ORDER
V.P. Gulati, Member (T)
1. These two appeals before us relate to the same facts in respect of the same manufacturer and therefore have been taken up for disposal together. For the sake of convenience we deal with Appeal No. 902/86-B1 first. This appeal is filed by the Collector of Central Excise, Indore, against the order of the Collector (Appeals).
2. Brief facts of the case are that the respondents manufactured steel ingots and availed of benefit of Notification No. 201/79 during the period October, 1980 to December 1980 and August 1981 to May 1982 in respect of refractories material used by them in the factory. Type of refractories as set out in the lower authorities order are as under:
(i) Steel clad chrom mag. bricks and other high grade of refractories to resist higher temperature. (No set-off taken on this item).
(ii) Ordinary magnasite and high Alumina refractories.
(iii) Fire clay refractories like B.P. sets, fire bricks, nozzle, laddie sleeves etc.
In respect of (i), the benefit of Notification No. 201/79 was not availed of by the respondents. In respect of refractories at Sl. No. (ii) the benefit was availed of by the respondents for the reason that these were used in the laddie and furnace shell covering for protecting the original laddie and furnace lining and was used up after a few Heats and were required to be replaced by such fresh refractory material. In respect of (iii) also, the benefit of the Notification 201/79 was taken for the reason that fire clay refractories like B.P. sets, fire bricks, nozzle, laddie sleeves etc., were formed into a mould for filling the molten metal in the C.I. Ingot Moulds and used up and the runners and risers which are formed had to be taken out by breaking the refractory material. In the proceedings before the lower authority, the Assistant Collector held that the respondents were eligible for the benefit of Notification No. 201/79. On appeal, the Collector (Appeals) allowed the appellant’s appeal partially and held as under :-
“Referring to the Appellate Tribunal’s judgment in the case of Rockdril (India), Jodhpur v. CCE, Jaipur 1984 (17) ELT 497, wherein it was held that the graphite moulds which were broken up and could not be re-used, manufacturer was entitled for the benefit of Notification No. 201/79-C.E., dated 4-6-1979 before its amendment on 28-2-1982 by Notification No. 105/82-C.E. By applying the ratio of this decision, it can be held that the appellants were entitled to benefit of Notification No. 201/79-C.E. in respect of Fire Clay Refractories like B.P. Sets, Fire Bricks, Nozzle, laddie sleeves, which were used for filling the molten metal C.I. Ingots. This office, however, does not have any information whether any refractories were so used by the appellants. In case, on scrutiny and examination of the records to be produced by the appellants, the jurisdictional Assistant Collector is satisfied that some quantity of refractories was so used, the benefit of the said Notification 201/79, shall be extended to the appellants. In respect of the refractories used for other purposes, the appellants shall not be entitled for the benefit. It is further clarified that from 28-2-1982, the appellants shall not be eligible for the said benefit in respect of the duty on the refractories.
As regards the time limit, in case it is ascertained that the appellants had applied for the benefit of Notification No. 201/79 in respect of the refractories and the permission was duty granted, the time limit of six months shall apply. In case, no permission for refractories was applied, time-limit of longer period of five years shall apply.”
Against this decision of the Collector (Appeals) the Revenue has come in appeal. The Grounds of Appeal taken by the Revenue are as under :
“The Collector (Appeals) has failed to appreciate that legislative intent in Notification No. 201/79 is to provide a set-off representing a sum equal to the amount of duty paid on “inputs” used in the manufacture of finished product, not subject to any time limit for recovery of the sum, as evidenced by the absence of any specific provision in the notification, therefore, the provision of limitation under Section 11A, which refers only to excise duty which had not been levied or paid or was short levied, short paid or erroneously refunded, is not applicable.
Aforesaid views have also been confirmed in the decision of Madras Tribunal in case of Premier Tyres Ltd., Alwaye v. Collector of Central Excise, Cochin, 1985 (22) ELT 948 (Tribunal).
Hence the decision of the Collector (Appeals) regarding limitation is bad in law and is liable to be quashed.
The fire clay refractories like B.P. Sets, Fire Bricks, Nozzle, laddie sleeves which are stated to have been used for filling the molten metal in cast iron moulds, can by no stretch of imagination be considered to extent the benefit of unamended Notification No. 201/79 as in that case the machinery and equipments used in the manufacturing process also will be entitled for the benefit. The ‘Inputs’ legible for the benefit under Notification No. 201/79 should go directly or indirectly in the manufacturing process to form a part of the finished product. The Collector (Appeals), has failed to appreciate that the refractories, even if they have been used in the filling of molten metals in the C.I. moulds, they cannot be considered as inputs in terms of unamended Notification No. 201/79.”
3. In respect of the benefit under the same notification, the respondents are in appeal before us against the orders of Central Excise, Indore in Appeal No. 103/83. The learned consultant and the JDR has stated that the issues involved in respect of both appeals are the same and therefore, some arguments in both the cases have been adduced. Learned consultant for the respondents stated that the Notification No. 201/79 was amended by Notification No. 105/82 dated 28-2-1982. The opening para of the notification before the amendment on 28-2-1982 Was as under :
“In exercise of the powers conferred by Sub-rule (1) of Rule 191A of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 178/77-Central Excises, dated the 18th June, 1977, the Central Government hereby exempts all excisable goods (hereinafter referred as “the said goods”), on which the duty of excise is leviable and in the manufacture of which any goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) (hereinafter referred as “the inputs”) have been used, from so much of the duty of excise leviable thereon as in equivalent to the duty of excise already paid on the inputs”….
After the amendment this opening para is as under :
“In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 178/77-Central Excises, dated the 18th June, 1977, the Central Government hereby exempts all excisable goods (hereinafter referred as “the said goods”), on which the duty of excise is leviable and in the manufacture of which any goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), have been used as raw materials or component parts (hereinafter referred as “the inputs” from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the inputs.”
4. Shri Gopal Prasad pointed out that after the amendment scope of the notification became restricted and benefit of the concession was limited only to the extent of the duty paid on the inputs which were in the nature of raw materials and component parts which went into the manufacture of finished excisable goods. He stated before the amendment the benefit of concession was available to the extent of the duty paid on any inputs falling under T.I. 68 and used in the manufacture of the finished excisable goods. He cited the case of Rockdril (India), Jodhpurv. Collector of Central Excise, Jaipur 1984 (17) ELT 497. In support of his this plea he brought to our notice the following observation of the Bench in this regard :
“Notification No. 201/79-C.E., dated 4-6-1979, prior to its amendment on 28-2-1982 by Notification No. 105/79-C.E. contained no condition that Item 68 goods should be used as raw material and component parts. On the other hand, it gave the exemption in respect of any Tariff Item 68 goods which were used in the manufacture of other dutiable goods. There is, therefore, no substance in the argument that exemption was admissible only if the Tariff Item 68 goods become constituent part of other finished dutiable goods. In fact, diamond drill bits cannot be manufactured without the use of graphite rods/moulds. Besides, it is seen from the process of manufacture that after being used, the graphite mould is broken up and cannot be re-used. But even if it could be re-used or had some economic value, the notification did not contain any condition that Tariff Item 68 goods should be used in the process of manufacture. Therefore, the appellants were thus entitled to exemption upto 27-2-1982. Demand in that respect is, therefore, set aside.”
He also eked the case of AIR 1965 SC 891 wherein he stated that the Hon’ble Supreme Court had interpreted the scope of expression “goods intended for manufacture for intended sale” and given a wider meaning to the term used in the manufacture. We observe that is interpretation of the Hon’ble Supreme Court in the context of a sales tax entry. He pleaded the order of Collector (Appeals) in favour of the appellants was maintainable and the order of Collector of Central Excise, Indore against them in the same issue was defective to the extent that the benefit as extended by Collector (Appeals) to them should not have been denied. Shri Verma, the learned SDR for the Department pleaded that the notification should be given a restrictive meaning and pleaded that the quantum of relief under Notification No. 201/79 should be restricted only to the duty paid only on such of those duty paid inputs falling under T.I.68 as go into the manufacturing process of the finished goods. He cited the case of Vikrant Tyres 1985 (21) ELT 620. He pleaded that the Tribunal in this case has held the same input and output ratio has to be there for the purpose of grant of relief in terms of this notification. He pleaded that the Tribunal took note of the fact that the Notification No. 201/79 was successor notification to Notification No. 178/79 with almost of the same wording as the earlier notification with only difference that the input and output ratio lotwise as stipulated in the earlier notification was not required to be done. He pleaded as a natural corollary thereto the benefit of notification will be available only in respect of such of those inputs which go into the manufacturing process and not in respect of items like mould etc. He also pleaded that the ruling of the Hon’ble Supreme Court 1965 SC 891 cannot be made applicable in the present case inasmuch as wording of the same was given while interpreting an entry in the Sales Tax statute.
5. We observe that the Tribunal in the case of Rockdril (India), Jodhpur 1984 (17) ELT 497 have clearly held that the benefit of Notification 201/79 could be available even in the case of moulds in view of the wording of the notification as it stood before the amendment. The Collector (Appeals) has followed the rationale of this decision and allowed the appeal partially subject to the satisfaction that the refractories stated to have been used for moulds etc., have been so used. The learned SDR arguments that the scope of the notification should be restricted to only such inputs which go into the process of manufacture is not acceptable in view of the wording in the notification as it stood at the relevant time and also held by the Tribunal in the decision cited supra. The case-cited by him in the case of Vikrant Tyres does not advance his case as the Tribunal was not called upon in that case to interpret the scope of notification in the context of issues before us. The Tribunal in that case has held that the duty paid on the inputs will have to be apportioned between duty paid clearances and those under an exemption where the duty paid T.I.68 inputs have been utilised partially for finished goods cleared on payment of duty and partially for those under an exemption. The decision of the Tribunal in the case of Rockdril (India), Jodhpur is in no way in conflict with the decision of the Tribunal in the case of Virant Tyres. We observe that the Larger Bench of the Tribunal in the case of Shri Ram Rayons v. Collector of Central Excise, New Delhi in their Order No. 208/87-C 1987 (30) ELT 850 (Tribunal) have held the same view as in the case of Rockdril (India), Jodhpur and relied upon the judgment of the Supreme Court in this regard in the case of J.K. Cotton, Spinning and Weaving Mills Company Limited v. Sales Tax Officer, Kanpur (1965 STC 563). We therefore, following the ratio of the decisions of the Tribunal in the cases (supra) hold that the order of the Collector (Appeals) is correct in law so far it relates to inputs in respect of which benefit has been given by the Collector (Appeals) is concerned.
Revenue have also pleaded provisions of Section 11A are not applicable in the facts and circumstances of the case.
6. Regarding the time limit, we observe that under Notification No. 201/79 a procedure has been prescribed for taking credit of duty paid inputs received in the factory where the finished goods are produced. This credit taken could be utilised for payment of duty on the finished goods in the manufacture of which these inputs have been utilised. Any wrong availment of credit will ultimately result in short collection of duty on the goods for which credit was utilised. The wrong availment of credit therefore, is in fact a short collection of duty and for recovery of this duty, therefore, a time limit available in terms of Section 11A is applicable. The Revenue’s contention that no time limit is applicable for the purpose of recovery of the wrong credit taken in respect of inputs is not maintainable. No doubt, the notification does not stipulate any time limit for the recovery of the credit wrongly taken but the notification cannot over-ride the substantive law. We hold that notwithstanding the absence of any time limit in the notification for the reason given above, time limit prescribed under Section 11A will apply. (See 1983 ECR 2047: Finolex Cables v. Collector of Central Excise, Pune). We therefore, do not find any infirmity in the order of the Collector (Appeals) wherein he has left the issue of applicability of shorter limit of six months or five years depending upon whether the appellant had applied or not for benefit of notification in respect of refractories. So far as the appeal No. 103/83-B1 filed by the appellants against the order of Collector of Central Excise is concerned, we allow the same partially and extend the relief to the extent it has been allowed by the Collector (Appeals) in the impugned order before us in the other appeal. We observe that the appellants have not filed any cross-objection or appeal against this order of Collector (Appeals) and therefore, it has to be presumed that they have no grievance against this order so far as the extent of relief allowed is concerned.