2008 (2) TMI 218 - AT - Central Excise

Dutiability of hypo solution & silver residue which come into existence during processing of Cinematographic film - Once it is not denied that hypo solution is chemical solution classifiable u/c 37.07 the same is squarely covered by Exemption Notification 264/76 - Notification 264/76 exempt all chemical preparations for photographic uses and unmixed products for photographic uses - Since both products are fully exempted from duty, demand cannot survive and accordingly appeal is allowed

Summary

Issues:
Dutiability of certain products (hypo solution and silver residue) during the processing of Cinematographic film.

Analysis:
The issue in this appeal revolves around the dutiability of hypo solution and silver residue produced during the processing of Cinematographic film. The appellants argued that these products are not marketable and do not have a shelf life, thus should not be considered excisable. They also claimed exemption under Notifications 264/76-C.E. and 19/88. Notification 19/88 exempts goods falling under Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985, provided no credit of duty paid on inputs used in manufacturing final goods is taken. On the other hand, Notification 264/76 exempts chemical preparations for photographic uses and unmixed products for photographic uses. The silver residue was classified under Chapter Heading 2620.00, falling under Chapter 26, and since goods under Chapter 26 are exempted from duty, and the appellants did not take Modvat credit on inputs, the exemption under the notification applies. Similarly, the chemical solution, falling under Chapter 37.07, is covered by Notification 264/76 exempting chemical preparations for photographic uses. As both products are fully exempted from duty, the demand is not sustainable, leading to the setting aside of the Commissioner's order and allowing the appeal. The judgment explicitly states that since the goods are exempted from duty, the connected issues of demand being time-barred or products being not marketable are not addressed.

This judgment clarifies the applicability of Notifications 264/76 and 19/88 to exempt certain products from duty during the processing of Cinematographic film. It emphasizes the importance of proper classification of products under the relevant chapters of the Central Excise Tariff Act to determine their dutiability. The judgment highlights the significance of not taking credit of duty paid on inputs in claiming exemptions under specific notifications. It also underscores the principle that if a product falls under a chapter exempted from duty and no credit of duty paid on inputs is taken, the exemption cannot be denied. The decision sets a precedent for cases involving similar issues of dutiability and exemption under the Central Excise Tariff Act, providing clarity on the interpretation and application of relevant notifications in such scenarios.