2008 (11) TMI 483 - AT - Central Excise

Summary

Issues:
1. Denial of exemption on manufacturing of Lay Flat Tubing from Plastic Granules under DEEC scheme.
2. Applicability of Board's Circular No. 125/36/95-CX and subsequent amendment by Circular No. 667/58/2002-CX.
3. Limitation aspect in relation to the Board Circular.

Analysis:

1. The case involved the denial of exemption to the respondents for manufacturing Lay Flat Tubing from Plastic Granules received under the DEEC scheme without payment of duty. The issue arose when a show cause notice alleged that the appellants had paid less duty during a specific period. The adjudicating authority denied the exemption, stating that the Lay Flat Tubes were manufactured from inputs that had not incurred any duty, thus making the 'nil' rate of duty unavailable. However, the Commissioner (Appeals) allowed the appeal based on the Board's Circular No. 125/36/95-CX and a previous Tribunal decision. The Board's instructions clarified that the exemption on a product made from duty-paid inputs cannot be denied even if the inputs were exempted from excise duty, which was consistent with the Tribunal's decision in a similar case.

2. The respondents had sought adjournment, while the Revenue's representative highlighted the amendment to the Circular cited by the Commissioner (Appeals) through Circular No. 667/58/2002-CX. The Revenue argued that the Commissioner failed to consider this amendment. However, the Tribunal found this argument unconvincing. It noted that the Board's circular in question was applicable at the time the final product was cleared without duty payment, and the subsequent clarification came seven years later. The Tribunal emphasized that since the Board's circular was in force during the relevant period and was only amended in 2002, the respondents could not be faulted for relying on it. Consequently, the appeal filed by the Revenue was rejected.

3. The judgment concluded by rejecting the Revenue's appeal, affirming the Commissioner (Appeals)' decision based on the applicability of the Board's circular during the relevant period. The Tribunal's analysis emphasized the importance of considering the timeline of regulatory changes and the impact on the parties' actions and obligations. The limitation aspect was crucial in determining the validity of the denial of exemption and highlighted the significance of regulatory clarity and consistency in tax matters.