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TMI Blog2015 (3) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly provides that such S.S.I. units whose aggregate clearances in the preceding financial year have not exceeded two hundred lakhs shall be eligible to get the benefit of the said notification. Assigning a plain meaning to the language used in the Government Order dated 1st March, 1994, the rerollers who are eligible to get the benefit of the Notification No.1/93 and are availing exemption thereunder are eligible to get the benefit of deemed credit thereunder. Provision whereby the benefit of notification No.1/93 is limited to the aggregate value of clearances of specified goods to the extent of rupees seventy five lakhs relates to the extent of benefit that can be claimed under the said notification. However, the same is not an eligibility criteria for availing of the benefit of the said notification. A reroller who avails of the benefit of Notification No.1/93 is by dint of such fact eligible for the benefit of deemed credit under the Order dated 1st March, 1994 and the benefit under the said order is not qualified by the limit provided for availment of the benefit of Notification No.1/93. The decision of the Tribunal in the case of Digambar Foundary v. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals is whether the re-rollers whose aggregate value of clearances in the current financial year had exceeded ₹ 75,00,000/- and who were paying full rate of central excise duty as applicable to re-rollers in respect of clearances exceeding ₹ 75,00,000/- in the current financial year, could still avail of the benefit of the Government of India Order No.TS/36/94-TRU dated 1st March, 1994. In other words, whether they could continue with the benefit of deemed credit without production of documents evidencing the payment of duty even when they had ceased to avail of the benefit of Notification No.1/93-CE. 3. Tax Appeals No.56/2005 to 74/2005 which are filed at the instance of the assessees have been admitted on the following substantial questions of law: (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that whatever interpretation was put on Notification No.1/93 would affect the availment of the benefit of the notification and hence, whether the issue was not specifically mentioned in the show cause notice or not, would not be material? (2) Whether, on the facts and in the circumstances of the case, the Tribunal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Central Government had issued a Notification No.1/93 dated 28th February, 1993 exempting clearances made by a small scale industrial unit to the extent stated therein, having clearances not exceeding ₹ 2 crores in the preceding financial year. 7. The assessees on the basis of the said order availed the benefit of deemed credit. However, with respect to the credit availed by the assessees, show-cause notices came to be issued raising demand as regards the deemed credit availed by the assessees. Such demand was raised on the ground that re-rollable materials with regard to which deemed credit had been availed of had originated from breaking of ships, boats and floating structures and were obtained either partly or directly from the ship-breakers from their ship-breaking units which were situated in Customs area or through traders. It was alleged that as per proviso (2) to rule 57G(2), credit of duty could be allowed without production of documents evidencing payment of duty but the existence of such documents was necessary. It was also alleged that vide Finance Bill, 1994, Headings No.72.30 and 73.23 were omitted and with such omission, in fact, there did not exist an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the exemption which signifies making use of and taking advantage of currently . After the period of availment of the benefit and advantage is over, it could not be said that one is availing of the benefit or advantages. The Tribunal, accordingly, held that the re-rollers whose aggregate value of clearances in the financial year exceeded ₹ 75,00,000/- and when they were paying the applicable rate of excise duty on the clearances beyond the value limit of ₹ 75,00,000/-, were not eligible for the benefit of Ministry s Deemed Credit Order No.TS/36/94 TRU dated 1st March, 1994. Mr. Dave submitted that the expression availing of exemption in the deemed credit Notification dated 1st March, 1994 cannot be read to mean availing of concessional rate of duty. It was submitted that if the benefit under the said Notification was to be curtailed to the extent of ₹ 75,00,000/-, it would have been specifically so mentioned in the notification. According to the learned counsel, the condition that re-rollers availing the exemption under Notification No.1/93 would be entitled to the benefit of the order is only for identifying the manufacturers who would be entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /93. 9.1 It was submitted that thus, the exemption from payment of central excise duty continued for three decades till Notification No.64/94-CE dated 1st March, 1994 along with 388 other notifications including Notification No.202/88 came to be rescinded. According to the learned counsel, considering the fact that raw materials used by small scale manufacturers were not purchased from manufacturers on account of which they would not have documents evidencing payment of duty, the benefit of deemed credit came to be extended to the small scale manufacturers under the Notification dated 1st March, 1994 for a period of one year to adjust to the new regime. Thus, the period of one year during which the assessees were given benefit of deemed credit was in the nature of a buffer period. It was submitted that it was never the intention to limit the benefit of the Government of India order under rule 57G(2) of the rules to the extent of clearances of ₹ 75,00,000/- only. It was urged that in the aforesaid backdrop, the only construction that can be put on the expression availing of exemption has to be small scale manufacturers who in the previous financial year had clearances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been provided. It was submitted that the Government s aim to allow deemed credit vide deemed credit order (TS/36/94-TRU) is specifically to provide the benefit of deemed credit to re-rollers availing the Small Scale Industries Exemption under Notification No.1/93 and hence, as and when a manufacturer crosses the exemption limit, as provided in the said notification, he is not entitled to the benefit of deemed credit order dated 1st March, 1994. In other words, under the Notification No.1/93 different slabs have been prescribed, and an SSI is initially entitled to the benefit of deemed credit, but once it reaches clearances of more than ₹ 75,00,000/-, it is no longer entitled to the benefit thereunder. It was contended that the Himachal Pradesh High Court in the case of Sood Steel Industrial (P) Ltd. v. Commissioner of Central Excise (supra) has not considered the intention behind providing slabs in Notification No.1/93 and has arrived at an erroneous interpretation of the order dated 1st March, 1994. It was argued that the Himachal Pradesh High Court has read an eligibility concept in Notification No.1/93 which was not provided thereunder and that the court should have i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sees are entitled to the benefit of exemption under Notification No.1/93-CE, however, the benefit of deemed credit under the order dated 1st March 1994 is sought to be denied to them beyond aggregate value of clearances exceeding ₹ 75,00,000/-. According to the respondents, since the benefit of deemed credit under the order dated 1st March, 1994 is available only to assessees availing exemption under Notification No.1/93-CE, they are not entitled to the benefit of deemed credit beyond clearances of goods worth ₹ 75,00,000/-. 14. From the facts and contentions noted hereinabove, it is apparent that the goods manufactured by the assessees namely, bars and rods were exempted from payment of central excise duty right from the year 1963 till 1994 when the Notification No.202/88 dated 20th May, 1988 came to be rescinded with effect from 1st March, 1994. However, at the same time, while rescinding the said notification, the items falling under Tariff Heading No. 72 came to be brought within the purview of Notification No.1/93-CE effective from 1st April, 1994 whereby exemption for first clearances of specified goods up to the value of 30 lakhs and concessional duty thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of rule 57G(2) of the rules and more particularly to the second proviso thereto in exercise of powers whereunder, the above order has been passed. 16. Rule 57G of the rules makes provision for the procedure to be observed by the manufacturer and to the extent the same is relevant for the present purpose reads thus: RULE 57G. Procedure to be observed by the manufacturer.- (1) Every manufacturer intending to take credit of duty paid on inputs under rule 57A, shall file a declaration with the Assistant Collector of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the Assistant Collector may require, and obtain a dated acknowledgment of the said declaration. (2)A manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgment aforesaid, take credit of the duty paid on the inputs received by him: Provided that no credit shall be taken unless the inputs are received in the factory under the cover of a Gate Pass, and A.R.1, a Bill of Entry or any other document as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 7th July, 1992, as amended, the Central Government hereby directs that the ingots and rerollable materials of iron and steel purchased from outside and lying in stock on or after the 1st day of April, 1994 with rerollers, availing of the exemption under Notification No.1/93 Central Excises, dated the 28th February, 1993 will be deemed to have paid duty, and the credit of duty under Rule 57A of the said Rules in respect of such ingots and rerollable materials used without undergoing the process of melting, in the manufacture of goods falling under Chapter 72 or 73 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), may be allowed at the rate of ₹ 920/- per tpnne, without production of documents evidencing payment of duty. 2. This Order shall come into force on the 1st day of April, 1994. 19. Thus, what the above Order dated 1st March, 1994 envisages is grant of benefit of deemed credit to re-rollers availing of the exemption under Notification No.1/93. The next question that arises for consideration as to what meaning can be attributed to the words availing of exemption under Notification No.1/93 , which is the principal controversy arising in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho are eligible to get the benefit of the Notification No.1/93 and are availing exemption thereunder are eligible to get the benefit of deemed credit thereunder. 22. The question that next arises for consideration is as to whether the limit of ₹ 75,00,000/- for availing the benefit under the Notification No.1/93 also extends to the Government Order dated 1st March, 1994 as is sought to be contended on behalf of the revenue. In the opinion of this court, the provision whereby the benefit of notification No.1/93 is limited to the aggregate value of clearances of specified goods to the extent of rupees seventy five lakhs relates to the extent of benefit that can be claimed under the said notification. However, the same is not an eligibility criteria for availing of the benefit of the said notification. A reroller who avails of the benefit of Notification No.1/93 is by dint of such fact eligible for the benefit of deemed credit under the Order dated 1st March, 1994 and the benefit under the said order is not qualified by the limit provided for availment of the benefit of Notification No.1/93. The decision of the Tribunal in the case of Digambar Foundary v. Commissioner of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Himachal Pradesh High Court and has held thus: 15. We agree with the view taken by the Division Bench of Himachal Pradesh High Court. Notification No.1/93-C.E., dated 28-2-1993 deals with payment of full/concessional/slab exemption rate of duty for the specified goods up to the aggregate value of clearances not exceeding ₹ 75 lakhs, subject to various conditions and limitations as provided in that exemption Notification. The exemption under that Notification was not available if the aggregate value of clearances of all excisable goods for home consumption (a) by a manufacturer from one or more factories; or (b) from any factory by one or more manufacturers had exceeded ₹ 200 lakhs in the preceding financial year. Notification No.1/93-C.E., dated 28-2-1993 did not deal with availing of credit. Whereas the Ministry s Deemed Credit Order TS/36/94-TRU dated 1-3-1994 is that goods should be lying in stock on or after 1-4-1994 with the re-rollers. As per the Ministry s Deemed Credit Order dated 1-3-1994, re-rollers availing exemption under Notification No.1/93-C.E., dated 28-2- 1993 will be deemed to have paid the duty. 16. In the present case, Appellant has not crosse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the revenue and in favour of the assessee. The Tribunal was justified in holding that the respondents who were availing the benefit of Notification No.1/93-CE dated 28th February, 1993 were entitled to avail the benefit of the deemed credit order after crossing the value clearance limit of ₹ 75,00,000/-. 28. However, it may be noted that in Tax Appeal No.466 of 2014, the respondent M/s Sonthalia Steel Re-Rolling Mills had availed the benefit of deemed modvat credit of ₹ 5,74,098/- on 24th December, 1995 for input lying in stock, after the Notification:TS/36/94-TRU dated 1st March, 1994 came to be rescinded vide Notification:TS/8/95-Tru.-CE (NT) dated 16th March, 1995 whereby the Central Government in exercise of powers under the second proviso to sub-rule (2) of rule 57G of the rules rescinded the order dated 1st March, 1994 with effect from 1st April, 1995. Thus, to the extent M/s Sonthalia Steel Re-Rolling Mills had availed the benefit of the order dated 1st March, 1994 after it came to be rescinded with effect from 1st April, 1995, it was not entitled to such benefit. The 2nd question in the appeals preferred by the revenue, is therefore, answered in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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