Aftab Alam, J.
1. Whether the six months' period of limitation provided under Section 11(a) of the Central Excise Act would also apply to notice issued under Rule 57-I of the Central Excise Act for recovery of (Modvat) credit wrongly availed of, though the Rule itself, at the material time, was uncircumscribed by any period of limitation ?. This is the primary question in T.C. Nos. 1, 2 and 3 of 1991 (R) and one of the main questions in T.C. Nos. 4 and 5 of 1991 (R) and CWJC No. 3867/1993 (R). These two sets of cases were, therefore, heard together and are being disposed of by this common judgment.
2. Two questions of law, common to T.C. Nos. 1, 2 and 3/1991 (R) (in all of which the common assessee is M/s. Tata Engineering & Locomotive Company Limited) have been referred to this Court by the Customs, Excise & Gold Control, Appellate Tribunal, Calcutta under Section 35G(3) of the Central Excise Act on a direction given by this court, at the instance of the Collector, Central Excise, Patna. The two questions on which the Tribunal was directed to state the case and refer to this court are as follows :
'(i) whether provision of limitation as prescribed under Section 11A of the Central Excise & Salt Act, 1944 which relates to demand of duty not levied, not paid, short levied, short paid or refunds erroneously granted and does not relate to credit of duty can be engrafted in Rule 57-I of the Central Excise Rules, 1944 for disallowing credit and whether Section 11A will over ride Rule 57-I ?
(ii) whether decision in Collector's conference observing application of time limit prescribed in Section 11A for the recovery of wrong credit taken in terms of provisions of Rule is binding when there is no time limit prescribed in Rule, 57-I itself?'
3. The Tribunal has submitted a common statement in all the three cases which are as follows :
'The respondent, M/s. Tata Engineering & Locomotive Company Ltd. Jamshedpur and availed themselves of the facility of Modvat credit in terms of Rule 57A of the Central Excise Rules, 1944. Under the said rule, Central Excise duty paid on the goods used in or in relation to the manufacture of the final products can be taken as credit which can be used for payment of central excise duty leviable on such final products. In this case the respondent had taken credit of duty paid on hydraulic jacks and tool kits supplied by them along with their final products, motor vehicles and used the same for payment of duty leviable on such motor vehicles. The credits so taken and utilised by them were disallowed under Rule 57-I of the Central Excise Rules. Their appeals to the Collector of Central Excise (Appeals), Calcutta against such disallowance of credit were disposed of by the said Collector (Appeals) by upholding the orders on merits but partially setting them aside on the ground of limitation (Annexure 'A'). The appeals by the Collector of Central Excise, Patna against such orders-in-appeal were dismissed by this Tribunal upholding the decision of the Collector (Appeals) on the application of the provisions of Section 11A of the Central Excise & Salt Act, 1944.'
4. The assessee in the other set of cases T.C. Nos. 4 and 5 of 1991 (R) and CWJC No. 3867/1993 (R) is M/s. Bhawani Paper Products (P) Ltd. (formerly M/s. Ashim Paper Products (P) Ltd.). The assessee in these three connected cases is engaged in the manufacture and sale of printing paper. During the period April, 1987 to December, 1987, the assessee had taken Modvat credit of excise duty paid on 'Endless P.B. Wire-mesh' & 'industrial cloth' which, according to its case, well required in or in relation to the manufacture of printing paper. The Superintendent of Central Excise, however, disagreed and issued demand-cum-show cause notice, dated 5-1-1988 stating that the two articles on which the assessee had taken Modvat credit were 'appliances' used for producing printing paper and, therefore, those would not qualify as 'inputs' in terms of sub-section (1) of the explanation to Rule 57A of the Central Excise Rules and hence the credit availed of by the assessee was required to be paid back. The assessee's show cause against the notice was rejected by the Assistant Collector of Central Excise by order, dated 10-6-1988 disallowing Modvat credit availed of by the assessee on the ground that the articles in question were not inputs but appliances. The assessee preferred an appeal against this order which was allowed by the Collector of Central Excise (Appeals) who by order, dated 31-10-1988 held that the assessee was entitled to Modvat credit on the two articles in question. Against that order the Collector, Central Excise preferred appeal before the Customs Excise & Gold Control Appellate Tribunal, Calcutta. The Tribunal by order, dated 30-3-1990 allowed the Revenue's appeal on merits holding that the Modvat credit was wrongly availed of by the assessee on the two articles in question. The Tribunal, however, restricted the demand for recovery of credit made by the department to the period within six months from the date of the issuance of the notice holding that the period prior to six months from the date of notice was barred by limitation as provided under Section 11A of the Act.
5. Both the assessee and the Revenue made applications under Section 35G(1) of the Act asking the Tribunal to refer to this court certain questions of law which according to their respective cases arose out of the Tribunal's order. On the application filed by the assessee the Tribunal drew up a statement of the case and referred the following two questions of law for a decision by this Court:
(i) Whether the Tribunal was right in denying the Modvat benefit to Endless P.B.Wire Mesh and Industrial Cloth used in the manufacture of paper holding them to be in the nature of appliances which perform specific function of removing the moisture from the pulp in the process of manufacture of paper and that such goods in the nature of appliances which are part of machines which produce the paper are not covered by the term 'inputs' within the meaning of Rule 57A of the Central Excise Rules, 1944.
(ii) Whether Modvat credit is admissible for the two inputs in question used in the manufacture of paper?
6. This reference by the Tribunal pertaining to the merits of the dispute between the parties was registered in this court as T.C. No. 4/1991 (R).
7. The Revenue whose application for reference on the point of limitation was rejected by the Tribunal then came to this Court in T.C. No. 5/1991 (R) under Section 35G(3) of the Act. In that case this Court was told that similar questions were pending before it in Tax Case Nos. 2 and 3/1991 (R)- This Court, accordingly, directed the Tribunal to state a case and refer the following questions of law for the opinion of this Court:
'Whether provision of limitation as prescribed under Section 11 of the Central Excises & Salt Act, 1944, which relates to demand of duty not levied, not paid, short levied, short paid or refunds erroneously granted and does not relate to credit of duty can be engrafted in Rule 57-I of the Central Excise Rules, 1944, for disallowing credit and whether Section 11A will over ride Rule 57-I ?
(ii) Whether the Tribunal can suo mottt decide the question of validity of demand since the question of limitation was neither the subject matter of the appeal before the Tribunal nor urged or agitated before the original authority or in first appeal or even before the Tribunal ?'
8. C.W.J.C. No. 3867/1993 (R) was later filed by the assessee apprising the Court that the same Tribunal (in fact the same learned Member of the Tribunal) later came around to the same view as espoused by the assessee on the merits of the dispute, that is to say, in some later cases it was held that in the manufacture of printing paper it was legitimate to take Modvat credit of excise duty paid on Endless P.B. Wire Mesh and Industrial Cloth.
9. Thus in T.C. Nos. 1, 2, 3 and 5 of 1991 (R) the primary question of law (as per question No. (1) in all those cases) that arises for consideration is whether a demand for recovery of Modvat credit wrongly availed of can be made under Rule 57-I regardless of any period of limitation or whether the period of limitation provided under Section 11A of the Act would also govern a demand for recovery under Rule 57-I. Tax Case No. 4/1991 (R) and C.W.J.C. No. 3867/1993 (R) pertain to question whether Modvat credit of excise duty paid on Endless P.B. Wire Mesh and Industrial Cloth would be available in the manufacture of printing paper ?
10. I propose to first take up the question of limitation in a demand for recovery of Modvat credit under Section 57-I of the Rules.
11. Prior to 6-8-1977 the provisions concerning recovery of duties and the period of limitation for such recoveries were contained in Rules 10 and 10A of the Central Excise Rules, 1944. The provisions of those rules were substituted by Notification No. 267/77-C.E., dated 6-8-1977 by a single Rule 10 which provided for a period of limitation of six months for recovery of duties which were not paid for reasons other than fraud, collusion or any wilful mis-statement or suppression of facts; in the latter cases, the period of limitation provided was five years. The provisions of Rule 10 remained in operation from 6-8-1977 to 16-10-1980 and by Notification No. 117/80-C.E., dated 12-11-1980 Rule 10 was omitted from the statute book with effect from 17-11-1990. At the same time by another Notification No. 182/80-C.E., dated 15-11-1980 substantially the same provisions as contained in the omitted Rule 10 and which had earlier been introduced in the parent act as Section 11A by the Customs Central Excise & Salt Act, 1978 (Act 24 of 1978) were made enforceable with effect from 17-11-1980. It is thus to be noted that the provisions which were earlier part of subordinated legislation in the form of rules framed under the Act were now made part of the Act itself. I consider this development as important and I think it needs to be borne in mind for putting the rival contentions advanced by the parties in their proper perspective.
12. At this stage it would be useful to take a look at Section 11A in so far as relevant for this case :
'11A. The recovery of duties not levied or not paid or short levied or short paid or erroneously refunded. - (1) When any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show that why he should not pay the amount specified in the notice :
Provided that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the Rules made there-under with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if, for the words 'six months', the words 'five years' were substituted.'
Explanation x x x x x
(2) x x x x x x
(3) x x x x x x'
13. Rule 57-I is part of Modvat credit scheme which was given legal sanction by incorporating Rules 57A to 57] under sub-chapter AA in Chapter 5 of the Central Excise Rules by Notification No. 176/86-C.E., dated 1-3-1986. Rule 57-I at the time when the disputes in all these cases arose and prior to its amendment on 6-10-1988 was as follows :
57-I. Recovery of credit wrongly availed of or utilised in an irregular manner. - (1) If the credit of duty paid on inputs has been taken wrongly, the credit so taken may be dis-allowed by the proper officer and the amount so dis-allowed shall be adjusted in the credit account or the account-current maintained by the manufacturer or if such adjustments are not possible for any reason, by cash recovered from the manufacturer of the said goods :
Provided that such manufacturer may make such adjustments on his own in the credit account or the account-current maintained by him under intimation to the proper officer.
(2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed of in the manner specified in this section, the manufacturer shall upon a written demand being made by the Assistant Collector of Central Excise pay the duty leviable on such inputs within ten days of the notice of demand.'
14. It is the absence of any period of limitation in the rule, as it stood at the material time, of which the revenue seeks to take advantage. It is the case of the Revenue that recovery of credit wrongly availed of under the scheme of Modvat credit was not circumscribed by any period of limitation. However, before proceeding to examine the case of the parties on the basis of the unamended Rule 57-I, it would be proper to first conclude the survey of the statutory provisions by stating that Sub-rule (1) of Rule 57-I was later substituted by Notification No. 23/88-C.E.(N.T.), dated 6-10-1988 by the following provisions introducing the same periods of limitation as provided under Section 11A of the Act:
'(1) Where credit of duty paid on inputs has been taken on account of an error, omission or misconstruction, on the part of an officer or a manufacturer, or an assessee, the proper officer may, within six months from the date of such credit, serve notice on the manufacturer or the assessee who has taken such credit requiring him to show cause why he should not be dis-allowed to such credit and where the credit has already been utilised, why the amount equivalent to such credit should not be recovered from him :
Provided that where such credit has been taken on account of wilful mis-statement, collusion or suppression of facts on the part of a manufacturer or an assessee, the provisions of this clause shall have the effect as if for the words 'six months' the words 'five years' were substituted.'
15. According to the Revenue, the position would stand altered after the amendment of the rule with effect from 6-10-1988 but prior to that date a demand for recovery of credit wrongly availed of could be raised regardless of any period of limitation for the simple reason that no limitation was provided in the Rule. On behalf of the Revenue, it is greatly stressed that Rule 57-I is part of the Modvat credit scheme for which a complete and self contained code is provided under Rules 57A to 57J of the Rules; and that Rule 57-I being an integral part of a self contained code and pertaining to the special provisions concerning Modvat credit scheme it must be held to be unfertered and un-affected by the period(s) of limitation prescribed for recovery of excise duty as provided, in a 'general manner', under Section 11A of the Act. Further, according to the Revenue Section 11A would be attracted to a case where same error was made in the assessment of excise duty leviable whereas Rule 57-I simply provided for adjustment and settlement of accounts maintained under Rule 57-G. It was submitted that though both Section 11A and Rule 57-I related to recovery of duties, the recovery under Rule 57-I was of special nature, as it was not dependent upon leviability of duty under Section 3 of the Act. According to the Revenue, therefore, a credit of duty taken unlawfully or irregularly by the assessee before the amendment of Rule 57-I on 6-10-1988 could be recovered without any limitation.
16. In substance all the submissions advanced on behalf of the Revenue are arguments in different forms arising from the principle of Generalia Specialibus Non Derogant in support of its contention, the Revenue relied upon a bench decision of Gujrat High court in Torrent Laboratories Pvt. Limited v. U.O.I. -1991 (55) E.L.T. 25. The Gujrat decision indeed puts at the highest all that can be said in favour of the view convassed by the Revenue. In that decision two learned Judges of the Gujrat High Court found and held that the Modvat scheme and the provisions of the Rules framed in connection with the scheme were a special provision and that the scheme regarding availing of the Modvat credit provided its own special provision (in the form of Rule 57-I) with regard to steps to be taken in cases where credit was wrongly availed of. Their Lordships further took the view that Rule 57-I before its amendment did not offend Article 14 of the Constitution, for its failure to provide for a period of limitation. Relying upon a decision of the Supreme Court in Government of India v. Citedal Fine Pharmaceuticals -1989 (42) E.L.T. 515, it was held that in the absence of any provision specifying a period of limitation, a reasonable period of limitation had got to be read into the rule. However, what would be a reasonable period of limitation was not clearly indicated and that might perhaps depend, according to the decision, on the facts of each case.
17. In so far as relationship between Section 11A of the Act and Rule 57-I is concerned, the Gujrat decision took the view that Rule 57-I being in its nature a special provision would remain independent of Section 11A which was a general provision and the demand for recovery under Rule 57-I would, therefore, be unfettered by the limitation provided under Section 11A. The decision in Torrent Laboratories (supra) is firmly founded on the principle that special provisions operate to the exclusion of general provisions and reliance is placed on two Supreme Court decisions for applying that principle for interpreting the scope of Rule 57-I. Thus, in paragraphs 12, 12A and 13 of the judgment, it is observed and held as follows :
'Whenever a general provision is in operation and thereafter knowing fully well that the general provision is in operation, the legislature enacts a special provision, it has got to be presumed that the legislature did not intend the general provision to apply to the special cases culled out by it. The general provision made in that sphere has got to yield to the special provision. This is one of the basic principles of interpretation of statutes. In this connection reference may be made to a decision of the Supreme Court in the case of J.K.C.S. & Mills v. State of UP reported in AIR 1961 Supreme Court 1170. In para 9 of the judgment the Supreme Court has held that specific provision prevails over the general provision and the general provision applies only to such cases which are not covered by special provision. The rule applies to both type of cases, that is, while interpreting different provisions in different statutes as well as in the same statute. The Supreme Court has observed as follows:
'The learned Attorney General seemed to suggest that while this rule of construction is applicable to resolve the conflict between the general provision in one Act and the special provision in another Act, the rule cannot apply in resolving a conflict between general and special provisions in the same legislative instrument. This suggestion does not find support in either principle or authority. The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect.
'12A. Similar view is taken by the Supreme court in the case of State of Gujrat v. Patel Ramjibhai Danabhai reported in (1979) 3 Supreme Court cases 347. In that case, the legality and validity of provisions of Section 33(6) of the Bombay Sales Tax Act, 1959 (corresponding to Section 14(6) of Bombay Sales Tax Act, 1953) came up for consideration before the Supreme Court. It was contended that no time-limit was provided in this specific provision, while for taking actions in other cases, Section 35 provided time-limit and therefore the provisions should be held to be ultra vires. The Supreme Court applied the maxim - Generalia Specialibus Non Derogant and negatived the contention. The Supreme Court held that the provision of Section 33(6) of the Bombay Sales Tax Act, 1959, was confined to a particular dass of tax evaders while Section 35 of the Bombay Sales Tax Act, 1959 was general provision dealing with escaped assessment or under assessment. Thus whenever the legislature makes general provision and in the same sphere makes a special provision which would be applicable to specific cases, the provision relating to specific cases and not the provision, relating to general cases.
'13. Thus in view of the first principles as regards the interpretation of statutes and in view of the aforesaid two decisions of the Supreme Court, the contention that the provision of Section 11A of the Act as regards the period of limitation should be read into Rule 57-I as it stood prior to the amendment cannot be accepted.'
18. With utmost respect I am unable to accept as correct the view taken by the Gujarat High Court and it appears to me that the two Supreme Court decisions cannot be appropriately applied for examining the relationship between Section 11A of the Act and Rule 57-I of the Rules. It seems to me that the decision in Torrent Laboratories failed to appreciate that from a legal point of view the two provisions are on two different levels. The provision contained in Section 11A is part of the parent Act whereas Rule 57-I being part of the Rules framed under Section 37 (XVIA) and (XVIB) of the Act is a place of subordinate legislation. In my view, the two provisions being on two different levels, the principle of Generalia Specialibus Non Derogant cannot be properly applied for judging the relationship between the two. It may be noted that in J.K.C.S. & W. Mills v. State of U.P. - AIR 1961 S.C. 1170 on which reliance was placed in the Gujrat decision, the Supreme Court considered the provisions contained in different clauses of the same Government order. In para 9 of the Supreme Court judgment quoted and relied upon in the Gujrat decision, the Supreme Court applied the principles of general provisions yielding to special provisions observing that the principle would apply for resolving a conflict between general and special provisions in the same legislative instruments and further observed, 'that when the same person gives two directions-----.'In the case in hand Section 11A is part of the enactment made by the Parliament while 57-I is a rule framed by the Central Government, in exercise of the delegated powers under Section 37 of the Act. The two provisions are, thus, neither in the same legislative instrument nor are they framed by the same person.
19. Again in State of Gujarat v. Patel Ramjibhai Danabhai - AIR 1979 S.C. 1098, the Supreme Court had before it for consideration the provisions contained in Section 33(6) and Section 35 of the same Act, that is to say, the Bombay Sales Tax Act and the principle of Generalia Specialibus Non Derogant was applied in that circumstance.
20. I am, therefore clearly of the view that the two Supreme Court decisions do not support the application of the principle Generalia Specialibus Non Derogant for judging the relationship between Section 11A of the Act and Rule 57-I of the Rules. Something perhaps could be said in favour of the view taken in the Gujrat decision had the provision of limitation continued as Rule 10 of the Rules. But from the legislative changes noted above, it is manifest that the provision of limitation was made part of the Act by introducing Section 11A much before Rules 57A to 57J were incorporated in the Rules. There was, therefore, no occasion to give separately any periods of limitation in Rule 57-I as the periods of limitation were provided in Section 11A in the Act itself and those would undoubtedly govern the provisions of the Rules.
21. A division bench of the Bombay High Court has taken the same view in Fabril Gasosa v. U.O.I. & Others -1997 (96) E.L.T. 241 (Bom.). In para 5 of the judgment it is observed as follows :
'5. The Rule is a subordinate legislation and is authorised by some provision in the statute under which those Rules are made. The power to frame the Rules is derived from the Act itself and the Rules owe their existence to the Act under which they are made if there is any provision in the Act itself and even if the Rules are silent on that aspect of the matter, it will always have to be presumed that the provisions in the Act would be applicable and will have to be considered while interpreting the Rules. If there is a conflict between the Act and the Rules made under that Act, the Act would always prevail. If something is provided in the Act, it is really not necessary to repeat the same in the Rules and therefore, if the entitlement of the refund or recovery is specified in the Rules without any mention of limitation, but the Act under which the Rules have been framed makes an unequivocal provision of limitation which may be applicable to those Rules, then the Rules will have to be read along with the provisions of the Act and not in isolation.'
Then after quoting the relevant parts of Section 11A, it is further observed as under :
'This provision speaks about the recovery of any duty of excise which has (not) been levied or paid or which has been short-levied or short-paid or erroneously refunded and takes in its cover all excise duties which have been erroneously paid, not levied or short-levied or short-paid. There is nothing in this Section which would enable us to presume that the duty which was paid against finished goods and to which the Modvat Scheme was applicable is excluded from the operation of this Rule, nor the Rule which stood before the amendment in the year 1988, had anything which would suggest that the rule excludes the operation of the limitation prescribed in Section 11A.'
22. On the question of applicability of the period of limitation provided under Section 11A to a demand for recovery made under the un-amended Rule 57-I, a division bench of the Madras High Court has also taken the same view in Advani Oerlikon Ltd. v. Assistant Collector of Central Excise - 1993 (63) E.L.T. 427. Thus, in para 14 of the judgment, it was held as follows :
'We are thus of the opinion that notwithstanding the rule, which did not contemplate any notice or any period of limitation for the demand, the rule of limitation, as found in Section 11A of the Act, has still to be applied to the case of the petitioners. We have come to this conclusion following the rule of strict construction of a taxing statute.'
23. A learned single Judge of the Karnataka High Court has also taken the same view on this question. In Thungabhadra Steel Products Ltd. v. Supdt. of Central Excise - 1991 (56) E.L.T. 340 (Karnataka) in para 17 of the judgment it was held as follows :
'Therefore, Rule 57-I as it stood before amendment with effect from 6-10-1988 should receive the same interpretation as it should receive after amendment and should be made applicable to the facts of the present case as well.'
24. In J.K. Spinning & Weaving Mills Ltd. v. Union of India - 1988 (32) E.L.T. 573 (S.C.) the Supreme Court held that the provisions of Rules 9 and 49 of the rules and the provision of Section 51 of the Finance Act, 1982 which provided that the amendments in Rules 9 and 49 of the Rules shall be deemed to have, and to have always had the effect on and from the date on which the rules came into force, that is, 28-2-1944, would be subject to the periods of limitation provided under Section 11A of the Act. In para 33 of the judgment, it was held as follows :
'33. There is no provision in the Act or in the Rules enabling the Excise authorities to make any demand beyond the periods mentioned in Section 11A of the Act on the ground of the accrual of cause of action. The question that is really involved is whether in view of Section 51 of the Finance Act, 1982, Section 11A should be ignored or not. In our view Section 51 does not, in any manner, affect the provision of Section 11A of the Act. In the absence of any specific provision overriding Section 11A, it will be consistent with rules of harmonious construction to hold that Section 51 of the Finance Act, 1982 insofar as it gives retrospective effect to the amendments made to Rules 9 and 49 of the Rules, is subject to the provision of Section 11A.'
25. The decision of the Supreme Court in J.K. Spinning & Weaving Mills Limited (supra) lends strong support to the stand of the assessees that the periods of limitation provided under Section 11A would also apply to a demand for recovery made under Section 57-I of the Rules even though there was no limitation provided in the rule before its amendment on 6-10-1988.
26. For the reason discussed above, I have no hesitation in answering question No. (i) in Tax Case Nos. 1,2,3 and 5 of 1991 (R) in the affirmative, that is to say, in favour of the assessee and against the Revenue.
27. In view of my answer to question No. (i), nothing really remains in so far as question No. (ii) in Tax Case Nos. 1,2 and 3 of 1991 (R) is concerned. It may, however, be pointed out that the Tribunal while restricting the demands for recovery within the period of limitation as provided under Section 11A nowhere stated in its order that the decision in the Collectors' conference was binding on it nor did it pass its order on the basis of the decision in the Collectors' conference. It simply referred to the decision taken in the Collectors' conference as being in accord with the view taken by it. Therefore, question No. (ii) in Tax Case Nos. 1, 2 and 3 of 1991 (R) does not in fact arise from the Tribunal's order and needs no answer from this court.
28. A few words are, however, required in so far as question No. (ii) in Tax Case No. 5/1991 (R) is concerned. It is noted earlier that the Assistant Collector, Central Excise by order, dated 10-6-1988 held that the assessee in that case had wrongly availed of Modvat credit and no credit of excise duty was available on duty paid on Endless P.3 Wire-Mesh and Industrial Cloth. Against this order the petitioner preferred an appeal before the Collector of Central Excise (Appeals) who by order, dated 31-10-1988 allowed the assessee's appeal on merit holding that Modvat credit was available on duty paid on the articles in question. The assessee's appeal having been allowed on merits in practical terms, there was no occasion for it to raise the question of limitation before the Collector, Central Excise (Appeals). Against the order of the Collector (Appeals), the Collector, Central Excise preferred an appeal before the Tribunal. The Tribunal by its order dated 30-3-1990 reversed the order of the Collector (Appeals) on merits holding that no Modvat credit was available on duty paid on the articles in question. The Tribunal, however, restricted the demands for recovery in accordance with the period of limitation provided under Section 11A of the Act.
29. According to the Revenue it was not open to the Tribunal to apply the question of limitation as no objection in that regard was raised by the assessee either before the Assistant Collector or the Collector (Appeals).
29A. It is important to note in this connection that no investigation of any disputed fact was required for considering the question of limitation and the period limitation provided by law was to be applied on admitted facts. That being the position, in my view, the Tribunal was quite right in taking note of the question of limitation and it cannot be faulted for having done so.
30. In Town Municipal Council, Athani v. Presiding Officer, Labour Court, Hubli and Ors. - AIR 1969 SC 1335, the Supreme Court held as follows :
'A question of limitation raises a plea of want of jurisdiction and, in these cases, this question could be decided on the basis of the facts on the record, being a pure question of law. It is in this background that we have permitted this question also to be raised in these appeals, though it was not put forward either in the High Court or before the Labour Court.'
31. Again in the State of Hyderabad v. Vasudev Anant Bhide and Ors. -AIR 1970 SC 196, the Supreme Court observed as follows :
' The second contention of Mr. Aggarwala relates to the claims being barred under Article 137 of the Limitation Act, 1963. This ground of limitation has not been raised either before the Labour Court or even in the special leave application filed in this court. The appellant has filed C.M.P. No. 1259 of 1969 for permitting him to raise this question of limitation based upon Article 137 of the Limitation Act of 1963. As no fresh facts had to be investigated and as the matter could be dealt with as a pure question of law, we permitted the appellant to raise this plea of limitation.'
32. In view of the aforesaid facts, I am clearly of the opinion that in the facts of the case the Tribunal was quite right in applying the period of limitation provided by law and to restrict the demand of recovery made by the department on that basis. In the facts and circumstances of the case, I answer question No. (ii) of Tax Case No. 5/1991 (R) in the affirmative, that is to say, in favour of the assessee and against the revenue.
33. The only question that now remains to be examined is question No. (i) in Tax Case No. 4/1991 (R). As noted above, this question arose from the main dispute between the assessee and the Revenue regarding the availability of Modvat credit on duty-paid on Endless P.S. Wire-Mesh and Industrial Cloth in the manufacture of printing paper. It appears that the controversy giving rise to this question was resolved by the Tribunal by its later decisions while this case was pending before this Court. It may be noted that the decision in the case of the present assessee was rendered on 30-3-1990 by a single Member Bench of CEGAT, East Regional Bench, Calcutta, presided over by Shri K. Sankararaman, Member (T). This decision is reported in 1990 (50) E.L.T. 120. The same question of availability of Modvat credit on Felt and Wire melting of stainless steel and Phosphor Bronze used for manufacture of paper later came up for consideration before a bench of the CEGAT, East Regional Bench, Calcutta, in Straw Products Limited v. Collector of Central Excise & Customs -1992 (59) E.L.T. 572. This Bench comprised of S/Shri K. Sankararaman, Member (T) and T.P. Nambiar, Member (J) and the decision in the case was delivered by Shri K. Sankararaman on 31-10-1991. It appears from para 4 and 14 of the judgment in Straw Products Limited (supra) that the Revenue placed strong reliance on the earlier decision given by Shri K. Sankararaman in the case of the present assessee. But it must be said to be the credit of the Member (T) that showing great openness of mind he considered the matter afresh observing that various relevant points were not argued in the earlier case of the present assessee and finally came to hold that Modvat credit was available on excise duty paid on the articles in question.
34. Later in Union Carbide India Limited v. The Collector of Central Excise - 1996 (86) E.L.T. 613, a still Larger Bench of the Tribunal consisting of the President and two more members specifically held that the earlier decision in the case of this assessee (that is the order from which the present reference arises) was not correctly decided and further held that Felts, Phosphor Bronze, Stainless Steel Wire Cloth, Wire Mesh and Dandy cloth used as parts in machine or machinery in the manufacture of paper and paper products are eligible inputs and are not excluded by virtue of exclusion clause (i) of Explanation to Rule 57A of the Central Excise Rules, 1944.
35. I have gone through the Full Bench decision of the Tribunal and I agree with the views and the findings recorded in that judgment.
36. Counsel for the assessee also relied upon a decision of the Calcutta High Court in Singh Alloys and Steel Limited v. Assistant Collector of Central Excise -1993 (66) E.L.T. 594. Though indirectly, this decision also lends support to the stand of the assessee.
37. For the reasons discussed above, I answer question No. (i) in Tax Case No. 4/1991 (R) in the negative, and question No (ii) in that case in the affirmative. In other words, both the question in Tax Case No. 4/1991 (R) are answered in favour of the assessee and against the revenue.
38. Thus, all the questions in all the tax cases are answered in favour of the respective assessees and against the Revenue.
39. Let a copy of this judgment be send down to the Tribunal for necessary action.
40. In view of the judgment in tax cases, no separate other is required to be passed in the writ case and the writ petition is disposed of in the above terms. There will be no order as to costs in any of these cases.