1986 (11) TMI 191 - AT - Central Excise

Summary

Issues:
Claim for exemption under Notification 178/77 for duty paid lime, Refund claim for duty paid inputs, Interpretation of Notification conditions

Analysis:
1. The appellants applied for exemption under Notification 178/77 for duty paid lime used in the manufacture of the final product. The Assistant Collector approved the exemption under a set-off procedure under Rule 56A. However, an amendment to the notification required a statement of inputs used in the final product. The appellants later claimed exemption for other inputs and filed a refund claim for the past 6 months.

2. The Assistant Collector rejected the refund claim, stating that the exemption application dated 19-3-1979 could only be applied prospectively. The notification did not allow for refunds of Central Excise duty on inputs but only set-off of duty paid on inputs used in manufacturing excisable goods to avoid double taxation.

3. The Appellate Collector upheld the rejection of the refund claim, emphasizing that the exemption had to be claimed at the time of clearance, and no refund could be claimed subsequently.

4. The appellants argued that the application for exemption was also a refund claim as it included details of inputs used in manufacturing different paper varieties. They contended that the procedural condition of furnishing a statement should not negate the substantive benefit of set-off duty paid on inputs.

5. The department relied on a Tribunal decision stating that furnishing a statement was a prerequisite for relief under the notification. They argued that the approval given earlier was only for lime and not the other inputs mentioned in the later application.

6. The appellants countered that the statement requirement was procedural and should not override the substantive condition of duty payment and utilization of inputs. They emphasized that the concession for lime should apply from the initial application date.

7. The Tribunal agreed with the appellants, stating that the exemption could be claimed beyond the time of clearance, and the application on 19-3-1979 was both a declaration and a refund claim for the past 6 months. They differentiated this case from prior decisions and emphasized the substantive benefit over procedural conditions, ultimately allowing the appeal in full.