Decided on December 20,2002



Arijit Pasayat, J. - (1.)These appeals are directed against common judgment of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi (in short the Tribunal).
(2.)Background factual matrix involved is undisputed and is essentially as follows : M/s. H.M.M. Limited (subsequently known as M/s. Smithkline Beecham Consumer Health Care Ltd.), (hereinafter referred to as the assessee) was availing set off under notification No. 201/79 dated 4-6-1979 in respect of inputs, namely, Malt and Malt extract under T.I. 68, received by it from M/s. Malt and Co. (India) Pvt. Ltd., M/s. Barmalt Ltd. and M/s. A. K. Malt (P) Ltd. during the years 1977 to 1985. The said notification was issued in exercise of powers conferred by sub-rule (1), Rule 8 of the Central Excise Rules, 1944. By the said notification, all excisable goods on which duty of excise is leviable and in the manufacture of which any goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (presently Central Excise Act, 1944, in short the Act) have been used as raw materials or components parts from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs. The excisable goods, and the raw materials and the component parts were referred to as "the said goods" and "the inputs" respectively in the notification. In the Appendix to the notification, in paragraphs 3 and 5(d) and (e) it was, inter alia, provided as follows :

"3. If the duty paid on the inputs (on which credit has been taken) is varied subsequently due to any person resulting in payment of refund to, or recovery of more duty from the manufacturer of the inputs, the credit taken shall be varied accordingly by adjustment in the credit account maintained under paragraph 5 of this Appendix or in the account-current maintained under sub-rule (1) of Rule 9, or sub-rule (1) of Rule 173-G, of the Central Excise Rules, 1944, or, if such adjustment be not possible for any reason, by refund to, or as the case may be, cash recovery from the manufacturer of the said goods.


5. A manufacturer of the said goods shall-

(d) maintain an account in Parts I and II of Form R.G. 23 in Appendix I to the Central Excise Rules, 1944;

(e) maintain in respect of the duty payable on the said goods an account-current with the Collector of Central Excise with adequate credit balance to cover payment of Central Excise duty leviable on the said goods cleared at any time."

(3.)The scope and ambit of the aforesaid paragraphs form subject-matter of consideration in these appeals. Sellers of the inputs as described above, filed writ applications before the Delhi High Court and took the stand that Malt and Malt Extracts were not dutiable in terms of notification No.55/75. The High Court accepted this stand of the Sellers. The Sellers had paid excise duty on the inputs, and, therefore, the assessee had taken credit in respect of the amount of duty paid on the inputs. Pursuant to the High Courts order appellant had refunded the duty. Barmalt took refund of the amounts paid on 8-11-1985 and 14-11-1985 while Malt India was refunded the amount involved on 8-5-1987. On 7-9-1987 a Demand show-cause notice was issued by the Assistant Collector requiring it to show-cause as to why the amount of duty involved in the set off be not recovered from it under paragraph 3 of the Appendix to the notification No. 201/1979. Assessee submitted its reply taking the stand that the notice was issued beyond the prescribed period of limitation under Section 11A of the Act. In any event, cash recovery was not permissible and what at the most the authorities could do was to adjust the amount from the credit account maintained in terms of paragraph 5. The plea did not find acceptance and by order dated 22-12-1987 the Assistant Collector confirmed the demand. Appeals before the Collector of Central Excise (Appeals) did not bring any relief to the assessee who carried the matter in further appeals before the Tribunal. By the Impugned judgment, Tribunal set aside the orders of the authorities holding that the case was covered under Section 11A of the Act and, therefore, the actions initiated were beyond the prescribed period of limitation.

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