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TMI Blog2015 (2) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of duty was not to be allowed if the final products are exempt. The intent was not to allow any such credit on the inputs used in the manufacture of a exempted final product. If the final product is exempted from whole of duty leviable thereon or is chargeable to nil rate of duty. However, upon manufacture if such final product is cleared either to a unit in a free trade zone or to hundred percent export oriented unit then the prohibition in rule 57C does not apply. This is really a substantive amendment. A free trade zone or units therein or exportoriented unit undertake activities which would facilitate the country in earning foreign exchange and which is considered extremely valuable. In that regard and to encourage such units to undertake the activities noted above, frequently, that this rule was amended. That was also enabling the suppliers of such duty free products and received in the free trade zone to claim credit on the basis of the clearances made. If such is the intent and purpose and the departure is specifically made from a particular date, then, such amendment cannot but be held to be prospective. In the light of the above discussion, we find that the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter Nos. 39 and 76 of the Central Excise Tariff Act, 1985 (for short the Tariff Act ). The appellants rely upon the Import Export Policy 1990-93 under which any supplies made in India / Kandla Free Trade Zone are considered as exports as per paragraph 206 (G) Chapter XVI of the Import Export Policy 1990-93. The appellants rely upon the duty exemption scheme under this policy. The appellants claim to have been the beneficiary of a Special Imprest Licence for import of exempt material for manufacture and supply of products to Kandla Free Trade Zone as per paragraph 204 (G) falling in Chapter XIX of the above Import Export Policy. Having obtained this licence on 18th September, 1991 the appellants rely upon Notification No. 33/90 Central Excise (NT) dated 5th September, 1990. The appellants submit that they received an order for supply of 320 lacs tubes to Hindustan Lever Limited at its Unit situate at Kandla Free Trade Zone. The appellants submit that HUL received the final product for home consumption as also for exports. They cleared the goods under bond or on nil rate of duty. The appellants further submit that after complying with the procedure prescribed under the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred the appeal to the Tribunal and which has been allowed partially by the impugned order. 6. Mr Prakash Shah, learned Counsel appearing on behalf of the appellants, firstly took us through Rule 57C as was prevailing when the show cause notices were issued. He points out that though the amendment has been incorporated on 1st March, 1992 it is clarificatory in nature. The intent was not to disallow credit on clearances to a Unit in Free Trade Zone or to a Hundred per cent export-oriented unit. In that regard, he relied upon Rule 191BB of the Central Excise Rules 1944. Mr Shah relied upon General Exemption No.21 which is applicable to excisable goods when brought into Kandla Free Trade Zone. He submits that this General Exemption No.21 has been in force and the intent thereof is very clear. The impact of the amendment to Rule 57C cannot but be held to be clarifying the position. In other words, according to Mr Shah, Kandla Free Trade Zone being notified as such and together with a exportoriented unit, the appellants having aided and facilitated an export, they were entitled to the benefit of Rule 57C as amended. The amendment was clarificatory in nature and hence had retrospec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal in the case of Kelkar Co. Ltd (supra) and distinguishes it. Mr Rao would submit that once the assessee is relying upon the amendment brought to Rule 57C with effect from 1st March, 1992 and terming it as clarificactory, then, it would not be open for it to argue that the exemption which the recipient HUL (Hindustan Uniliver Limited) was conditional. The recipient admittedly, received the goods duty free. The recipient received the goods, cleared from the factory or manufacturing unit of the assessee before us. The assessee cleared it as duty free. In such circumstances, any argument to the contrary and now canvassed should not be permitted. He submits that the amendment cannot be held to be clarificatory as exemption or exception in case of clearances to Free Trade Zone or export oriented unit was introduced for the first time in Rule 57C on 1st March, 1992. Any prior clearance and intended to be for use in this Free Trade Zone was not subject matter of the Rule earlier. Therefore, the amendment cannot be given retrospective effect. He would, therefore, submit that the appeal be dismissed. 11. With the assistance of Mr Shah and Mr Rao, we have perused the memo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely duty free. The receipt of inputs by HUL for manufacture in use and export may be duty free but all this is conditional. The condition is, if this goods received by HUL as duty free are not used in export, HUL would have to be pay duty on the same as if they have been cleared for home consumption. Such an argument, now forthcoming, would go somewhat contrary to the principal argument, namely, that the amendment and by which the words have been inserted in Rule 57C with effect from 1st March, 1992 are retrospective and not prospective. 15. The appellants cannot now fall back on any of the liabilities that were allegedly incurred or invited by HUL. It is the assessee's case of availment of credit and which is termed as wrongful or erroneous by the revenue that we are dealing with. In such circumstances, the alternate argument of Mr Shah need not be considered and should not detain us. 16. Now about his principal argument, Rule 57C, with effect from 1st March, 1992 reads as under: Rule 57C Credit of duty not to be allowed if final products are exempt. No credit of the specified duty paid on the inputs used [in the manufacture of a final product (other than those clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct. Thus, this Rule will not assist the argument that amendment to Rule 57C was retrospective. 19. Then, reliance placed upon Exemption Notification, General Exemption No.21 also cannot be of any assistance. In exercise of the powers conferred by Rule 8 (1) of the Central Excise Rules, 1944 read with subsection (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and in supersession of the Notification of the Government of India in the Ministry of Finance dated 11th December, 1971, the Government being satisfied that in public interest it is necessary to do so exempted excisable goods when brought into Kandla Free Trade Zone from the factories of their manufacture or warehouses situated in other parts of India for use by the industries located in the said zone for the production of goods or in connection with the production of goods or for packaging of goods intended for export or for supply to units situated in another free trade zone, export processing zone or hundred percent EOU. This is for manufacture of goods solely meant for export. That is to enable claiming exemption from duty of excise leviable on such goods under Section 3 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture of a final product , the words in the manufacture of a final product (other than those cleared either to a unit in a Free Trade Zone or to a hundred per cent ExportOriented Unit) shall be substituted; (ii) in the proviso to rule 57D, for the words in the manufacture of a final product , the words in the manufacture of a final product , the words in the manufacture of a final product (other than those cleared either to a unit in a Free Trade Zone or to a hundred per cent ExportOriented Unit) shall be substituted; (iii) in rule 57F, (a) after subrule (1), the following subrule shall be inserted, namely:- (1A) Notwithstanding anything contained in clause (ii) of subrule (1), the inputs in respect of which a credit of duty has been restricted in terms of proviso to rule 57A, may be removed subject to prior permission of Collector of Central Excise from the factory for home consumption on payment of duty of excise equivalent to the credit availed on such inputs. ; (b) after the second proviso to subrule (3), the following proviso shall be inserted, namely: Provided also that the credit of specified duty in respect of inputs used in the final products clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he clearances made. If such is the intent and purpose and the departure is specifically made from a particular date, then, such amendment cannot but be held to be prospective. 24. Reliance placed by Mr Shah on a similar attempt and made in relation to another Central Excise Notification No.217 of 1986 with effect from 1st March, 1992 will not be of any assistance. There Notification No.217 of 1986 was granting exemption to inputs manufactured in a factory of production in or in relation to the manufacture of final products from the whole of the duty of excise leviable thereon. This notification contained a proviso and namely that nothing contained in the notification shall apply to inputs used or in relation to the manufacture of final products which are exempt from the whole of duty of excise leviable thereon or is chargeable to nil rate of duty with effect from 1st March, 1992. Similar wording as to be found in Rule 57C was inserted and what we find is the inputs used in or in relation to the manufacture of final product other than those cleared either to a unit of free trade zone or hundred percent exportoriented unit which are exempt from the whole of the duty leviable there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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