1987 (5) TMI 130 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification 201/79 and Notification 118/75 regarding excise duty exemption for goods.
2. Determination of whether the benefit of Notification 201/79 applies to the chemicals used in the manufacture of pulp sheets transferred between factories.
3. Analysis of whether the pulp sheets transferred between factories can be considered finished goods or intermediary products.

Analysis:
The case involves an appeal against the orders of the Collector (Appeals) concerning the application of Notification 201/79 and Notification 118/75. The Appellants, engaged in manufacturing paper, transferred pulp sheets from one factory to another for further processing. The dispute arose regarding the duty exemption on inputs used in the manufacture of pulp sheets. The Department contended that the Appellants cannot claim the benefit of Notification 201/79 as they had removed the pulp sheets without payment of duty. Additionally, the Department argued that the pulp sheets should be considered as finished goods rather than intermediary products, thus denying the exemption for inputs.

The Appellants argued that the movement of pulp sheets between factories should not be treated as clearance of finished goods. They contended that the proviso of Notification 201/79 would not be applicable as it referred to goods exempted from excise duty, which, in this case, would be the final product. On the other hand, the Department asserted that since the Appellants had availed of Notification 118/75 for pulp clearance, the proviso of Notification 201/79 would be applicable, disallowing the exemption for inputs.

The Tribunal analyzed the notifications in conjunction and concluded that the Appellants should have paid duty under Item 68 and then availed the benefit of Notification 201/79 for the chemicals used in the manufacturing process. As the Appellants had removed the pulp sheets without paying duty, the Tribunal upheld the Department's contentions. The Tribunal clarified that the inputs for the Bhopal factory were the pulp sheets, not the chemicals used in a different factory. Therefore, the benefit of Notification 201/79 was deemed unavailable to the Appellants due to non-compliance with the prescribed procedures and payment of duty on inputs.

Ultimately, the Tribunal dismissed the appeal, emphasizing that the Appellants could not claim exemption for the duty paid on inputs since they had not paid duty at the factory where the inputs were used. The decision highlighted the importance of adherence to notification requirements and proper declaration of intended manufacturing processes to avail of duty exemptions effectively.