2007 (9) TMI 140 - AT - Central Excise

Finished goods Plastid ropes are produced with the help of inputs HDPE/PP granules Duty is paid on inputs Exemption to Plastic ropes under Not. 6/02 cannot be denied by saying that intermediate products are exempt from duty

Summary

Issues:
- Interpretation of Notification No. 06/2002-C.E. regarding exemption for HDPE/PP and Nylon Ropes
- Applicability of Board's Circulars on the interpretation of "appropriate duty of excise has already been paid"
- Eligibility of the Respondents for exemption under Notification No. 6/2002-C.E. dated 1-3-2002
- Rejection of Revenue's appeal against the Order-in-Appeal

Interpretation of Notification No. 06/2002-C.E.:
The case involved manufacturers of HDPE/PP and Nylon Ropes who cleared finished goods without duty payment under Notification No. 06/2002-C.E. Revenue challenged this claiming that the intermediary products were cleared at Nil rate of duty, not as goods with 'appropriate' duty paid. The Apex Court's ruling emphasized that goods cleared at 'Nil' duty cannot be considered as cleared with 'appropriate duty'. The Board's Circulars clarified this interpretation, stating that exemption is not available if the raw material is not liable to excise duty or if the duty is nil.

Applicability of Board's Circulars:
The Respondents argued that they were entitled to exemption under Notification No. 6/2002-C.E. for HDPE/PP Granules cleared during a specific period, supported by a CBEC Circular. The Board's Circulars, especially the one dated 26-9-2002, were used to deny the benefit of exemption based on the interpretation of 'appropriate duty of excise has already been paid' as per the Apex Court's decision in a previous case.

Eligibility for Exemption under Notification No. 6/2002-C.E.:
The Tribunal analyzed the case records and found that the Respondents used duty paid HDPE/PP Granules to manufacture ropes, meeting the conditions of the Notification. The Commissioner (Appeals) highlighted that the raw material (granules) was duty paid, making the Respondents eligible for exemption. The Tribunal agreed, emphasizing that the exemption cannot be denied when the raw material has duty paid, as per the Apex Court's interpretation.

Rejection of Revenue's Appeal:
The Tribunal rejected the Revenue's appeal, upholding the Commissioner (Appeals) decision that the Respondents were eligible for exemption under Notification No. 6/2002 for the ropes manufactured from duty paid granules. The Tribunal emphasized that the mere exemption of intermediate products from duty did not affect the claim for exemption for the final product, plastic ropes. The decision was based on the legal and proper application of the Notification, leading to the dismissal of the Revenue's appeal.