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TMI Blog1985 (12) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed under Rule 45A. The system of maintaining this account contemplates that as and when a manufacturer receives materials or component parts on which the duty of excise or additional duty has been paid, the amount of duty paid or additional duty paid is entered to the credit of the manufacturer. The amount standing to the credit of the manufacturer is deducted from the excise duty when the finished product in which the material or the component part is used and the manufactured goods are removed from the factory against duty payable in respect of the finished product. 3. The Superintendent of Central Excise, however, took the view, that when the number of containers would be destroyed, then, the amount of duty credited in respect of that number would be debited in the account R.G. 23. 4. The petitioner approached the Assistant Collector of Central Excise, for relief. He, however, confirmed the view taken by the Superintendent and directed that the petitioner should be given seven days notice in advance to the Assistant Collector of Central Excise, and the petitioner would be permitted to destroy the containers after a debit entry to the extent of the corresponding credit alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, having regard to the period that has elapsed since the duty of excise was imposed on any such material, component parts or finished product, the position of demand and supply of the said goods in the country and any other relevant considerations, the Central Government may direct that with effect from a specified date all stocks of the said goods in the country, except such stocks lying in a factory, customs area as defined in the Customs Act, 1962 (52 of 1962) or 'warehouse as are clearly recognisable as being non-duty paid, may be deemed to be duty paid and credit of duty in respect of the said goods may be allowed at such rate and subject to such conditions as the Central Government may direct, without production of documents evidencing the payment of duty; (c) ........ (d) ........ (e) ........ (ii) ........ (iii) Any material or component parts in respect of which credit has been allowed under sub-rule (2) may, with the prior approval of the Superintendent of Central Excise having jurisdiction - (a) be removed for export under bond or on payment of duty; or (b) be removed on payment of duty for home use or for repairs. (iv) Any waste arising from the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, since it is not disputed that a number of batteries have become waste, the petitioner will be entitled to the credit in respect of those battery containers for adjustment against duty payable in respect of batteries subsequently. According to the department, the petitioner's case is squarely covered by rule 56A(3)(vi) and the battery containers having become waste, the credit entry made when the battery containers were taken by the petitioner for the purpose of manufacture of batteries must be reverted in respect of the number of batteries which became waste. In order to appreciate this contention, it is necessary to appreciate the scheme of Rule 56A. 9. Rule 56A(2) which we have reproduced above provides for a facility with regard to payment of duty in respect of goods manufactured, for the manufacture of which the manufacture has brought into the factory material or component parts or finished product, on which the duty of excise or the additional duty under Sec. 2A of the Indian Tariff Act, 1934, has already been paid. This is permissible only in respect of the goods notified by the Central Government under Rule 56A(1). The facility is that the duty paid on the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the waste material, the credit given in respect of these batteries when they were brought within the factory must continue as it is. The further argument is that if some amount stands to the credit of the manufacturer in the account R.G. 23, then when on a further occasion the manufactured goods are cleared, the amount standing to the credit of the manufacturer was liable to be adjusted against a part of the duty which is payable by the manufacturer. This argument, in our view, is based on a misapprehension of the scope of Rule 56A(3)(iv). Rule 56A(3)(iv) undoubtedly refers to any waste arising from the process of manufacture to which the materials or component parts, in respect of which credit has been allowed, have been subjected. Though in the opening part of clause (iv), it is not made expressly clear that the waste contemplated thereby is only waste which is dutiable, all the three clauses which follow the substantive part of Rule 56A(3)(iv) clearly indicate that the subject matter of sub-clause (iv) is waste which is liable to duty as waste. Clause (a) expressly refers to removal of waste on payment of duty. Clause (b) refers to removal without payment of duty and clause (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven in respect of any material or component parts which are to be utilised, that credit can be dealt with only in the manner prescribed by sub-clause (vi). The manner is that it is only adjustable towards payment of duty on the finished excisable goods in the manufacture of which the materials in respect of which credit has been given are used. 14. It is sought to be canvassed before us that an amendment has now been made by substituting new sub-clause (vi) in rule 56A(3) and under that amendment, credit which is originally given is allowed to be utilised in respect of any finished excisable goods. This part of the rule reads as follows :- "(vi)(a) - The credit of duty allowed in respect of any material or component parts may be utilised towards payment of duty on any finished excisable goods for the manufacture of which such material or component parts were permitted to be brought into the factory under sub-rule (2) where such material or component parts are cleared from the factory as such, on such material or component parts. (b) No part of such credit shall be utilised save as provided in sub-clause (a) or shall be refunded in cash or by cheque." 15. There is undoubtedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in that case had imported a quantity of 745.490 M.T. of Rock Phosphate and a quantity of 560.298 M.T. was utilised for the manufacture of fertilizers. The fertilizer was cleared between 4.10.1971 and 14-10-1971. The Assistant Collector made a demand under Rule 56(A)(vi) on the footing that the manufacturer became liable to duty under Rule 56A(3)(v). It was contended on behalf of the manufacturer that it was not incumbent on the manufacturer to utilise the imported Rock Phosphate in one and the same process and so long as it was properly accounted for. Rule 56A(3)(vi) was complied with. The department took the stand that there must be a correlation between the actual quantity of the goods imported and the ultimate product. In dealing with that contention, the learned judge took the view that the manufacturer need not correlate the Rock Phosphate imported to the ultimate finished product and in any case since the entire Rock Phosphate imported was already utilised, ultimately there was complete utilisation. It is true that in this decision the learned judge has taken the view that the quantity of Rock Phosphate imported need not be correlated to the ultimate finished product. Howev ..... 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