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TMI Blog1986 (6) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/79 dated 4-6-1979 exempted all excisable goods in the manufacture of which inputs which had already paid duty under item No. 68 CET had been used, to the extent of the duty paid on the inputs. A quantity of tyre cord warp sheets, and input for the goods manufactured by the appellants was procured by the appellants from M/s. Sri Ram Rayons, Kota, Rajasthan. The latter had cleared the tyre cord warp sheets during the period 12-6-1978 to 27-6-1978 under gate passes Nos. 490, 498, 533, 537 and 540 without payment of duty. It appears that later on the warp sheets were classified under item No. 68 CET and the authorities demanded payment of duty leviable on them under item No. 68 CET from M/s. Sri Ram Rayons. The duty amounting to Rs. 56,128.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The notice was not in respect of the duty on tyres and tubes alleging short levy therein. Therefore, the contention that the demand should have been raised under Section 11 A and the demand was hit by limitation had no force, observed the Collector (Appeals). 3. The appeal was heard by the South Regional Bench at Madras. During the hearing the appellants had cited the decision of the West Regional Bench in M/s Finolex Cables Ltd., Pune v. Collector of Central Excise, Pune = 1983 ECR 2047 wherein, in somewhat similar circumstances, the Bench had held that the provisions of Section 11 A would be applicable. Noting that the basis of this finding was not given in the said order, the South Regional Bench was of the prima facie view that Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned counsel for the appellants submitted that since there was no allegation in the show cause notice about suppression of facts etc. on the part of the appellants, the extended time limit of five years would not, in any event, apply to the facts of the present case. On the question whether the provisions of Section 11 A at all applied to the case, Shri Koshy drew our attention to the West Regional Bench s decision in the Finolex Cables Ltd. case (supra). In this case, the Bench observed that Notification No. 201/79 had been issued under Central Excise Rule 8; it permitted, a manufacturer to avail himself of the credit of the duty paid on inputs towards payment of duty on the finished product. Therefore, Section 11 A would apply in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court - Where the procedure under Rule 56A has been made applicable, the manufacturer is entitled to credit in his account with the excise authorities for the excise duty that has been paid on raw material used in the manufacture of the finished product. The finished product can, then, be assessed to excise duty only at the full rate leviable thereon less the excise duty paid on the raw material. Where credit for the excise duty that has been paid on the raw material has been inadvertently or erroneously given e.g. because the procedure under Rule 56A has not been made applicable, the finished product is under assessed to excise duty and there is short levy. It is a matter of convenience that Rule 56A provides procedure where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed products. The ratio of the Bombay High Court judgment in the Zenith Tin Works Private Ltd. case, applies to the facts of the present case. 7. Another decision relied on by Sri Koshy is that of a Division Bench of the Andhra Pradesh High Court in Jay Engineering Works Ltd. v. Govt. of India and others, 1979 E.L.T. (J307). The question in this case again was of recovery of credit erroneously availed of in respect of a Rule 56A situation. The Court held that to such recoveries, the provisions of Rule 10 would apply. Again, this case pertains to a period prior to the amendment of Rule 56A to provide for a time limit for recoveries. 8. The provision applicable in the instant case would be Section 11 A since this section had come into fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In fact, the notice of short levy or recovery is not in respect of the duty short levied or short paid on the finished products, but in respect of a certain sum alleged to have been erroneously taken credit of and availed of. Whether the credit was taken on the appellant s own (but under intimation to the Superintendent) or it was allowed is immaterial since the fact is that credit had been availed of which the department felt was erroneously availed of. It is this which they were seeking to recover. Such a recovery, in the view of the Bombay High Court, which we respectfully follow, amounts to short levy which is what is sought to be recovered. In the result, the notice is hit by limitation and is set aside. In this view of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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