HYDERABAD ASBESTOS CEMENT PRODUCTS AND ANR. versus UNION OF INDIA AND ORS.

Citation: [1999] SUPP. 5 S.C.R. 155 · Decided: 07-12-1999 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed

Judgment (excerpt)

HYDERABAD ASBESTOS CEMENT PRODUCTS AND ANR. 
A 
v. 
UNION OF INDIA AND ORS. 
DECEMBER 7, 1999 
[S.P. BHARUCHA, R.C. LAHOTI AND N. SANTOSH HEGDE, JJ.] 
B 
Central Excises and Salt Act, 1944-Central Excise Rules, 1944-Rule 
56A Proviso (i) and (ii)-Tariff items 22, 23A, 23C-Asbestos cement 
products-Benefit of proforma credit procedure-Raw materials and final 
products excisable under different tariff items-No notification or sanctioned C 
remission or adjustment of duty on finished goods-Held, assessee not entitled 
to benefit of proforma credit procedure. 
Appellan~ manufacture and sell asbestos cement products using cement 
and asbestos fibre as raw materials. The raw materials as well as the finished 
goods were excisable under different Tariff items of22F, 23 and 23C. The D 
finished products were not exempt from payment of excise duty nor were they 
chargeable with nil rate of duty. There was no notification by Central 
Government in the Gazette or sanction for remission or adjustment of duty 
paid for the finished goods. The Appellants claimed the benefit of proforma 
credit procedure under Rule 56A of Central Excise Rules 1944, by seeking E 
credit for the payment of duty paid on the raw materials as against the duty 
payable on the finished products. The claim was rejected by the Assistant 
Collector as well as Collector of Central Excise. The Writ Petitions filed by 
t~e Appellants before the High Court were dismissed. 
On appeal before this Court the Appellants contended that once the F 
Central Government has notified the excisable goods under sub-rule (1) the 
benefit of proforma credit shall be available to the Appellants without regard 
to the fact whether or not the raw material or the component parts are excisable 
under the same item or sub-item of Tariff* and that the effect of benefit 
extended by the main part of the Rule cannot be nullified or taken away by a G 
proviso to Rule. 
Dismissing the appeals, the Court 
HELD : 1. There is no doubt that to avail the benefit of proforma credit 
* 1986 (25) ELT 879. 
155 
H 
156 
SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R. 
A under Rule 56A the inputs which go to manufacture the specified finished 
excisable goods must be exigible to payment of duty under the same tariff 
item or sub item; or else, if such inputs are exigible to tax under different 
tariff items or su~items then they must be covered by the specifie sanction 
of the Central Government granting remission or adjustment of duty on those 
B inputs as provided by proviso to (ii) (b). Admittedly there is no such specific 
sanction. The raw materials consumed being excisable under Ta .. iff items 
differ;ent from the one under which the finished products are excisable the 
Appellants have been rightly denied benefit of proforma credit [160-C-D] 
2. The language of the Rule is plain and simple. It does not admit of any 
C doubt in interpretation. Proviso (i) and (ii) are separated by the use of 
conjunction 'and'. They have to be read conjointly. The requirement of both 
the provisos has to be satisfied to avail the benefit Clauses(a) and (b) of proviso 
(ii) are separated by the use of an 'or' and there the availability of one of the 
two alternatives would suffice. Inasmuch as cement and asbestos fibre used 
by the Appellants in the manufacture of their finished excisable goods are 
D liable to duty under different tariff items, the benefit of proforma credit 
extended by Rule 56A cannot be availed of by the Appellants and has been 
rightly denied by the authorities of the Department. [160-A-B-C) 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6990 of 1999 
E Etc. 
From the Judgment and Order dated 8.4.87 of the Andhra Pradesh High 
Court in W.P. No. 13361 of 1983. 
Harish N. Salve, Solicitor General, (Dushyant Dave, Ms. Gauri Rasgotra, 
F Ms. Pumia Singh, Suman J. Khaitan, Haris Beeran, Siddhartha Dave), for Ml 
s. Khaitan & Co., Kailash Vasdev, Hemant Sharma and P. Parmeswaran for the 
appearing parties. 
The Judgment of the Court was delivered by 
G 
R.C. LAHOTI, J. Leave granted. 
The appellants manufacture and sell asbestos cement products such as 
sheets (corrugated or plain), pressure pipes, couplings etc. These products 
require cement and asbestos fibre as raw materials. Both the items consumed 
H as raw materials as also the finished products manufactured by the appellants 
J. 
...... 
HYDERABAD ASBESTOS CEMENT PRODUCTS v. U.O.I. [R.C. LAHOTI, J.] 
157 
are all excisable commodities un

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