ORDER
M. Santhanam, Member
1. This is a revision application filed before the Government of India which, on a transfer to the Tribunal, is being treated as an appeal.
2. The appellants are manufacturers of steel ingots and iron and steel products with the aid of electric furnace classifiable under Items 26 and 26 AA of the Central Excise Tariff. Notifications 65/73, 67/73 and 68/73 prescribe concessional rate of duty under certain conditions. In terms of Notification No. 17/71 dated 27-3-71, the duty paid on raw materials could be taken credit of for utilisation towards payment of duty on the finished products. The appellants have been getting raw materials from (i) bazar `crap, (ii) duty-paid fresh unused steel melting scrap from sister concerns, iron in crude form and (iii) reverse scrap. Alloy materials are added and steel ingots are manufactured by the appellants which are used in the manufacture of iron and steel products. Prior to 1-3-73, steel ingots manufactured from specified scrap were exempted from duty under Notification No. 26/69 dated 1-3-1969. Under Notification No. 67/73, all forms of semi-finished steel falling under sub-item (i) of Item No. 26AA made from steel ingots on which duty at the appropriate rate had already been paid were liable to duty at Rs. 65/- per metric tonne while others were liable to duty at Rs. 165/- per metric tonne. There is a proviso to this notification which reads as follows:
“Provided that in the case of the products mentioned against S.Nos. Kb), 2(c), 3(b) and 4(b) of the aforesaid Table, manufactured with the aid of electric furnace from any of the following materials, namely :
(i) old iron or steel melting scrap;
(ii) a combination of the material referred to at (i) above with fresh unused steel melting scrap on which the appropriate duty of excise has been paid, and
(iii) iron in any crede form falling under Item No. 25 of the said First Schedule on which the appropriate duty of excise has been paid, in combination with the materials referred to at (i) and (ii) above,
the duty specified against the corresponding entries in column (3) of the said Table shall be reduced by fifty rupees per metric tonne.”
The appellants also applied for permission for availing the procedures set out in Rule 56A of the Central Excise Rules. Notification No. 17/71 prescribes that iron and steel products falling under Item No. 26 for the manufacture of which duty-paid steel ingots including” steel melting scrap are used are exempted from so much of duty on excise as is equivalent to the duty on excise already paid on such steel ingots including steel melting scrap. The appellants were permitted to avail the procedure by the Assistant Collector in his letter dated 26-6-73. However, the appellants were restrained from payment of duty on the finished goods by debiting from the credit taken in RG-23 on the plea that the raw materials could not be co-related with the finished products made out of it. The appellants had to make the payment of duty by debiting from personal ledger account during the period from 1-3-73 to 28-2-74. The appellants represented the matter to the Member (Tariff) who also paid a visit to the plants. While so, a notification bearing No. 163/73 dated 25-8-73 was issued in which strict co-relation between raw materials and finished products was waived. The departmental authorities did not verify the RG-23 records in spite of several representations and the amount credited therein remained unutilised. The. appellants represented to the Collector that necessary instructions may be given to re-open the assessment of RT-12 and waive strict co-relation of the raw materials. There was exchange of correspondence in the matter. While so, a show cause notice was issued on 22-6-1979 asking the appellants to explain as to why the prayer for waiver of strict co-relation between duty-paid raw materials and finished products for the period from 1-3-73 to 24-8-73 and allowing the credit lying in RG-23 to be utilised towards payment of duty on the finished goods for the period from 25-8-73 to 28-2-74 should not be rejected. The appellants sent a reply urging that strict co-relation of the raw. materials with the finished products was neither possible ‘nor feasible and that Rule 56A did not contemplate such a co-relation. The appellants furnished the heat numbers and also the gate passes and the invoices.
3. In spite of the appellants’ submissions and contentions, the Assistant Collector passed orders on 6-6-79 rejecting the appellants’ prayer on the plea that from 1-3-73 to 24-8-73 strict co-relation of raw materials with finished products could not be made and for the period from 25-8-73 to 28-2-74 assessment on RT-12 had become final and as such could not be re-opened. An appeal to the Appellate Collector was also rejected on 30-5-85. Hence the present revision, now treated as an appeal.
4. Shri N. Mookherjee, the learned counsel for the appellants submitted that the appellants had moved the authorities for proforma credit which was granted on 26-6-1973. So far as co-relation was concerned, he stated that the log book mentioned the details and the identity of the scrap was established. He relied on 1979 E.L.T. (J253) (M/s. E.I.D. Parry (India) Limited, Madras) wherein the High Court of Madras has held that there was no obligation on the part of the manufacturer to co-relate the Rock Phosphates imported to the ultimate finished goods. He submitted that there were no laches on the part of the appellants. They had maintained the RG-23 registers and have also been agitating the matters with the authorities. He drew our attention to the several correspondence in the matter and stated that the appellants were agitating at every stage that the benefit of proforma credit should be given to the appellants. He also relied on the letter dated 28-2-1974 addressed to the Superintendent, Durgapur seeking early approval of credit already taken in the RG-23 registers. He placed reliance on the classification list filed before the authorities on 20-4-74 w.e.f. 1-3-73 wherein it was mentioned that proforma credit under Rule 56A will be availed of in respect of the duty-paid on fresh unused steel melting scrap used in the manufacture of steel ingots and steel products. This endorsement was struck off by the department. In the RG-23 Part II Account filed before the department, an opening balance was claimed but that was not taken into consideration by the authorities. He emphasised that the log sheets were produced before the Assistant Collector and he had every opportunity of verifying the co-relation. A strict arithmetical co-relation of the quantity of the raw materials with the finished products was neither practicable nor feasible. However, all the materials were placed before the authorities and adequate evidence was placed establishing the co-relation.
5. Shri A.K. Jain, SDR stated that the proforma credit was granted on 25.8.73 and no proforma credit could be claimed prior to that date. He urged that the appellants had availed the benefit of Notification No. 65/73 and have paid concessional duty. Hence it is not open to them to claim proforma credit. In support of his contention he relied on 1983 (2) E.T.R. (530) [M/s Associated Cement Company Limited] where the East Regional Bench, Calcutta had held that,
“Once proforma credit was given to duty-paid goods it had the effect of making them non-duty paid and the procedure laid down was designed to safeguard revenue.”
He relied on 1981 E.C.R. (190) [M/s. Hindustan Wire Products] Order No. 82-83/86-B1 for the ‘same purpose. He urged that when credit was frozen the appellants had not filed any appeal. The appellants had also not questioned the cancellation of the endorsement in the classification list. The assessments have become final and no appeal had been preferred. In respect of the scrape received from M/s Bajaj, no document has been filed. Strict co-relation was done away with in 1973. The appellants have not placed adequate materials co-relating the credit with the finished products for the earlier period. Having availed the concessional rate of duty their claim for proforma credit would amount to a re-opening in the assesment resulting in the refund of duty which would be against the provisions of the Central Excises and Salt Act, 1944.
6. We have carefully considered the contentions raised by the parties. The two questions that arise for decision are:
(i) Whether the appellants are entitled to proforma credit for the period from 1-3-73 to 24-8-73 without strict co-relation of the raw materials with the finished products, and
(ii) Whether the appellants are entitled to credit for the period from 25-8-73 to 28-2-74 even though the assessment in the RT-12 were not made final.
7. The party have been quite ingenious. They have presented their case as a question of allowing them proforma credit for the period 1-3-1973 to 28-2-1974. There is really no purpose in allowing them proforma credit for this period because as set out very clearly in the order of the Assistant Collector for the period 1-3-1973 to 24-8-1973, there will be a question of relaxation of the requirement of the law for strict correlation between the raw material and the finished product produced from such material in terms of rule 56A. That such strict correlation was required was recognised and acknowledged by ASP when they asked the Board for relaxation of this requirement of the law. During the time beginning 1-3-1973, ASP did not attempt to correlate the products with the raw materials and, in fact, they submitted RG-23 accounts part II only on 14-9-1974 thus depriving the assessing officer of whatever chance he might have had to correlate the raw material with the products manufactured from them. Nor did ‘the factory indicate in their RT 12 and PL A returns during the period beginning 1-3-1973 that they would avail proforma credit for the period they submitted the RT-12 returns and, therefore, the assessments at concessional rates under notifications No. 65/73-CE, 67/73-CE and 68/73-CE, at reduced rates asked by themselves were completed by the assessing officer. On 28-2-1974, the factory informed the excise authorities that they wanted to take credit in RG-23 of duty paid on raw materials and also requested that they should be allowed to adjust credit in their RG-23 for payment of duty of goods cleared from 1-3-1973. For this purpose, they submitted RG-23 Part II, but only on 14-9-1974 as already noticed.
8. Therefore, after having paid duty under concessional rates from 1-3-1973 to 28 2-1974 it was only on 14-9-1974 that the factory submitted to the excise authorities their RG-23 account. It may be true they had intention to avail proforma credit from 1-3-1973, but they had done nothing to establish correlation of such raw material with finished products as required by rule 56A. Therefore, the proper course for them was to ask for a refund of duty paid by them for the clearances; there is no other way in which the request of the party can be conceded. Or to put it differently, concession of their point is of no benefit to them unless they are also allowed refund of the duty paid on the clearances. Therefore, the request made by the ASP to be allowed to avail proforma credit from 1-3-1973 to 24-8-1973 and to relax strict requirement of correlation between raw materials and finished product has only one object: establishing that they should obtain refund of the duty paid.
9. This is not permissible because for one thing, strict correlation was necessary at the time at least upto 24-8-1973 and this has not been done. Furthermore, the, party did nothing to facilitate the correlation and instead of establishing correlation between the raw materials and their finished products, they chose to pay duty at concessional rates on their clearances. It is, therefore, no argument for ASP now to say that they had been allowed to avail proforma credit by the Assistant Collector from the beginning of March, 1973; because permission imposes upon the factory the duty to follow the prescribed procedures; it does not exempt them from such procedures and we have seen that they did not follow the prescribed procedures. For Example, when they submitted the RG-23 accounts, to Central excise for the period 1-3-1973 to 28-2-1974, they did so only in September, 1974. Similarly, their demand to reopen their assessment of RT-12’s from 1-3-1973 to 28-2-1974 to adjust proforma credit against the clearances of their dutiable products will serve no purpose unless it is followed by a refund of the duty paid by them. They paid the duty by adjustment in their PL A during the period 1-3-1973 to 24-8-1973 and the period 25-8-1973 to 28-2-1974 availing the concessional rate of duty under the Notification Nos. 65/73-CE, 67/73-CE and 68/73-CE. As correctly remarked by the Assistant Collector, had the licensee been able to correlate the raw materials with their finished products as required under Rule 56A, the question of payment of duty at concessional rate would not have arisen. The assessees were working under SRP and would have known that the submission of RT-12 with PLA or RG-23 was required. This RG-23 account was not submitted by the assessee till several months after the expiry of the period in dispute. It raises a question in one’s mind whether the RG-23 was, in fact, maintained at the proper time, although the Assistant Collector does not go into this.
10. The assessees did not approach the central excise in a straightforward manner. They have asked for permission to adjust proforma credit for 1-3-1973 to 24-8-1973 and to reopen assessment of RT-12 returns from. 25-8-1973 to 28-2-1974; these are nothing but tactics for obtaining refunds of duty for which claims would be time barred. The Assistant Collector did not appear to have noted this, but we think he did right in rejecting the request for allowing the proforma credit and for reopening the assessments.
11. We reject the appeal.