ORDER
K.S. Venkataramani, Member (T)
1. These appeals are against the common order dated 27-11-1991 passed by the Commissioner of Central Excise (Appeals), Allahabad. The appellants, herein, are engaged in the manufacture of vegetable products and availed of cash credit scheme for use of minor specified oil in their final product in terms of Notification 27/87 issued under Rule 57K of the Central Excise Rules. One of the conditions in this notification is that the quantity of credit utilised for payment of duty on any individual clearance of the final product shall not exceed Rs. one thousand PMT of the vegetable product cleared and the excess credit, if any, available in the credit account, shall not be refunded to the manufacturer or adjusted against or utilised for payment of duty on any excisable goods in any other circumstances. Notification 27/87 was rescinded on 25-8-1989 by Notification 39/89. Subsequently, another Notification 45/89, dated 11-10-1989 was issued on the same lines for the same purpose, namely, to encourage use of minor oil in the manufacture of vegetable product by grant of rebate designed in the notification. The department, initially, took the view that the resicinding of the Notification 27/87, the appellants, cannot utilise the accumulated credit for payment of duty. However, this view was over-ruled in various writ petitions before the High Courts and in the appellants’ own case, the High Court of Delhi in their misc. petition before that court in CMP NO. 4288/89 of 1989 directed that the appellants be permitted to utilise the credit already earned when the Notification 27/87 was in force. Similar view was expressed by other High Courts while disposing of writ petitions on this issue as follows :
1. Dipak Vegetable Oil Industries Ltd. v. U.O.I. reported in 1991 (52) E.L.T. 222 (Guj.)
2. Agarwal Industries v. U.O.I. reported in 1992 (57) E.L.T. 561 (A.P.), and
3. Madras Vanaspati Ltd. v. U.O.I. reported in 1992 (61) E.L.T. 6 (Mad.)
2. The department, however, issued demand-cum-show cause notices to the appellants on the grounds that they were entitled to take credit and utilise the same Rs. one thousand PMT under Notification 27/87 and under the subsequent revised Notification 45/89 whereas the appellants had paid duty from the money credit scheme of more than Rs. one thousand PMT thereby it was alleged that they had violated the provisions of exemption notification. The jurisdictional Assistant Commissioner confirmed the demand in all these cases which were challenged in appeal before the Commissioner (Appeals). The Commissioner (Appeals) referred to the relevant provisions relating to money credit under Rule 57K and the related rules. He also referred to the decision of the Gujarat High Court in the case of Dipak Vegetable Oil Industries (supra) and held that utilisation of credit accumuated under Notification 27/87 was subject to the provisions of Central Excise Rules governing money credit of the condition of the notifications issued thereunder. Notifications 27/87 and 45/89 were such notifications. Reading of Rule 57K with Notifications 27/87 and 45/89, issued under that rule, clearly indicated that the amount of credit is to be restricted to Rs. one thousand PMT. In this context, the Commissioner (Appeals) referred to the Delhi High Court decision in the case of Amrit Vanaspati Products, Ghaziabad which had modified the High Court’s earlier order in CMP No. 2763/89 and had directed that the amount from accumulated credit utilised by the petitioner should not exceed Rs. one thousand PMT. The Commissioner (Appeals) rejected the appeal.
3. Shri Bipin Garg, ld. Counsel appearing for the appellants, submitted that the High Court decisions on this aspect have clearly laid down that the accumulated credit under the rescinded notifications can be utilised for payment of duty. After its rescinding also such a direction was also given to the appellants by the Delhi High Court in the decision on their misc. petition filed before it in the writ petition. In accordance with interpretation of the notification and the rule and the direction in their own case by the High Court, the appellants had utilised Rs. 900.00 accumulated under Notification 27/87 and a credit of Rs. one thousand which they had earned under Notification 45/89 for, paying duty on their clearances. The ld. Counsel contended that both the notifications were independent of each other and the appellants had correctly utilised for credit. It was argued that the judgments of the High Courts would indicate that the appellants were fully entitled to utilise the amounts of credit under both the notifications simultaneously for an individual clearance.
4. Shri Mewa Singh, ld. S.D.R. contended that the rebate scheme and the notifications issued under Rule 57K restricted the rebate which can be availed of for a single clearance to Rs. one thousand PMT and not more. If the appellants were keen to utilise the accumulated credit under the rescinded notification, they could have distributed the utilisation in any manner provided always that the total amount utilised is limited to Rs. one thousand PMT.
5. We have carefully considered the submissions made by both the sides. The judgments of the High Courts of Gujarat, Madras and Andhra Pradesh [supra] lay down clearly that just because the Notification 27/87 had been rescinded, it will not be a bar to utilisation of that credit earned already while the notification was in force. The implication of the rescinding notification is that fresh credit cannot be earned when the notification was not in force. The Gujarat High Court in its judgment had referred to the objective of the rebate scheme as reflected in the Finance Minister’s speech while introducing the Budget for the year 1987-88 explaining that the system of rebate for excise duty for vanaspati and soap was linked to the larger use of a minor oils that such a rebate scheme was being continued and in the memorandum issued by the Ministry of Finance explaining the provisions of the Finance Bill 1987-88, it was, further, explained that the existing rebate scheme for vanaspati and soap was modified so as to provide for granting of rebate through a system of granting credit to be utilised for payment of duty in final product. The Gujarat High Court observed thereafter that even after the rescinding of the Notification 27/87, the credit of money which was earned by the manufacturers on vanaspati and soap could be utilised by them in terms of rules and notifications for payment of excise duty on vanaspati and soap manufactured by them after 25-8-1989. The Andhra Pradesh High Court in its decision (supra) followed the Gujarat High Court judgment. The Andhra Pradesh High Court noted therein that the credit taken under the notification will be available for utilisation under the scheme only after the commencement of the succeeding month. This quantum of oil used in the manufacture of vanaspati and the credit utilisation for payment of duty on vanaspati cleared, should not exceed Rs. one thousand PMT. The Court, further, noted that the excise payable on vanaspati was Rs. 1,900.00 PMT and that therefore, the manufacturer will have to pay a minimum of Rs. 900.00 PMT on vanaspati cleared from other sources. The Commissioner (Appeals) had also noted a decision of the Delhi High Court wherein the High Court had modified its earlier order and directed that the amount from accumulated credit to be utilised by the petitioner, should not exceed Rs. one thousand PMT. From the discussion of the ratio of the judgments above and the nature and objective of the scheme of granting rebate on excise duty to encourage use of minor oils in the manufacture of vanaspati and soap, it emerges that the notifications issued for the purpose have clearly restricted the use of the credit for payment of duty to a limit of Rs. one thousand PMT on any individual clearance of the final product. The objective and the purpose is, further, emphasised in condition No. 3 of the notification by its stipulation that the excess credit, if any, available in the credit account shall not be refunded or adjusted or utilised for payment of duty on any excisable goods under any other circumstances. The Andhra Pradesh High Court had also noted specifically that the manufacturer under the scheme will have to pay minimum of Rs. 900 / P.M.T. as duty after availing of the rebate. Such being the position, contention of the appellants that they are entitled to utilise the amount accumulated under the rescinded notification as also amount earned under the subsequent Notification 45/89, simultaneously, for an individual clearance cannot be accepted. All that, they were, permitted to do was to utilise the accumulated balance and the current earning of credit only so as to pay duty upto the ceiling fixed under the notification:ion, namely, Rs. one thousand PMT on individual clearance. In considering this aspect it should also be borne in mind that what the notification grants is in the nature of rebate of duty and there is no element of subsidy therein. The Gujarat High Court in its decision (supra), had also noted that the accumulated credit can be utilised only in terms of the rules and notifications for payment of duty on the vanaspati manufactured. Therefore, there is no scope for the acceptance of the contention that a simultaneous utilisation of the credit should be allowed for individual clearances exceeding Rs. one thousand per clearance. Therefore, we see no reason to interfere with the orders passed by the Commissioner (Appeals). The appeals are rejected.