1986 (9) TMI 245 - AT - Central Excise

Issues:
1. Claim for refund under Notification No. 178/77 for excise duty paid in excess.
2. Requirement of filing a statement of input-output ratio for claiming refund.
3. Interpretation of Notification No. 178/77-C.E. and its conditions.
4. Time limitation for issuing show cause notice for demand.
5. Compliance with the conditions of the exemption notification for duty exemption.

Analysis:

Issue 1: Claim for refund under Notification No. 178/77
The case involves a revision application filed by the Government of India, treated as an appeal, regarding a claim for refund of excise duty paid in excess by the appellants for manufacturing High Voltage Air Break Switches and Isolators under Tariff Item No. 68. The appellants sought refund as per Notification No. 178/77, claiming entitlement to the duty paid on inputs. The Assistant Collector initially permitted proforma credit but later, the Collector set aside the order citing the absence of a statement showing the input-output ratio for each unit of output.

Issue 2: Requirement of input-output ratio for refund
The central issue revolves around the requirement of furnishing a statement of input-output ratio as a condition for claiming the refund under the Notification. The appellants argued that their products varied in composition and did not have a fixed ratio of inputs, making it impractical to provide a formula in advance. They contended that the notification did not mandate such a pre-condition, and the Collector's demand for a formula was beyond the scope of the notification.

Issue 3: Interpretation of Notification No. 178/77-C.E.
The interpretation of Notification No. 178/77-C.E. was crucial in determining the appellants' eligibility for the refund. The appellants emphasized the word "used" in the notification, stating that they should furnish the input statement only after utilizing the inputs. They argued that the exemption applied to goods where duty had already been paid on inputs, and they had provided necessary documents to prove their eligibility for the refund.

Issue 4: Time limitation for demand
A question of time bar was raised concerning the demand made in the Order-in-review dated 26-3-1981. However, an earlier show cause notice on 13-12-1980 was issued within six months of the refund, satisfying the time limitation requirement. The Assistant Collector had verified the particulars before granting the refund, and the order-in-review was deemed timely.

Issue 5: Compliance with exemption notification conditions
The case also addressed the compliance of the appellants with the conditions of the exemption notification for duty exemption. The Collector's observations regarding difficulties faced by manufacturers in complying with the notification's requirements were noted. The Tribunal cited precedents where compliance with notification conditions was deemed necessary for granting duty exemptions.

In conclusion, the Tribunal allowed the appeal, setting aside the Collector's order-in-review. The decision was based on the appellants' entitlement to the refund under Notification No. 178/77-C.E., the absence of a mandatory requirement for a pre-submission of input-output ratio, and the timely issuance of the show cause notice within the statutory period.

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