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PETITIONER: LAL WOOLEN & SILK MILLS (P) LTD.

       Vs.

RESPONDENT: THE COLLECTOR OF CENTRAL EXCISE, CHANDIGARH

DATE OF JUDGMENT:       13/04/1999

BENCH: A.P.Misra, R.P.Sethi

JUDGMENT:

DER

       The  short  question  raised  for  the  assessee  is whether  he  is  liable  to  pay excise duty on dyed worsted woollen yarn when he  has  already  paid  the  duty  on  the worsted  woolen grey yarn, if liable, whether he is entitled for set off the difference of excise duty, which he paid for the ’grey yarn’ while being taxed on the  said  dayed  yarn? The  two  Notifications  imposing duty on the said two goods are Notifications 235/76 and 236/76.  It is not  in  dispute for  the  first time separate rate of duties were imposed on grey yarn and dyed yarn in 1966.    Thereafter  thought  the aforesaid Notifications different tariff values and separate rates of  duty  were  notified  for  the said two goods.  In spite of this the assessee continued to pay the differential duty in view of the earlier practice without  any  objection from the Department.  It is only on 24th August, 1977 notice was   issued  by  the  Department  refusing  such  set  off. Department case is that woollen  yarn  is  notified  in  the schedule to  Rule  56  A  of the Central Excise Rules.  Thus under this Rule grant of proforma credit  is  permitted  and not  any  set off subject to the claim by the assessee under sub-rule (2) of  Rule  56A.    As  no  such  permission  was obtained  by the assessee from the Assistant Collector under Rule 56 A, thus the appellants were directed to  show  cause why  Central  Excise  Duty  of  Rs.4.08.789.96 should not be recovered under rule 10 of the Central Excise  Rules.    The Assistant  Collector  confirmed  the said demand over-ruling the  assessee’s  objections  with  reference  to  the   past practices.   In  appeal the Collector of Customs and Central Excise (Appeals) New Delhi confirmed the order passed by the Assistant Collector) New Delhi confirmed the order passes by the Assistant Collector of Central Excise,  Amritsar.    The Customs, excise and Gold (Control) Appellate Tribunal partly dismissed  the  appeal  of the assessee with majority of 2:1 relying upon the decision of this Court in Empire Industries Limited Vs.  Union of India (1985) 3 SCC.    314.    Learned counsel  for the assessee attempted to distinguish this case that the said decision related to ’cotton fabrics’ while our case is of ’woollen yarn’.   An  attempt  was  made  by  the learned  counsel  for  the  assessee that conversion of grey yarn into dyed yarn did not amount to any manufacture  hence two separate  duties  are  not leviable.  We do not find any merit in this submission.  Admittedly both ’dyed  yarn’  and ’grey  yarn’  are  covered  by two separate distinct head of tariff item with different duty.  So this itself  recognises they to  be two different goods with separate levy.  In view

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of this it cannot be urged that there is no  manufacture  of ’dyed yarn’ from the ’grey yarn’.

       Next  the  only  short point pressed for decision is whether appellant is entitled for set off  under  Rule  56A, when  he  has  not followed the procedure as laid down under sub-rule (2) of the said Rule?  It is  true  it  is  not  in dispute  that  assessee  has paid the duty on both grey yarn and dyed yarn.   Assessee  also  qualifies  for  a  proforma credit  in  case  he  applies in terms of sub-section (2) of Rule 56A.  It is also not in dispute that assessee  has  not applied  and  has not followed the procedure as contemplated under sub-section (2) by making an application for  proforma credit.   It  is also true that the said rule was amended on 21st Feb.,1981 by introducing sub-rule 2B under which  power was entrusted to the collector both to condone the defect of any  procedure of sub-rule (2) and to confer benefit to such assesses.  But we find this rule was amended  only  on  21st Feb.,1981  the  period  to  which we are concerned is of the year 1976-77.  Hence, appellant cannot claim benefit of this amendment.  In view of this we do not find any error in  the Tribunal’s judgment  .    In view of this we do not find any error in the Tribunal’s judgment when it did not  grant  set off to  the  appellant.  Admittedly, appellant never applied or claimed for proforma credit of the  differential  amount, hence claim was rightly rejected.

       We are also informed the decision reported  in  1985 (3) S.C.C.  314  Empire Industries Ltd.  Vs.  Union of India on  which  the  Tribunal  relied  has  been  upheld  by  the Constitutional  Bench  in  the case reported in 1989 (3) SCC 488.  Hence for all these reasons we do not find  any  merit in this appeal and is accordingly dismissed.