1989 (1) TMI 131 - HC - Central Excise

Summary

Issues Involved:
(a) Entitlement to double benefit under Notification No. 46/70 and Rule 56-A (Notification No. 91/67).
(b) Effect of availing credit of duty on raw materials under Rule 56-A on the duty-paid status of raw materials.
(c) Interpretation of the phrase "has already been paid" in Notification No. 46/70.

Summary:

Issue (a): Entitlement to Double Benefit
The Petitioner, a manufacturer of aluminium extrude articles, claimed benefits under both Notification No. 46/70 and Rule 56-A (Notification No. 91/67). The Department issued Show Cause Notices demanding repayment, arguing that the Petitioner was not entitled to both benefits simultaneously. The Assistant Collector and subsequent appellate authorities upheld this view, leading to the Petitioner's appeal. The Court held that unless a Notification explicitly bars the benefit if another is availed, the assessee is entitled to both benefits. The Court found no such prohibitory clause in the relevant Notifications, thus allowing the Petitioner to claim both benefits.

Issue (b): Duty-Paid Status of Raw Materials
The Department contended that by availing proforma credit under Rule 56-A, the raw materials became non-duty paid, disqualifying the Petitioner from the benefit under Notification No. 46/70. The Court disagreed, stating that the proforma credit does not render the raw materials non-duty paid. The duty on raw materials was paid at the time of clearance, and the proforma credit is merely an accounting entry utilized at the stage of clearing the final product. Therefore, the raw materials retained their duty-paid status.

Issue (c): Interpretation of "Has Already Been Paid"
The phrase "has already been paid" in Notification No. 46/70 refers to the duty paid on raw materials at the time of their clearance from the factory. The Court clarified that this duty-paid status is not negated by subsequent availing of proforma credit. The duty on raw materials remains paid, fulfilling the condition for the concessional rate of duty on the final product under Notification No. 46/70.

Conclusion:
The Court concluded that the Petitioner is entitled to the benefits under both Notification No. 46/70 and Rule 56-A (Notification No. 91/67). The impugned Show Cause Notices and orders were set aside, and the Petition was allowed. The Rule was made absolute in terms of prayer Clause (b), with no order as to costs.