1984 (8) TMI 330 - AT - Central Excise

Summary

Issues: Appeal against order-in-appeal allowing benefit of two notifications - Notification No. 217/79 and Notification No. 201/79 - to the respondent for manufacturing insulating varnish using duty-paid inputs.

Analysis:
1. Background: The appeal was filed by the Assistant Collector of Central Excise, Patiala against the order-in-appeal passed by the Collector (Appeals), New Delhi, allowing the appeal filed by M/s. Hindustan Wire Products (P) Ltd. The dispute arose regarding the benefit of two notifications - Notification No. 217/79 and Notification No. 201/79 - claimed by the respondent for manufacturing insulating varnish using duty-paid inputs.

2. Facts and Claim: M/s. Hindustan Wire Products claimed the benefit of Notification No. 217/79 and Notification No. 201/79 for manufacturing insulating varnish. The Assistant Collector held that availing set-off under Notification No. 201/79 would make the inputs non-duty paid, thus denying the benefit of Notification No. 217/79. However, the Collector (Appeals) allowed the appeal, stating that the respondent was entitled to the benefit of both notifications.

3. Grounds of Appeal: The grounds put forth in the appeal were related to the interpretation of Notification No. 201/79 and Notification No. 217/79. The appellant argued that once credit of duty-paid inputs was taken, they ceased to be duty-paid, thus disqualifying the respondent from claiming the benefit of Notification No. 217/79.

4. Submissions and Arguments: The department contended that the duty-paid character of inputs was lost once credit was taken, while the respondent argued that the inputs retained their duty-paid status. The respondent claimed that both notifications were independent, and they fulfilled the conditions of both, making them eligible for the benefits.

5. Judicial Analysis: The Tribunal analyzed the provisions of Notification No. 201/79 and Notification No. 217/79. It clarified that Notification No. 201/79 was an exemption notification exempting excisable goods using duty-paid inputs. The Tribunal agreed with the respondent that the duty-paid character of inputs was not lost upon taking credit. It differentiated between the proforma credit procedure and exemption notifications, stating that the benefit of Notification No. 217/79 should not be denied to the respondent.

6. Decision: The Tribunal rejected the appeal, upholding the Collector (Appeals) decision to grant the benefit of both notifications to the respondent. The Tribunal emphasized that the duty-paid inputs retained their character, allowing the respondent to claim the exemptions under both notifications.

7. Additional Judgment: In a separate judgment, Member H.R. Syiem endorsed the decision, emphasizing that Notification No. 201/79 required an input-to-finished product correspondence and exempted only the duty equivalent to inputs. The judgment highlighted that if the input duty was not available due to credit, no exemption could be claimed under Notification No. 201/79. The judgment supported the reasoning that the concession under Notification No. 217/79 should be available to the respondent.

In conclusion, the Tribunal upheld the benefit of both notifications to the respondent, emphasizing that the duty-paid character of inputs was retained even after taking credit. The judgments clarified the distinction between the proforma credit procedure and exemption notifications, ensuring the respondent's eligibility for the claimed exemptions.