1. This is an Appeal against the finding of the Collector of Central Excise (Appeal) holding that the appellants were not entitled to 10% more than what has already been paid as duty by their New Rohtak Road unit. The Asst. Collector passed the Order-in-Original, which was appealed before the Commissioner (Appeals). The Asst. Collector had held that in fact the demand notice amount was inclusive of the notional credit of Rs. 45,552.77 which the firm had availed along with Modvat credit while it was not allowed to be availed by the said firm against inter-transfer of goods/components from Anand Parbat unit to Naraina Unit.
2. The facts, in brief, are that the Appellants have 2 units-one at Naraina Industrial Estate and the other at New Rohtak Road, Anand Parbat. The Unit at Naraina is engaged in the manufacture of parts and accessories of Motor Car, Scooters, Tractors and Trucks. The unit at New Rohtak Road (Anand Parbat) supplies components for use to the unit at Naraina Industrial Estate from where the final product is cleared on payment of duty. Both the units are owned by common Directors and for purposes of assessment, the value of clearances of the two units are clubbed. Both these firms have opted for Modvat under Rule 57A and are paying duty at the same rates specified under Notification No. 175/86.
The Unit at Naraina took Modvat credit not only of the duty actually paid by the Anand Parbat Unit, but also the higher notional credit under Rule 57B of the Central Excise Rules, 1944. The Department issued three Show Cause Notices to the units asking them to explain as to why Modvat credit should not be denied to them. It was alleged that the unit at Naraina cannot avail credit of duty paid in respect of the inputs coming from the Anand Parbat unit. Thus, the Asst. Collector held that Modvat credit under Rule 57A was admissible, but notional higher credit was not admissible. The same view was upheld by the ld.Commissioner (Appeals) and hence the appeal before us.
3. Shri R. Pal Singh, the ld. Consultant appearing for the Appellants, submits that Rule 57B provides: "Notwithstanding anything contained in Rule 57A, credit of specified duty on inputs may in a case where duty on inputs has been paid under a notification issued under Sub-rule (1) of Rule 8 exemption such inputs from a part of a duty leviable thereon on the basis of value of clearances of such inputs during any specified period, be allowed at the rate otherwise applicable to such inputs but for the said notification; Provided that the said notification provides for grant of credit in respect of such inputs at such higher rates as may be specified therein." 4. Explaining the position, the ld. Consultant submits that both the units at Naraina Industrial Estate and Anand Parbat were entitled to payment of Central Excise Duty at the same rates provided under Notification No. 175/86. He submits that final product of one unit was being used as an input by the other unit. He submitted that Trade Notice No. 62/86, dated 3-9-1986 was issued by the Delhi Central Excise Collectorate. In para 5 of this Trade Notice, a clarification was given that exemption from duty for interplant transfer of intermediate products has not been allowed; that in respect of intermediate products on which duty is paid and used in the manufacture of final product, in another factory, Modvat credit can be availed. The ld. Consultant clarified that the final product of one factory was being used as input in the other factory; that the earlier factory was paying duty on the goods in terms of Notification No. 175/86; that since duty was being paid on the final product of one factory which was being used as an input by the other factory, the other factory was entitled to Modvat credit. The ld. Consultant submitted that Modvat credit does not mean Modvat credit under Rule 57A alone; that Modvat credit includes notional higher credit also. He submits that notional, higher credit was admissible to the Appellants as Modvat credit was being taken if duty was paid under Notification No. 175/86.
5. The ld. Consultant also referred to Notification No. 175/86. He submitted that Clause 5 of this Notification provided : "Notwithstanding the exemption granted by this notification in respect of the specified goods which are subjected to concessional rate of duty (other than those specified goods which are wholly exempted from the duty of excise leviable thereon. Under this notification and used as inputs in the manufacture of final products in terms of the provisions of Section AA of Chapter V of the said Rules, the credit in respect of such inputs shall be allowed under Rule 57B of the said Rules, at the rate of duty otherwise applicable, but for this notification." 6. The ld. Consultant submitted that with the withdrawal of Notification No. 118/75, the Appellants were entitled to the benefit of Modvat credit and that too under Rule 57B also. He submitted that the Apex Court in the case of Hemraj Gordhandas v. Asst. Collector of C.E., Surat and Ors. 1978 (2) E.L.T. (J 350) held that in a taxing statute, there is no room for intendment but regard must be had to the clear meaning of the words. If the tax payer is within the plain terms of an exemption he cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. In a Court of law or Equality what the legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact either in express words or by reasonable or necessary implication. He submitted that Rule 57A and Rule 57B are to be interpreted in terms as are specifically provided under the relevant rules.
7. The ld. Consultant also referred to the judgment of the Apex Court in the case of J.K. Steel Ltd. v. Union of India and Ors. - 1978 (2) E.L.T. J355. In this case, the Apex Court held that the Court cannot proceed to make good deficiencies if there maybe any, the court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payer. If there is any ambiguity of language in a fiscal statute benefit of that ambiguity must be given to the assessee.
8. The ld. Consultant submitted that there is no ambiguity in the interpretation of Rule 57A and Rule 5.7B; but even if there is an ambiguity, then the benefit of ambiguity should go to the Tax payer.
9. The ld. Consultant also referred to the decision of this Tribunal in the case of BPL India Limited 1994 (74) E.L.T. 645 in which this Tribunal held that plain meaning to be given to the words used if they are clear and that resort to principles of interpretation called for only in case of ambiguity and that no equity or intendment in a taxing statute.
10. The ld. Consultant, therefore, submitted that in view of the above submissions and the case law relied upon, the Appeal may be allowed.
11. Shri A.M. Tilak, the ld. JDR appearing for the Respondent Commissioner, submits that there was a Notification No. 118/75, dated 30-4-1975 which provided for exemption for captive consumption in the same factory or any other factory of the same manufacturer; that this Notification was rescinded in 3/86 by issue of Notification No. 175/86; that with, the rescinding of this Notification, the position did not change in so far as captive consumption of the goods was concerned. He submitted that for calculating the availability of the concession under Notification No. 175/86, captive consumption was not being into consideration. He submitted that since captive consumption was not taken into consideration, the question of allowing higher notional credit did not arise inasmuch as duty was paid at the lower rate and, therefore, the Asst. Collector has rightly disallowed the higher notional credit.
12. He submitted that since the decision was not specific in this case and, therefore, this cannot be equated with payment of duty at lower rate and availability to avail higher credit. He, therefore, submitted that the lower authorities have rightly denied the Higher notional credit and prayed that the Appeal may be rejected.
13. We have heard the submissions of both sides. We have also perused the provisions of Rule 57A and Rule 57B. We have perused Notification No. 118/75, dated 30-4-1975 and the Trade Notice No. 62/86, dated 3-9-1986 issued by the Delhi Collectorate of Central Excise. We have also perused the decision of the Apex Court and the Tribunal cited and relied upon by the Appellants.
14. We note that in the instant case, there are two units owned by the same persons; both the units were availing the benefit of Notification No. 175/86. We note that the final product manufactured by one Unit was being used as an input by the second unit. After rescinding the Notification No. 118/75, the position changed. The Collectorate, by its Trade Notice dated 3-9-1986, clarified that if a unit is paying duty at a concessional rate, then the Modvat credit can be taken by the said unit which was using the product of the first unit as input for the manufacture of the final product and where the final product was being cleared on payment duty. This trade notice thus clarified that Modvat credit can be taken. Now, in question is whether Modvat credit included notional higher credit under Rule 57B or not. We have perused Rule 57B as well as Clause 5 of the Notification No. 175/86. Clause 5 of Notification No. 175/86 permits taking of higher notional credit under Rule 57B. The respondents have not cited any case law or brought to our notice any rule or notification by which it may be said that two units placed in a situation as the present one could not be entitled to the benefit of higher notional credit. In view of this clear legal position that Modvat credit includes higher notional credit also and it was allowed under Clause 5 of Notification No. 175/86, we note that notional higher credit was admissible to the Appellants. In this view of the matter, we allow the Appeal. Consequential relief will be admissible to the appellants in accordance with law.