1988 (7) TMI 235 - AT - Central Excise

Issues Involved:

1. Whether the appellants could be allowed the benefit of proforma credit in terms of the amended Notification 226/77.
2. Whether the demands raised in that context are maintainable in law.
3. Whether the levy of duty on processed fabrics amounted to double taxation.
4. Whether the Assistant Collector had the authority to review the earlier order of approval of the classification list.
5. Whether the appellants should have been allowed the benefit of Rule 56A and the amount of the set-off claimed could be considered as proforma credit.

Detailed Analysis:

1. Benefit of Proforma Credit in Terms of Amended Notification 226/77:

The appellants continued to avail the set-off of duty under the original Notification 226/77 even after the amendment by Notification 111/80, which deleted the provision for set-off. The appellants sought permission to avail proforma credit retrospectively for the period after the amendment. The Collector refused this permission, and the Tribunal confirmed the Collector's order, stating that this issue does not survive for consideration since the Tribunal's order has acquired finality.

2. Maintainability of Demands Raised:

The Assistant Collector issued show cause notices and confirmed the duty demand for the period after the amendment of the notification. The Collector (Appeals) upheld the demand, stating that Section 11A provides independent power to recover short-levy or short-payment. The Tribunal observed that the notification amendment was a new fact that came to light after the approval of the classification list, justifying the demand under Section 11A. The Supreme Court's judgment in Nat Steel Equipment Pvt. Ltd. supported the prospective modification of the classification list and upheld the demand for six months.

3. Levy of Duty on Processed Fabrics and Double Taxation:

The appellants argued that the levy of duty on processed fabrics constituted double taxation. However, the Supreme Court in Empire Industries upheld the levy of duty on processed fabrics, noting that the benefit of credit of duty paid on grey fabrics would be available to manufacturers of processed fabrics. The Tribunal, therefore, held that this issue was settled by the Supreme Court judgment.

4. Authority of Assistant Collector to Review Classification List Approval:

The appellants contended that the Assistant Collector could not review his own order of approval of the classification list. The Collector (Appeals) and the Tribunal noted that Section 11A allows for recovery of short-levy, and the amendment to the notification was a new fact that justified the demand. The Supreme Court, in similar cases, had upheld the prospective modification of classification lists and demands for six months.

5. Benefit of Rule 56A and Proforma Credit:

The appellants argued that they should have been allowed the benefit of Rule 56A, and the set-off claimed could be considered as proforma credit. The Collector refused this benefit for the past period, and the Tribunal confirmed this refusal. The Tribunal's order on this issue has acquired finality, and the appellants must seek relief in the appropriate forum if they desire.

Conclusion:

The Tribunal found no merit in the appeal and rejected it, upholding the demands raised by the Assistant Collector and the refusal of proforma credit benefit for the past period. The issues of double taxation and the authority to review classification list approvals were settled by higher judicial precedents, and the Tribunal's order on Rule 56A stood final.

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