Tata Oil Mills Co. Ltd. Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. the appellant at the relevant time was a manufacturer of soap. after communicating its intention to the superintendent by letter dated 31-3-1996, it removed after paying duty the cakes of soap manufactured by it along with a carton each for packing to various factories outside bombay. the units in question packed the soap into the cartons and despatched the packets of soap to the depots of the appellants according to its directions. it is not in dispute that the soap was cleared from the factory the price of the packing material was included in its assessable value. the appellant utilised the credit on the duty paid on the cartons towards payment of duty on the packed soap. the superintendent objected to the procedure on the ground that the appellant removed the goods without per-mission provided in rule 57f.after exchange of some correspondence, the superintendent by his order dated 12-12-1986 disallowed the credit on the ground that the action taken by the appellant was not in order. hence this appeal.2. appellant relies vipon an order no. 1406/97-wzb passed by the tribunal bench on 26.. 1997 (sic) in which identical issue has been decided. in that order the tribunal has applied the ratio of the decision in india paper pulp v. cce -1994 (73) e.l.t. 752. the facts of the case are identical to the facts of the present case.3. departmental representative points out that the provisions of sub-rule (2) to section 57f have not been followed in that the goods were not returned to the factory as required by it.4. the ratio of the tribunal's decision in the case cited above is applicable to this case. in addition there is another factor on the basis of which the appeal will have to be allowed. when the credit was taken on the carton it is correctly taken. the credit has been disallowed only for the reason that cartons have been removed outside the factory irregularly and not in accordance with the procedure.recovery of credit in such a situation where it is correctly taken but the inputs are not accounted for as provided in the rules will be governed by provisions of sub-rule (2) of section 57f. this sub-rule requires the assistant collector to issue notices and after giving the assessee an opportunity of being heard and after considering the facts properly. in this case notice has not been given to the assessee before the order was passed. the order has been passed by the superintendent.the notice (sic) therefore has to be held to be invalid.5. appeal allowed and impugned order set aside. (appeals), bangalore, dated 27-3-1992.

Judgment:
1. The appellant at the relevant time was a manufacturer of soap. After communicating its intention to the Superintendent by letter dated 31-3-1996, it removed after paying duty the cakes of soap manufactured by it along with a carton each for packing to various factories outside Bombay. The units in question packed the soap into the cartons and despatched the packets of soap to the depots of the appellants according to its directions. It is not in dispute that the soap was cleared from the factory the price of the packing material was included in its assessable value. The appellant utilised the credit on the duty paid on the cartons towards payment of duty on the packed soap. The Superintendent objected to the procedure on the ground that the appellant removed the goods without per-mission provided in Rule 57F.After exchange of some correspondence, the Superintendent by his order dated 12-12-1986 disallowed the credit on the ground that the action taken by the appellant was not in order. Hence this appeal.

2. Appellant relies vipon an Order No. 1406/97-WZB passed by the Tribunal Bench on 26.. 1997 (sic) in which identical issue has been decided. In that order the Tribunal has applied the ratio of the decision in India Paper Pulp v. CCE -1994 (73) E.L.T. 752. The facts of the case are identical to the facts of the present case.

3. Departmental representative points out that the provisions of Sub-rule (2) to Section 57F have not been followed in that the goods were not returned to the factory as required by it.

4. The ratio of the Tribunal's decision in the case cited above is applicable to this case. In addition there is another factor on the basis of which the appeal will have to be allowed. When the credit was taken on the carton it is correctly taken. The credit has been disallowed only for the reason that cartons have been removed outside the factory irregularly and not in accordance with the procedure.

Recovery of credit in such a situation where it is correctly taken but the inputs are not accounted for as provided in the rules will be governed by provisions of Sub-rule (2) of Section 57F. This sub-rule requires the Assistant Collector to issue notices and after giving the assessee an opportunity of being heard and after considering the facts properly. In this case notice has not been given to the assessee before the order was passed. The order has been passed by the Superintendent.

The notice (sic) therefore has to be held to be invalid.

5. Appeal allowed and impugned order set aside. (Appeals), Bangalore, dated 27-3-1992.