ORDER
N.K. Bajpai, Member (T)
1. These four appeals were heard together. We would first take up the appeals (1) to (3) because they involve the same question viz., whether M/s. Associated Cement Company Ltd. (M/s. ACC) are entitled to refund of duty paid by their suppliers on certain inputs in terms of Notification No. 201/79-C.E., dated 4-6-1979. Briefly stated, the facts are that M/s. Tata Iron & Steel Company Jamshedpur paid duty on blast furnace slag under protest under Tariff Item 68 and supplied it to M/s. ACC who utilised it in the manufacture of granulated slag which was finally consumed in the manufacture of cement. M/s. ACC had initially wanted to take credit of the duty paid by M/s. TISCO on the blast furnace slag in terms of Notification No. 201/79, dated 4-6-1979 but the Superintendent of Central Excise did not grant permission to do so because of their failure to comply with the procedural requirements prescribed in the notification. Thereafter, M/s. ACC filed claims for refund of the duty involved in all the three cases relating to the three appeals before us and, on rejection of their claims by the Assistant Collector, they preferred appeals to the Collector of Central Excise (Appeals), Calcutta. While the appeals in the first two cases in which M/s. ACC are the appellants were rejected, the third one in which the department is the appellant before us was allowed in favour of M/s. ACC by Collector (Appeals).
2. The questions which arise for our consideration are :
(a) whether credit of duty was at all permissible under Notification No. 201/79 to M/s. ACC when the manufacturer (M/s. TISCO in this case) themselves had paid the duty under protest because of a dispute;
(b) the dispute was whether blast furnace slag was excisable and was subsequently settled in favour of M/s. TISCO by an order of the Tribunal (Order No. 815/80-B1, dated 17-12-1986), with the result that there was no liability to duty on the slag and, therefore, the question of availing set-off of duty by M/s. ACC would not arise;
(c) whether any claim for refund of duty paid by M/s. TISCO on that furnace slag which was utilised by M/s. ACC could be entertained in terms of Notification No. 201/79.
3. We have heard Shri Gokhale, learned counsel for M/s. ACC and Shri L.C. Chakravarti, learned Departmental Representative for the Collector.
4. The further facts which have come on record show that the Revenue authorities had filed appeals to the Supreme Court against the order of the Tribunal holding that blast furnace slag was not excisable and these appeals were dismissed in limine as time-barred on 4th May, 1990. Thus, the order of the Tribunal having become final, M/s. TISCO were not required to pay any duty on blast furnace slag and such amounts as were paid under protest became refundable to them. If no duty paid or the duty that was paid became refundable, where was the question of availing of any set-off under Notification No. 201/79? Thus, without going into the rival contentions on this question argued before us, it is evident that M/s. ACC have no case for any credit of duty because the goods themselves were not liable to duty.
5. In the second appeal (E/3106/83-D), M/s. ACC had also claimed set-off on Calcium Carbonate sludge and Phospho Gypsum supplied by the Sindri Fertiliser Plant of the Fertiliser Corporation of India. The contention is that since the authorities did not allow set-off on these commodities under Notification No. 201/79, M/s. ACC filed claims for refund of the duty which were rejected on the ground that the notification specifically provides that no part of the credit is to be refunded in cash or cheque [Clause 9(b) of Notification No. 201/79]. This order having been upheld by Collector (Appeals) on the same ground, this appeal has been filed. Among the grounds taken before us are that M/s. ACC had submitted the requisite Declaration to the local Central Excise authorities and had also sent D 3 intimation about the receipt of the duty-paid inputs but they were not permitted to avail of the set-off of duty under Notification No. 201/79 in the absence of clear instructions/guidance from the local authorities even though the Assistant Collector, Central Excise, Dhanbad had granted the necessary permission vide his letter No. IV (16)(16)(9)4/75/1152, dated 20-2-1981.
6. There being a specific condition in Notification No. 201/79 that no part of the credit is to be refunded, both the lower authorities have rightly rejected the claim of M/s. ACC for refund of duty. We uphold their orders and reject the appeal on this count.
7. So far as the claim for availing of the set-off of duty on Calcium Carbonate sludge and Phosphor Gypsum supplied by the Sindri Fertiliser Plant is concerned, it appears to us that it should be entertained by the authorities and there is no reason why it should be denied only on the ground of technicalities provided the conditions prescribed in Notification No. 201/79 are fulfilled. It will also be necessary for the authorities to remember that the matter being 10 years old, they should decide the claim expeditiously.
8. We now proceed to decide the fourth appeal (E/2444/88-D) which, though argued alongwith the other three, involves a different question. M/s. ACC, Sindri Cement Works have not been allowed by Assistant Collector, Dhanbad to utilise the credit balance of Rs. 10,23, 243.88 as on 28-2-1986 lying in RG-23 Part II on inputs because Notification No. 201/79 was rescinded with effect from 1-3-1986. The Assistant Collector came to the conclusion that with the coming into force of the Modvat Scheme with effect from 1-3-1986 which did not cover cement (falling under sub-heading 2502.20) and the inputs being either exempted or liable to nil rate of duty, the unutilised credit of duty available in their books automatically lapsed on 1-3-1986.
9. Collector (Appeals) accepted the contention of M/s. ACC that the unutilised credit represents exemption of duty on the inputs used in the final product for payment of duty on the final product and is a right which had accrued prior to the rescinding of Notification No. 201/79 and cannot lapse under Section 6(c) of the General Clauses Act, 1897. He has accepted the plea in the following words :-
“…The Assistant Collector holds the view that with the repeal of Notification 201/79-C.E., dated 4-6-1979 the credit of duty paid on inputs and lying unutilised in RG-23 Part-II after 28-2-1986 automatically lapsed, whereas the appellants argued that the repealing Notification 186/86-C.E., dated 1-3-1986 does not take away their rights accrued prior to its repeal as because nothing to that effect has been mentioned in the repealing notification. Moreover, the repealing notification could only be prospective in effect, they plead. There is considerable force in the contentions raised by the appellants. Notification 186/86, dated 1-3-1986 merely rescinds 12 notifications starting with Notification 118/75 without any other explanations or directions. The new notification could therefore, be prospective in nature and the benefits which were available with the earlier notification will no longer be available. The notification, however, would not, in view of Section 6(c) of the General Clauses Act, 1897 destroy the rights already accrued under the repealed provision/notification. Therefore, the fact of its repeal on 1-3-1986 would not render the said balance lying in RG-23 Part-II as unutilised after 1-3-1986 as proposed.”
10. In their appeal, the Collector of Central Excise, Patna has contested the order of Collector (Appeals) on the ground that once exemption Notification No. 201/79 was rescinded with effect from 1-3-1986 the final product was not entitled to exemption from duty to the extent to the credit which had accrued on the inputs. It is claimed that the underlying idea behind the input duty relief scheme as incorporated in Notification No. 201/79 was to relieve the final product from the cascading effect of excise duty and the benefit of such exemption materialises when the final product (the finished goods) are cleared from the factory. In the instant case when the time for clearance of the finished goods in which the inputs were used came, the duty relief scheme itself stood rescinded. In such a situation, the order of Collector (Appeals) for refund of balance amount of unutilised credit lying in the assessees’ account is contrary to law on two counts : First, that it would amount to effectuating Notification No. 201 /79 when it is no longer in existence and secondly even if considered in terms of requirements of the notification, it would militate against Clause 9(b) of the notification which forbade refund in clear and categorical language. Clause 9 of the notification which is as under :-
“9.(a) The credit of duty taken in respect of any inputs may be utilised towards payment of duty on any said goods for the manufacture of which such inputs were declared by the manufacturer to be brought into the factory, or where such inputs are cleared from the factory as such, on such inputs.”
“(b) No part of such credit shall be utilised save as provided in clause (a) or shall be refunded in cash or by cheque.”
11. The issue can be decided on the short point whether the benefit of an exemption notification can be availed of even after the notification has been rescinded no matter whether it is in the form of unutilised credit available in an account prescribed in the notification itself. In this connection, what has to be remembered is that the exemption notification exempted the excisable goods in the manufacture of which any goods falling under Item No. 68 had been used as raw materials or component parts (referred to as inputs) from so much of duty as was equivalent to the duty of excise already paid on the inputs. Once the exemption was withdrawn, the first thing that would happen is that the goods would become liable to duty at the rate laid down in the tariff. If any credit had accumulated in the account on the date of withdrawal of the notification, it could not be utilised for availing of the exemption from duty because exemption was no longer in force. This being so, the goods had to be subjected to duty at the tariff rate. The next question that would arise is what would happen to the unutilised credit. Since the notification itself had forbidden refund of the credit, no refund could have been given as long as the notification remained in force. Once the notification was rescinded, it would have to be considered :
(a) whether any benefits which were not provided under the notification (viz., refund of the credit), when it was in force could be given after it was rescinded;
(b) what are the provisions in the central excise law for utilisation of the credit which had accrued under a notification which was no longer in force.
12. The answer to the first question has to be in the negative because the authority for conferring the benefit having been withdrawn, no benefit could accrue in the absence of that authority. As far as the second question is concerned, the provision of refund of duties is contained in Section 11B of the Act. The relevant portion of the section necessary for our consideration are as under :-
“11B Claim for refund of duty :- (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Collector of Central Excise before the expiry of six months from the relevant date;
“Provided that the limitation of six months shall not apply where any duty has been paid under protest.
“(2) If on receipt of any such application, the Assistant Collector of Central Excise is satisfied that the whole or any part of the duty of excise paid by the applicant should be refunded to him, he may make an order accordingly.” (emphasis supplied).
13. In terms of the provisions of Sub-section (2), it is clear that refund of duty can be made to the person who has made the payment. The law does not provide for refund of duty paid by one person to another person. This being the law governing refund of duties, it follows that, in the present case, refund of duties which were paid by TISCO or other parties cannot be made to M/s. ACC. Even otherwise, it is clear that the word “credit” has an altogether different connotation and there is no provision for refund of any amount equivalent to the amount of credit to a person who holds the credit of duty paid by another person. What M/s. ACC are trying to do is to avail of the benefit of exemption notification even after it had been rescinded, by claiming refund of an amount equivalent to the amount of credit of duty standing in their account. If such a claim is to be accepted it would, in other words, mean that even though the exemption notification has been withdrawn, M/s. ACC are seeking to continue to take benefit of the exemption notification as though it were continuing. In view of this, it is clear that once the exemption notification was rescinded, not only was the exemption no longer available, even the unutilised credit of duty cannot confer any benefit on M/s. ACC by way of utilisation of that credit.
14. It has been held by the Tribunal in the case of HMM Ltd., New Delhi v. Collector of Central Excise – 1987 (29) E.L.T. 688 (Tri.) that correlation between inputs and outputs is a must for claiming set-off under exemption Notification No. 201/79. Since this is the interpretation given by the Tribunal itself, correlation of duty paid on inputs before 1-3-1986 would be possible only with reference to the finished products cleared after 1-3-1986 (when the exemption was withdrawn) and this is not permissible since the finished goods did not enjoy exemption after 1-3-1986. Thus, considered from all angles, it is evident that there is no provision in the Central Excise law for utilisation of the credit of duty paid on the inputs before 1-3-1986 and standing in the RG-23 account of M/s. ACC after withdrawal of the exemption Notification 201/79 with effect from 1-3-1986.
15. Turning to the contention that under Section 6(c) of the General Clauses Act, 1897, a right which had accrued cannot be affected by the repeal of the enactment, it may be stated that withdrawal of an exemption notification cannot be equated with the repeal of an enactment as these are two different things. The so-called right, such as the present one, which was created by the exemption notification naturally extinguished as soon as the exemption was withdrawn. Further, it has not been explained to us by Shri Gokhale how a credit of duty arising out of an exemption notification can be called as a “right”. It is not necessary for us to explain that an exemption given under the law is different from a ‘right’ arising out of an enactment. In fact, as the word signifies, “exemption” means a concession from something and it would be difficult to treat it as a ‘right’ conferred by the statute. We do not find any logic or understandable reason for considering the credit arising out of the exemption notification to be a “right” conferred by an enactment. Therefore, this argument also fails. The appeal is, therefore, (A. No. E/2444/88-D) devoid of any merit is rejected.
16. Thus, except for the modification indicated in Paragraph 7 of this order, all other appeals fail. We suggest that the authorities should look into this aspect expeditiously and finalise the claim within a period of three months from the date of this order.