2001 (5) TMI 316 - AT - Central Excise

Summary

Issues involved:
Appeal against Order-in-Appeal No. 42/85 regarding eligibility for benefit of proforma credit under Rule 56A for duty paid on raw materials used in manufacturing asbestos cement products.

Detailed Analysis:

1. Background and Appeal Basis:
The appeal arose from Order-in-Appeal No. 42/85 passed by the Collector of Central Excise (Appeals), Madras, concerning the appellant's eligibility for proforma credit under Rule 56A for duty paid on raw materials used in manufacturing asbestos cement products. The appellant's application for this credit was rejected by the Assistant Collector, leading to the appeal.

2. High Court Order and Supreme Court Decision:
The High Court of Karnataka, in response to a writ petition, directed the appellant to file an appeal before the Tribunal. The appellant cited a Supreme Court decision in the case of Hyderabad Industries Ltd. v. U.O.I., which clarified that imported asbestos fiber is not liable to duty under Section 3 of the Central Excise Act. The Supreme Court also ruled that no additional duty could be demanded or refunded if already realized.

3. Interpretation of Legal Provisions:
The Supreme Court emphasized that for attracting additional duty on imported manufactured articles, actual production in India is not necessary. It was noted that the levy of additional duty is to counterbalance excise duty leviable on similar articles produced in India. The Court clarified that if an article cannot be subjected to excise duty due to non-production or manufacture, no additional duty can be levied on its import.

4. Final Decision and Disposition:
After considering the Supreme Court's ruling, the Appellate Tribunal concluded that imported asbestos fiber is not subject to duty under Section 3 of the Central Excise Act. Consequently, the appellant was deemed ineligible for proforma credit under Rule 56A. Therefore, the appeal was disposed of in favor of the Revenue, denying the appellant the credit sought for duty paid on raw materials.

In summary, the judgment clarified the non-liability of duty on imported asbestos fiber under the Central Excise Act, leading to the appellant's ineligibility for proforma credit under Rule 56A. The decision was based on the interpretation of legal provisions and the Supreme Court's ruling, emphasizing the absence of duty liability on imported articles not produced or manufactured in India.