad contended that they were chemicals, not eligible for the proforma credit facility under Rule 56A.

3. The competency of the Asstt. Collector to withdraw permission under Rule 56A was challenged. The appellants argued that only the Deputy Collector had the authority to order such withdrawal, as per a notification by the Board in 1981, which was after the withdrawal of their permission in 1978.

4. The retroactive application of Rule 56A(5) and Notification No. 104/79 was debated. The appellants contended that the demand, if any, could only survive for a specific period due to the absence of wilful misstatement or suppression of facts on their part.

5. The discrepancy in classification and assessment practices between Bombay Customs and Madras Customs regarding the imported raw materials added complexity to the case. While Bombay Customs treated the raw materials as resins, Madras Customs classified them as chemicals, leading to differing interpretations and assessments.

6. The jurisdiction of Central Excise authorities to re-open assessments done by Customs authorities was a crucial issue. The Tribunal noted that the Central Excise authorities in Hyderabad did not have the jurisdiction to re-assess goods already assessed by Bombay Customs, especially when the appellants had acquiesced in the assessment without protest or refund claims.

7. The applicability of Central Excise Notification No. 178/77 for exemption of dutiable inputs under Item 68 CET was raised. The appellants argued that if the raw materials were classified under Item 68, they would be eligible for the benefit of the notification.

8. Lastly, the judgment highlighted the prohibition on tax authorities to deny consequences of their incorrect assessments. The Tribunal emphasized that once an assessment had been finalized and accepted by the taxpayer, the authorities could not later re-open the assessment or demand re-crediting of availed benefits based on changed interpretations or classifications.