2010 (5) TMI 788 - AT - Central Excise

Summary

Issues:
- Dispute regarding exemption of duty on Mono Ethlylene Glycol (MEG) used in the manufacture of Polyester staple fiber (PSF) under Notification No. 225/86-C.E.
- Admissibility of set off of duty on MEG for PSF cleared without payment of duty under Rule 191BB for export.
- Denial of set off on MEG contained in waste and by-products.
- Disallowance of set off on MEG used in the manufacture of PSF cleared at nil rate of duty.
- Alleged short receipt of MEG and denial of set off amounting to &8377; 6,50,090.

Analysis:
1. The dispute revolves around the applicability of Notification No. 225/86-C.E. exempting PSF from duty based on duty paid on MEG used in its manufacture. The issue arises when PSF is cleared without duty for export under Rule 191BB. The Tribunal has previously held that such clearances are not exempted goods, allowing the benefit of the notification. The department's acceptance of duty-free clearances for export under bond implies eligibility for the exemption under Rule 191BB.

2. The Notification operates similarly to the Modvat scheme, allowing credit for specified duty on inputs towards finished products for export. Previous judgments have upheld this principle, extending the benefit to clearances under bond without payment of duty. The Tribunal's decision aligns with this interpretation, emphasizing consistency in applying the exemption to duty-free clearances under Rule 191B.

3. Regarding the alleged short receipt of MEG, the Commissioner (Appeals) found discrepancies in the department's claims, highlighting excess receipts under other bills of entry. The lack of challenge or explanation by the department led to upholding the Commissioner's findings. The Tribunal dismissed the Revenue's appeal, affirming the correctness of the impugned order.

Overall, the Tribunal's decision confirms the admissibility of duty exemption under Notification No. 225/86-C.E. for MEG used in PSF manufacture, even for clearances without payment of duty under Rule 191BB. The judgment emphasizes consistency in applying exemption provisions and requires proper justification for challenging findings on alleged discrepancies in input receipt.