1987 (11) TMI 187 - AT - Central Excise

Summary

Issues:
Alleged clearance of staple fibre claiming duty exemption, rescinded exemption notification, date of removal from factory, admissibility of exemption under Rule 9A of Central Excise Rules 1944.

Analysis:
The case involves the appellants clearing staple fibre claiming duty exemption under Notification No. 279/77 but actually removing the goods from the factory after the exemption was rescinded by Notification No. 45/80. The Assistant Collector ordered duty payment as the gate-pass was not issued before the rescission date. The Appellate Collector upheld this decision, stating that removal from the factory is necessary for exemption under Rule 9A of Central Excise Rules 1944.

The Senior Advocate for the appellants argued that goods were fully exempt at the time of manufacture and should remain so even if cleared after the exemption withdrawal date. Citing case law, the advocate contended for continued exemption post-rescission. The JDR reiterated the lower authority's view and highlighted that the appellants failed to prove their product met the conditions of the exemption notification.

The Tribunal found that the appellants were manufacturing staple fibre out of drawn waste, negating the department's claim of insufficient evidence. The department's argument focused on duty liability post-exemption withdrawal, while the appellants maintained that goods were cleared before the withdrawal and retained in the factory due to labor issues, not constituting removal. The Tribunal acknowledged the exemption at the time of manufacture, rendering the duty liability post-withdrawal irrelevant.

The Tribunal concluded that since the goods were fully exempt at the time of manufacture, no duty liability arises even after the exemption withdrawal. This obviated the need to determine if removal to the duty paid store-room constituted removal for duty purposes under Rule 9 of Central Excise Rules, 1944.