Judgment:
1. These are five appeals filed by M/s. Maharashtra Steel Industries being aggrieved with the common order-in-original passed by the Additional Collector of Central Excise, Aurangabad. In his adjudication order, the Additional Collector of Central Excise had confirmed the demand of Rs. 49,031.14, had imposed a penalty of Rs. 20,000/- on M/s.
Maharashtra Steel Industries and penalty of Rs. 5,000/- on each of the four persons.
2. The matter relates to the applicability of exemption Notification No. 208/83-C.E., dated 1-8-1983, in a case where the inputs had been received from the manufacturer under gate passes in which the nil duty had been shown. The adjudicating authority had taken a view that as no duty had been paid on the inputs the final products were not eligible for exemption under Notification No. 208/83-C.E., dated 1-8-1988.
3. Shri P.S. Bedi, Consultant submitted that during the relevant time, there was no such condition in the exemption notification that the benefit will not be available if the goods have been received on nil rate of duty gate passes. He submitted that the nil duty was also a payment of duty and that once the Central Government had issued an exemption notification in favour of any product, such products having been cleared on nil rate of duty gate passes, then the benefit available to the final products subject to the condition that the inputs are duty paid, could not be denied. In reply Shri P.K. Jain, SDR stated that there is no dispute that no duty had been paid on the inputs, the nil duty could not be considered as payment of duty for the purposes of Notification No. 208/83-C.E. He further submitted that subsequently the notification was amended and it was specifically provided that benefit of this notification will not be available if the goods were otherwise exempted or were not duty paid. It was his plea that this amendment although subsequent to the period involved in these proceedings was of a clarificatory nature and will have retrospective effect. He also stated that it was not the case of deemed credit and the scheme of notification clearly stipulated that if the inputs were duty paid then no further duty was to be paid on the final products. As in this case, there is no doubt that the goods were exempted. It was his submission that the view taken by the adjudicating authority was correct.
4. We have carefully considered the matter. The relevant proviso in Notification No. 208/83-C.E., dated 1-8-1983 as applicable during the relevant period is extracted below :- "Provided that such final products are made from any goods of the description specified in the corresponding entry in column 2 of the said table (such goods being hereinafter refer to as inputs) and falling under the said item on which the duty of excise leviable under the said Act, or the additional duty leviable in the Customs Tariff Act, 1975 (51/1975) as the case may be, has already been paid." 6. In these proceedings, there is no dispute that the inputs had been received on nil duty gate passes. The appellants were engaged in the manufacture of iron and steel products such as mild steel round bars, flats, angles, etc. The period involved is prior to 1-3-1986 and the applicable Tariff Item was Item No. 28 of the old Central Excise Tariff. The inputs were MS Rolls of beams and channels etc. They were bringing the inputs under GP 1 showing nil rate of Central Excise duty.
Shri Bedi had referred to the Patna High Court decision in the case of Tata Yodogawa Ltd. v. Union of India reported in 1987 (32) E.L.T. 521 (Pat.) where the High Court had observed that the expression 'already paid' has been interpreted by the Court to mean contracted to be paid or ought to have been paid. Para 21 from that decision is reproduced below :- "21. The very same meaning has been extended to the expression 'already paid by the High Court of Gujarat (sic) in the case of Steel Authority of India v. Collector of Central Excise, Calcutta 1984 (18) E.L.T. 555. Although interpreted in a different context and for the reasons stated in the judgment, Deshpande, J (as he then was in the Delhi High Court) has noticed the relevance of interpreting the words "already paid" to mean "contracted to be paid or ought to have been paid". There is no reason why the same meaning be not given to the words used in Notification No. 66/73 when in the hands of Tayo the scrap were in the capacity of a transferee for the purpose of manufacturing ingots and even in the hands of the Tisco who may have the liability to pay duty on the scraps, since the scraps answered the requirement of the description in the said notification, no duty was payable by them on the ingots." 7. This decision of the Patna High Court had been followed by the Tribunal in the case of MC Ltd. v. CCE, Bombay reported in 1988 (35) E.L.T. 142 (Tribunal). The Tribunal had observed that the appropriate duty would include nil duty.
8. We find that subsequently the notification had been amended and it had been specifically provided that if the inputs were otherwise exempted or were cleared on nil rate of duty, then benefit under that notification will not be available. Ld. Consultant submitted that this amendment is an amending Notification No. 66/89-C.E., dated 1-3-1989, no such condition was in the notification during the relevant time and no retrospective effect to the disadvantage of the assessee could be given to such an amending notification.
9. Ld. SDR has referred to the Tribunal's decision in the case of J.K.Synthetics Ltd. v. CCE, Jaipur reported in 1996 (88) E.L.T. 785 (Tribunal). The Tribunal had observed in that case that definition of the capital goods as substituted by the Notification No. 14/96-C.E.(NB), dated 23-7-1996 was of a clarificatory in nature. We consider in the present case, it was not question of any definition but of excluded exempted goods from the purview of the exemption Notification No.208/83-C.E. We consider that it will not be appropriate to deny the exemption retrospectively when no such specific condition was laid down in the notification during the relevant time.
10. As already noted above, we are not concerned with the period after amendment dated 1-3-1989 when the benefit was specifically denied when the inputs were cleared on nil rate of duty gate passes. This was also not the case where the goods were procured from the open market or there was no evidence about their manufacturer or duty liability as also already noted by the adjudication authority at page 7 of his order. The inputs were cleared at nil rate of duty under the GP 1. As the goods were eligible for nil rate of duty, we consider that the benefit under Notification No. 208/83-C.E. could not be denied only on the ground that the goods had been cleared by the manufacturer at nil duty gate passes.
11. Taking all these considerations into account, we do not agree with the view taken by the ld. Additional Collector of Central Excise, Aurangabad. As a result, all these five appeals are allowed.