1. This is an appeal against the order of the Collector (Appeals), Bombay dated 18th August, 1988.
2. The appellants have sent a letter dated September 5,1994 enclosing as the written submissions and requesting that the matter may be decided on merits in their absence.
3. Accordingly, we have gone through the appeal memorandum and the written submissions and allow the DR to make his submissions.
4. The learned DR submitted that in this case the appellants were initially entitled to the benefit of Notification No. 201/79, dated 4-6-1979 in respect of the items falling under TI 68.
5. Subsequently, the notification was amended and the classification of the input 'Phenol' falling under Tariff Item 68 earlier was changed to Tariff Item 14 AAA.6. The appellants said in the meanwhile they had taken credit in respect of the quantity received as inputs but they utilised that quantity for payment of duty on their final product subsequent to the date of the amendment namely 16/17th March, 1985.
7. A question has, therefore, arisen whether they were required to pay back the amount so utilised. The Assistant Collector had dropped the demand but the Learned Collector (Appeals) has set aside his order on the ground that the amended Notification No. 201/79 contains explanation and by virtue of this explanation the items whose classification is changed from Tariff Item 68 to another item, the benefit could be given only with reference to the Rule 56A provided the input and output fall under the same Tariff Item and both are specified in Sub-rule 1 thereof and not otherwise. Since this was not the situation in the present case which relates to the Notification No.201/79 and not to Rule 56A, the appellants were not eligible for the benefit taken by them. They were required to pay the demand as demanded.Collector of Central Excise v. Addisons Paints & Chemicals Ltd. as reported in 1990 (45) E.L.T. 662, it has, of course, been held that the authorities are in error when they demanded the duty merely because the classification had changed from one item to another. However, that order was passed with reference to the unamended Notification No. 201/79-C.E., which had not contained the above explanation, hence the same was distinguishable.
9. The Learned DR, further, stated that the appellants have in the written submissions referred to the Supreme Court's judgment in the case of Mangalore Chemicals & Fertilisers Ltd. as reported in 1991 (55) E.L.T. 437 (SC) but that judgment lays down a principle of interpretation in a different context. In the present case we are concerned with a specific explanation incorporated therein and it has to be decided whether the appellant's case was hit by this explanation or not.
10. We have gone through the written submissions filed by the appellants as well as considered the oral submissions made by the Learned DR.11. We observe that the Learned DR is correct in pointing out that the basic issue to be decided is whether the appellant's case was hit by the explanation incorporated in the amended Notification No. 201/79 and, further whether it was required to be given prospective or retrospective effect.
12. We observe in this connection that this notification grants set off of duty by way of an exemption in respect of all excisable goods on which the duty of excise is leviable and in the manufacture of which goods falling under Item No. 68 have been used, as raw materials or component parts ("the inputs" from so much of duty of excise leviable thereon) as is equivalent to the duty of excise already paid on the input provided the prescribed procedures are followed, and the final products is not chargeable to nil rate of duty. The explanation incorporated in this notification reads as follows : "Explanation. - Where, as a result of any amendment to the said first Schedule, the Item No. of any raw materials or component parts, on which duty of excise has been paid under the said Item No. 68 before such amendment, undergoes a change and where, after such amendment, such raw materials, or component parts, and the said goods in the manufacture of which such raw materials or component parts are used, fall under the same Item and the said goods are specified under Sub-rule (1) of Rule 56A of the said rules, such raw materials or component parts shall be deemed to be inputs for the purpose of this notification: Provided also that nothing contained in this notification shall apply to the said goods on which duty of excise is paid through "Central Excise Stamps".
13. An perusal of the above explanation shows that this explanation was intended to cover a specific situation. As a resist of this explanation certain goods which were not earlier eligible for proforma credit became eligible to benefit thereof and, therefore, for the purposes of proforma credit under Rule 56A the credit already taken earlier could be utilised provided other conditions were specified.
13.1 This explanation has nothing to do with the type of situation which has arisen in the present case and does not in any way bar the continuation of benefit already taken under Notification No. 201/79 with reference to the same inputs and outputs irrespective of change of classification. We, therefore, find that in respect of the stocks already lying with the assessee on the date of amendment i.e. 16/17th March, 1985 in respect of which the credit had already been taken in terms of entitlement under Notification No. 201 /79. The benefit could be availed of even after the date of said amendment in respect of declared inputs or final outputs, if the benefit of said Notification had already been allowed by the proper officer in the normal course and the appellant could not be asked to reverse the credit or repay the amount so utilised.
14. In other words, in respect of the stocks in question the appellants were not hit by the explanation.
15. In view of the above position, we set aside the impugned order and accept the appeal.