ORDER
Harish Chander, Member (J)
1. M/s. Knit Foulds (P) Ltd., Kapurthala has filed an appeal being aggrieved from the order passed by the Collector of Central Excise (Appeals), New Delhi. The appellants manufacture ‘woven fabric belting’ and ‘leather nylon sandwich belting’. In the manufacture of which nylon strips and synthetic resins are used and the same are imported from abroad. They paid additional duty (CV duty under Section 3 of the CTA, 1975) on the import of said nylon strips and synthetic resins. Superintendent of Central Excise Range, Kapurthala vide his letter CE/7/KNF/2/80/587 dated 5-6-1980 directed the appellants to obtain a Central Excise L-4 licence in respect of uncut rolls of Woven Fabric Sandwich Belting even though used for captive consumption within the factory, and they were also directed not to clear the goods without payment of excise duty as they were not exempted under Notification No. 115/75 dated 30-4-75. The appellants obtained the said licence and filed a classification list declaring their goods i.e. uncut rolls of Woven Fabric Sandwich Belting as falling under T.I. 22 under protest. The appellants had taken the stand that the said uncut rolls of Woven Fabric Belting are not chargeable to duty as these are not classifiable under T.I. 22 and the appellants urged that Leather Nylon Sandwich Belting being a product of the factory covered by Tanning Industry is exempted under Notification No. 115/75 dated 30-4-1975. They further agitated that in case they are to pay Central Excise duty on the said uncut rolls of Woven Fabric Sandwich Belting under T.I. 22 and the said leather Nylong Sandwich Belting under T.I. 68, they were entitled to the credit of CV duly paid by them under the CTA, 1975 on Nylon Strips and Synthetic Resins which are used in the manufacture of both the above products. The appellants had also claimed the credit of duty under Rule 56-A and further claimed that the second proviso to Rule 56-A (2) was not applicable to their case which denies credit of countervailing duty if the CV duty has been paid on goods falling under T.I. 68 whereas Nylon Strips and Resins fall under T.I. 15A. It has also stated that first proviso to Rule 56-A (2) which denies under Clause 2, the allowance of credit of duty in case of goods on which excise duty has been paid if they do not fall under the same Tariff Item, was also not applicable to them since this does not refer to the countervailing duty at all. The term ‘duty’ has been defined under Rule 2(v) of the Central Excise Rules, 1944 as “Duty” means a duty payable under Section 3 of the Act. Under Section 3 of the Central Excises and Salt Act, 1944, excise duty is leviable only on the manufacture of goods. This has no reference to additional duty leviable under Customs Tariff Act, 1975. According to the appellants, they were entitled to credit of countervailing duty referred to under Rule 56-A (2) paid on the said Nylon Strips and Synthetic Resin used in the manufacture of the said uncut rolls Woven Fabric Belting. The learned Assistant Collector did not accept the contention of the appellants and had rejected the application for availing proforma credit in respect of CV duty paid by them on Nylon Strips and Synthetic Resins which are further used by them for manufacture of goods falling under T.I 68 i.e. leather nylon sandwich belting, and T.I. 22 i.e. uncut rolls of woven fabric sandwich belting. Being aggrieved from the aforesaid order the appellants had filed appeal before the learned Collector of Central Excise (Appeals). The learned Collector (Appeals) had confirmed the findings of the Assistant Collector and had rejected the appeal. Being aggrieved from the aforesaid, the appellants have filed an appeal before this Tribunal.
2. Shri V.K. Aggarwal, learned advocate has appeared on behalf of the appellants. He has reiterated the facts as mentioned in the appeal memo. He has argued that the additional duty was paid under Section 3 of the CTA, 1975 and CV duty on T.I. 68 items was levied for the first time in 1979. In terms of provision of Rule 2(v) of the Central Excise Rules, 1944, “Duty” means the “duty” payable under Section 3 and under Section 3 the “duty” is the Central Excise duty. In support of his argument he has cited the following judgments :-
(i) 88 ITR 192 Commissioner of Income Tax v. Vegetable Product Ltd.
Tax payable is not the same thing as tax assessed. The words “the tax” in the latter part of the provision can only refer to “the tax, if any, payable” by the assessee mentioned in the earlier part of Section 27 (1) (a) (i).
(ii) Volume XXXVI (1959) ITR 1 Commissioner of Income Tax, Mysore, Travancore-Cochin and Coorg v. Indo-Mercantile Bank Ltd.
Whereas the Supreme Court has held that “it is a fundamental rule of construction that a proviso must be considered with relation to the principal matter to which it stands as a proviso”. Therefore, it is to be construed harmoniously with the main enactment. It has to operate in the same field and if the language of the main enactment is clear it can be used for the purpose of interpreting the main enactment or two exclude by implication what the enactment clearly says unless the words of the proviso are such that that is its necessary effect.
(iii) 1978 ELT (J 350) (SC) Hemraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise & Customs, Surat and Ors.
It is well established that in a taxing statue there is no room for any intendment but regard must be had to the clear meaning of the words. If the tax-payer is within the plain terms of an exemption he cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. In a Court of Law or Equality what the legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact either in express words or by reasonable or necessary implication.
Lastly, he cited the judgment of Supreme Court in the case of Kulu Valley Transport, reported in 77 ITR 410, where the Hon’ble Supreme Court has held that where two views are possible, the view which is favourable to the assessee has to be adopted.
3. Shri L.C. Chakraborty, learned JDR has supported his case on the basis of the order-in-original and the impugned appellate order. Shri Chakraborty states that for the CV duty paid no credit can be given to the appellants. The use of the word “the” restricted to Central Excise duty. He has pleaded for the dismissal of the appeal. Shri Aggarwal has again pleaded for the acceptance of the appeal.
4. We have heard both the sides and have gone through the facts and circumstances of the case. Rule 2(v) defines “duty” and “duty” means the duty payable under Section 3 of the Act and Section 3 which is the charging section provides that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India or imported by land into any part of India and at the rate setforth in the First Schedule. Rule 56-A envisages a scheme and Rule 56-A has to be read as a whole. Reading of Rule 56-A in piecemeal manner will not be proper. Sub-rule (2) of Rule 56-A permits proforma credit of the duty of excise or CV duty paid on the imported material or component parts. However, the first proviso places certain limitation before the benefit envisaged in the said sub-rule becomes available. These limitations are :
(a) The proforma credit is not available if the finished excisable goods are totally exempt or carry nil rate of duty.
(b) The material or component parts should fall under the same Tariff Item as the finished excisable goods, or in the alternative the Central Government specifically sanction remission or adjustment of duty paid on such material or component parts.
The second proviso stipulates that credit of CV duty will not be allowed in respect of material or component parts which fall under T.I. 68 of the Central Excise Tariff. There is nothing to indicate in the wordings of these provisions or the scheme of this rule that the first two provisos to Sub-Rule (2) of Rule 56-A are mutually exclusive. As regards the first proviso, in the appellants’ case there was no notification which specifically sanctioned remission or adjustment of countervailing duty paid on their imported input and since the said imported input (Item 15-A) and their finished goods (Item 68) fell under two different Tariff Items, their case was hit by both the conditions of the Rule. These conditions formed a part of the basic scheme of the Rule. Before us, the appellants tried to read too much in absence of the article “the” before the word “duty” in Clause (ii) (a) of the first proviso. Such absence cannot mean, as the appellants would have us believe, that while credit of excise duty on inputs was admissible only if paid under the same Tariff Item, credit of the corresponding countervailing duty on inputs could be had irrespective of the Tariff Item under which they fell. The Rule, read as a whole, provided for similarity of treatment between Central Excise duty and countervailing duty so far as the condition of same Tariff Item was concerned. The judgments cited by the learned advocate do not help him. The appeal is rejected.