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TMI Blog1999 (6) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed a penalty under Rule 173Q. 2. It will be appropriate for us to consider separately the liability (the liability) to tow on the different grounds referred to in the order. We shall first consider together the case of tow cleared under Rule 191BB and used in the manufacture of products which are cleared for export without payment of duty including tow consumed in the manufacture of PSF so cleared for export without payment of duty. 3. The assessee had contended before the Commissioner that the clearances in each of these cases would be covered by sub-clause (3) of the proviso to sub-rule (1) of Rule 9 and Clause (4) of Rule 49. The relevant provisions of Rules 9 and 49 are reproduced below : Rule 9. Time and manner of payment of duty. - (1) No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these Rules or as the Collector may require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such procedure as the Collector may specify in this behalf.] [(2) If any excisable goods are, in contravention of sub-rule (1), deposited in, or removed from, any place specified therein, the producer or manufacturer thereof shall pay the duty leviable on such goods upon written demand made (within the period specified in Section 11A of the Act) by the proper officer, whether such demand is delivered personally to him, or is left at his dwelling house, and shall also be liable to a penalty which may extend to two thousand rupees, and (such goods) shall be liable to confiscation.] [Explanation. - For the purposes of this rule, excisable goods produced, cured or manufactured in any place and consumed or utilised - (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity; Whether in a continuous process or otherwise, in such place or any premises appurtenant thereto, specified by the Collector under sub-rule (1), shall be deemed to have been removed from such place or premises immediately before such consumption or utilisation.]" Rule 49. Duty chargeable only on removal of the goods from the factory premises or from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other commodity which - (i) is excisable goods specified by the Central Government by notification under sub-rule (1) of Rule 56A, [(ii) is classifiable under heading No. or sub-heading No. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as may be specified in the notification issued under sub-rule (1) of Rule 56A, and] (iii) is neither exempt from the whole of the duty of excise leviable thereon nor is chargeable to nil rate of duty.] Explanation. - For the purposes of this rule, excisable goods made in a factory and consumed or utilised - (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity, whether in a continuous process or otherwise, in such factory or place or premises specified under Rule 9 or store-room or other place of storage approved by the Collector under Rule 47, shall be deemed to have been issued out of, or removed from such factory, place, premises, store-room or other place of storage, as the case may be, immediately before such consumption or utilisation.]" 4. The contention of the manufacturer before the Commissioner and reiterated before us is that the goods which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.C.E. - 1995 (77) E.L.T. 256 and the Delhi High Court judgment in Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise, Mirzapur - 1981 (8) E.L.T. 642. The Tribunal accepted this contention. It said that the East Regional Bench had held in Orissa Synthetics Ltd. that removal of final product without payment of duty under Rule 191BB was not clearance of goods either exempted or at nil rate of duty and hence not attracting the provisions of Rule 57C. It noted that the Tribunal in deciding C.C.E. v. Hindustan Aluminium Corporation Ltd. v. Supdt. of Central Excise apply the same view with regard to Modvat credit under Rule 56A similar to the provisions of Rule 57C in the case of the goods cleared without payment of duty after export under Rule 191B and Rule 191BB. It held that on the ratio of these decisions the Delhi High Court judgment in Hindustan Aluminium Corporation Ltd. v. C.C.E. - 1981 (8) E.L.T. 642 and views of the Board itself it could not be said that removal in question attracted the scope of Rule 57C. They declined to accept the prayer made by the advocate for the department to reconsider these two decisions and not applied the ratio. 8. The ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise - 1981 (8) E.L.T. 642, the question that the Delhi High Court found raised was whether the goods which were exported under bond were liable to payment of excise duty totally exempted. The petitioner before the Court had exported aluminium without payment of duty under a bond given under Rule 13. Notice was issued to it claiming the differential duty between duty leviable on aluminium under the tariff and the amount notified as rebate by notification issued under Rule 12. The assessee contended that by virtue of the provisions of Rule 13 which was independent of Rule 12 the goods could be exported from bond without payment of duty and the notification issued under Rule 12 would not apply to such clearances. The Court did not accept this contention. It said that Rules 12 and 13 are supplementary and deal with the same matter and the goods exported out of India. The difference between Rules 12 and 13 was only the mode and manner of payment of duty, Rule 12 covering cases of export of goods cleared on payment of duty on which rebate would be available and Rule 13 covering the cases where goods are exported under bond without payment of duty. Where goods are exported under Rule 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eared for making the yarn exported cannot therefore be considered to be goods exempted from payment of duty. 14. It is no doubt true that the Tribunal s decisions were on the applicability of Rule 57C relating to Modvat credit taken on inputs. In Machine Buildings v. C.C.E. - 1996 (86) E.L.T. 576, the Tribunal had, while construing the provisions of the orders of the Government of India issued under Rule 57G relating to deemed credit, interpreted the words wholly exempted from payment of duty as taking in cases of unconditional exemption of the whole of the duty payable and also conditional exemption of such duty were the conditions were satisfied. The Tribunal in that order, however was not concerned with goods which were exported. It considered in para 19 only four contingencies in which duty was not paid - this being were no nil rate of duties prescribed in the tariff; goods are wholly exempted; not cleared by the manufacturer and cleared clandestinely without payment of duty; the case of goods which were exported without payment of duty was not considered at all. The Tribunal did not consider the decision in Reliance Industries Ltd. v. C.C.E. or the other two decisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty has to be paid either at the tow stage or at the PSF stage, and that therefore the exemption is in respect of duty which will ultimately be relatable to PSF. Advocate for the appellant relies upon the decision in Indian Organic Chemicals Ltd. v. C.C.E. - 1997 (91) E.L.T. 180. 17. The question before the Tribunal in the decision cited by the appellant was the same one with which we are now concerned the duty payable on tow from which PSF was manufactured and cleared under Notification 191/85. The assessee claimed the benefit under Notification 84/87 which exempts tow from payment of duty if used in the manufacture of PSF cleared on payment of duty. The department has denied this benefit on the ground that the fibre was cleared under an exemption notification without payment of duty. The contention raised on behalf of the assessee was that demanding duty on the tow will defeat the object of the notification which was to supply fibre without payment of duty as a measure of social welfare. It was further contended that Notification 76/92 issued on 1-7-1992 exempting tow used in the manufacture of PSF cleared under Notification 191/85 was only clarificatory in nature and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85. Notification 76/92 amended not by Notification 191/85 but by Notification 53/95. This notification again has no direct relation to the Notification 191/85. The view that the object of the notification was to subserve the same purpose as that of Notification 191/85 may or may not be correct. Even if it is correct, it does not confer a retrospective operation upon Notification 76/92. This conclusion of the Bench therefore, in our view, requires reconsideration. The question of the liability to duty on such goods as was supplied under notification therefore will on merits have to await the result of that reconsideration if the demand is sustainable on limitation. 21. The question of limitation has now to be considered. The notice to show cause which demanded duty is dated 10-2-1994 and was issued for clearances between 25-7-1991 and 30-6-1992. It invoked the extended period contained in the proviso to Section 11A(1) on the grounds that there is no allegation of mis-statement, misdeclaration or suppression; previous notices were on the same ground have been issued and that factory was throughout under physical control. The Supreme Court judgment in C.C.E. v. HMM Ltd. - 1995 (76) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed because of the contravention of the provisions of the Acts and Rules alleged. The notice to show cause cites Section 6 of the Act, Rules 9(1), 52A, 53, 54 and 174. Section 6 of the Act and Rule 174 related to licensing provided that any person manufactures excisable goods must be licensed. It is not denied that the appellant was licensed for manufacture of excisable goods. Rule 9(1) prescribes payment of duty before goods are removed. Rule 52A provides for issue of gate passes. Rule 53 prescribes maintenance of the daily stock account. Rule 54 provides for the monthly return. Sub-rule (2) of Rule 9(1) itself provides that any contravention of Rule 9 provides for recovery of duty on goods removed without such payment within the period specified in Section 11A of the Act. Thus, the mere fact of contravention of Rule 9(1) would not justify invoking the extended period. If that were the case, in every case where duty is demanded, either on the ground that it was short levied or not levied, the provisions of Rule 9(1) would apply and hence the extended period would be available. This leads us to rules relating to issue of gate passes and filing of returns. The object of these returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section, delivery or loading. Challenge of stock must be conducted and checks made from account. 26. Specific checks are prescribed in what are called commodity supplement relating to a particular industry. 27. If the checks were carried out in the manner prescribed, by the departmental officers having jurisdiction, it is impossible for them not to be aware that the appellant was manufacturing and clearing tow and waste, and that such clearance was without payment of duty. This is the same conclusion that has been arrived in various decisions of this Tribunal cited by the appellant to the effect that the extended period contained in proviso to Section 11A (1) would not be available in the cases of factories under physical control. It is however true that the question in those decisions did not revolve around the point now canvased by the department i.e. the contravention of the rules has to be treated on a different footing. We must, in this context, refer to the judgment of the Supreme Court in Pushpam Pharmaceutical Co. v. C.C.E. - 1995 (78) E.L.T. 401. The Court noted in that judgment that suppression of facts referred to in the proviso to Section 11A(1) was a mildest expr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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