ORDER
J.H. Joglekar, Member (T)
1. This appeal from revenue was argued by Shri G.B. Yadav, Shri D.H. Mehta, Advocate, appeared for the respondents.
2. The first issue for decision is whether a manufacturer operating under Notification 175/86 could avail of the facility of paying duty on certain products after utilising the Modvat credit facility, and at the same time choose to clear other products entirely without payment of duty. The Commissioner (Appeals) ruled that these two facilities could be availed of simultaneously relying upon the Tribunal judgment in the case of Abhilash Rubber Products v. C.C.E. – 1991 (56) E.L.T. 168 and other similar judgments. Shri D.H. Mehta submits that this is also the finding of the three member bench judgment in the case of, Faridabad Tools Pvt. Ltd. v. C.C.E. – 1993 (63) E.L.T. 759. This has been followed by the single member bench judgment in Noble (India) v. C.C.E. -1996 (88) E.L.T. 500, Shri Yadav relied upon the five member bench judgment in the case of Kamani Foods v. C.C.E. – 1995 (75) E.L.T. 202. We have seen the three judgments. The judgments relied upon by the assessees have been distinguished in the five member bench judgment. In the said judgment the Tribunal had held that the two paths given in the said notification could not be availed of at the same time by the same manufacturer for goods falling under different classifications. Shri Mehta submits that it has come in the Noble (India) judgment that the decision of the Tribunal in the case of Faridabad Tools Pvt. Ltd. has been upheld by the Supreme Court. Shri Mehta fairly concedes that he does not have the order nor is he able to say as to on what grounds the Supreme Court has upheld the order. If it is an order of dismissal of the appeal filed by one of the parties and where the order does not state the reasons, it cannot be said that order will stand in higher rating than the judgment given on the same issue by the Larger Bench.
3. On this ground we find that the Commissioner (Appeals) had wrongly interpreted the subject notification.
4. The second ground is of limitation. The Commissioner (Appeals) commented adversely on the drafting of the show cause notice from which it was difficult to derive the period that the demand covered. The Commissioner observed that the demand could be issued only for six months and allowed the appeal on limitation also. In the appeal memorandum it is claimed that the show cause notice being dated 16-7-1987, the demand for the period from 11-9-1986 to 31-3-1987 was not barred by limitation. Prima facie this calculation is correct but we will deal with this when we take up the next issue for decision.
5. The third issue is provisions of the law which was invoked and under which the Modvat was availed of. The Assistant Collector had confirmed the demand under Rule 57-I. The show cause notice had invoked the provisions of Rule 9(2) read with Section 11A of the Act. The Commissioner (Appeals) observed that confirmation under a provision which was not invoked was incorrect and bad in law. In the appeal memorandum citing the Supreme Court judgment in the case of ACCE v. The Elphinstone Spg. & Wvg. Co. Ltd. -1978 E.L.T. (J 399) it has been claimed that if the exercise of power can be traced to a legitimate source, the fact that the same was purported to have been exercised under a different power does not vitiate the exercise of the power in question.
6. We have seen the cited judgment. The Court in that case was discussing the coverage of Rules 9,10 and 10A as they existed at the material time. In paragraph 14 of the judgment what the Court observed was that if the power existed to issue the notice under either of two rules, then the fact that the same was issued under one rule when the other was applicable could be condoned. The situation here is different. As we interpreted the show cause notice the demand is made for those goods which were cleared free of duty. In that case Rule 57-I cannot have any application at all and therefore the cited judgment is of no use. In the same judgment the Supreme Court had held that Rule 9(2) would come into play only where the goods are clandestinely removed and not otherwise. It is not the charge of the department in this case that the goods were clandestinely removed. There is no allegation of suppression in the show cause notice. Therefore the demand made under Rule 9(2) also could not sustain. On the ground we do not find any merit in the department’s appeal and therefore dismiss the appeal.