1988 (1) TMI 140 - AT - Central Excise

Summary

Issues:
Whether Acetate Yarn/Staple Fibre/Tow manufactured by the appellants are entitled to the concession under Notification No. 201/79-C.E., dated 4-6-1979.

Analysis:
The issue revolves around the entitlement of the appellants to the concession granted under Notification No. 201/79-C.E., dated 4-6-1979 for the manufacturing of Acetate Yarn/Staple Fibre/Tow. The notification exempts excisable goods where the duty of excise is leviable and certain inputs have been used in their manufacture. The appellants submitted declarations to the Superintendent of Central Excise indicating the inputs and finished goods intended to be manufactured. However, the Superintendent issued show cause notices questioning the correctness of the declarations. The Superintendent held that the appellants were not eligible for the exemption under the notification as certain intermediate products, including Cellulose Acetate, were manufactured during the process. The Collector of Central Excise (Appeals) upheld this decision, stating that the benefit of the notification was not applicable as the inputs fell under a different tariff item than the finished goods.

During the hearing, the appellants argued that their case aligns with previous Tribunal decisions and should be allowed. The respondent argued that the finished products were manufactured from goods falling under a different tariff item, making them ineligible for the notification's benefit. The Tribunal considered various precedents cited by the appellants, including cases where the definition of inputs was broadly interpreted to include materials used in the manufacturing process. The Tribunal noted that the appellants used Acetaldehyde and Acetic Acid as starting raw materials, which were converted into intermediate products like Cellulose Acetate before the final products were produced.

Ultimately, the Tribunal held that the benefit of the notification should be extended to the appellants for manufacturing Acetate Yarn/Staple Fibre/Tow using Acetaldehyde and Acetic Acid as starting raw materials. The Tribunal emphasized that the use of intermediate products in the manufacturing process did not disqualify the appellants from the notification's concession. Therefore, the impugned order was set aside, and the appeal was allowed.