Decided on June 11,1986



K. Prakash Anand, Member - (1.)IN this matter the department submits that the respondents are manufacturers of tyres and they have been permitted to avail the special provision under Rule 56A. They received 20 tonnes carbon black on Sunday the 5th February, 1984. Since Sunday was a holiday the relevant D-3 documents were handed over by the respondent to the proper officer on the following day that is on 6th February, 1984. The department's case is that the respondents took the material for use in the production without waiting for verification by the Central Excise Officer. They also say that the D-3 was filed late and not within 24 hours on receipt of the goods as required under the rules. IN view of this position the proper officer at the factory disallowed the entire credit in respect of the material which was not available for verification. His orders were confirmed by the Assistant Collector. The Collector of Central Excise (Appeals), Madras- however allowed the respondents to take the proforma credit on the ground that the credit should not be denied to them on technicalities when the receipt of the goods and the duty /paid nature are not disputed by the department. While taking this decision, the Collector of Central Excise (Appeals) relied on the decision of this Tribunal in 1984 (18) ELT 135 in the case of "Chemi Equip Limited v. Collector of Central Excise, Thane".
(2.)Shri Vadivelu, the learned JDR has reiterated the view contained in the department's grounds of appeal and emphasised that as per Rule 173K of the Central Excise Rules, 1944 the respondents were required to inform the proper officer in writing and in proper form regarding the receipt of each consignment of excise duty-paid material received by them within 24 hours to enable the proper officer to identify the material. The respondents have not only submitted the D-3 declaration late but also consumed the goods without giving the officer concerned an opportunity to verify the goods. It is therefore stated that the order in appeal should be set aside.
On behalf of the respondents Shri Krishna Srinivas submits that the point at issue is fully covered in an earlier decision of this Tribunal in the case of 'Chemi Equip Ltd. v. Collector of Central Excise, Thane" (supra) and that the respondents' should not be denied the proforma credit due on mere technicalities. Shri Srinivas further states that as the order in original duly records the respondents have explained before lower authority that the materials were urgently required for use in production and if they had not done so production would have been hampered.

(3.)WE have" carefully considered the facts of the case and the submissions made by both the sides. It is not the department's case that the goods were not received; nor it is the department's case that the goods were not duty paid. Furthermore it is not the department's case that the goods were not duly taken in for further production. All that they have stated is that there has been violation of procedural requirements in delaying submitting D-3 document by a few hours and further that the goods were not available for verification. It would be understandable if the department, on 'this ground, were to consider warning the respondents or imposing any penalties for violation of procedures. To disallow credit of duty already paid even on satisfaction that such duty paid goods have been duly received and further consumed in the production of goods, which on clearance would be charged to duty, amounts to taking the stand that, on account of some default in following the procedural requirement, the Department would collect duty at both ends. This stand is not supportable. It is this principle which guides the earlier decision of this Tribunal in the case of 'Chemi Equip Limited v. Collector of Central Excise, Thane' (supra) which undoubtedly covers the point at issue that procedural lapses should not be cited for denying the assessee the benefit of set off, where the receipt of goods, their essential duty paid character and their utilisation for further production is not disputed.

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