1994 (3) TMI 119 - AT - Central Excise

Summary

Issues Involved:
1. Whether the benefit of exemption Notification 225/86 dated 3-4-1986 can be availed only at the time of clearance of goods on payment of duty.
2. Whether the benefit of the said notification can be kept in an account for being utilized for payment of duty on final products manufactured subsequently using further lots of the same inputs.
3. Whether the Tribunal decision in Indian Petro Chemicals Limited v. Collector of Central Excise requires reconsideration.

Issue-wise Detailed Analysis:

1. Whether the benefit of exemption Notification 225/86 dated 3-4-1986 can be availed only at the time of clearance of goods on payment of duty:
The Tribunal examined the scope and effect of Notification 225/86, which exempts specified final products from duty equivalent to the duty paid on the inputs used in their manufacture. The notification does not specify that the exemption must be availed at the time of clearance of goods. Unlike Notification 201/79, Notification 225/86 does not include a procedure for availing the benefit, such as maintaining a set-off register or following an appendix procedure. The Tribunal concluded that the exemption could be availed without batchwise correlation of inputs and final products, allowing for a more flexible utilization of the benefit.

2. Whether the benefit of the said notification can be kept in an account for being utilized for payment of duty on final products manufactured subsequently using further lots of the same inputs:
The Tribunal found that the benefit under Notification 225/86 is not limited to being availed at the time of clearance of goods. The notification allows for the exemption to be utilized for payment of duty on final products without requiring a one-to-one correlation between inputs and final products. This interpretation aligns with the Delhi High Court's judgment in the Good Year India Limited case, which stated that there need not be any nexus between inputs and outputs for the utilization of credit. Therefore, the benefit can be kept in an account and utilized for subsequent lots of final products.

3. Whether the Tribunal decision in Indian Petro Chemicals Limited v. Collector of Central Excise requires reconsideration:
The Tribunal upheld its decision in the IPCL case, stating that the Collector's interpretation requiring a one-to-one correlation between inputs and final products was erroneous. The Tribunal's decision was based on the principle that there is no need for strict correlation between inputs and final products for the availment of credit. The decision was consistent with previous rulings, including the Good Year India Limited case, which allowed for the flexible utilization of credit. The Tribunal concluded that the IPCL decision does not require reconsideration, as it correctly interpreted the scope of Notification 225/86.

Conclusion:
The Tribunal confirmed that the benefit of exemption Notification 225/86 can be availed without strict correlation between inputs and final products, allowing for flexible utilization of the benefit. The Tribunal's decision in the IPCL case was upheld, affirming that the notification does not require the exemption to be availed only at the time of clearance of goods. The interpretation aligns with previous judicial decisions, ensuring the effective application of the exemption benefit.