1988 (7) TMI 189 - AT - Central Excise

Summary

Issues:
Appeal against C.C.E., Bombay order; Benefit of Notification No. 103/61 as amended; Proviso under Rule 56A; Denial of benefit due to C.V. Duty payment; Interpretation of Notification No. 103/61 and Rule 56A compliance.

Analysis:
The appeal was filed against the C.C.E., Bombay order regarding the benefit claimed under Notification No. 103/61 as amended by Notification No. 109/80. The dispute arose due to the proviso added in sub-rule (ii) of Rule 56A by Notification No. 104/79, restricting credit of countervailing duty on specific goods. The appellants were denied the benefit of the said Notification in relation to products on which C.V. duty was paid. The Notification exempts synthetic organic dyestuffs from excise duty, subject to following Rule 56A procedure. The appellants argued that their claim was under Notification No. 103/61, not Rule 56A, and the procedural amendment under Notification 109/80 should not affect their substantive benefit.

The lower authorities held that compliance with Rule 56A was necessary for availing the benefit of Notification No. 103/61. The appellants contended that the procedural amendment did not impact the substantive benefit claimed under the Notification. The key issue was whether the appellants had to follow Rule 56A procedure to claim the exemption under Notification No. 103/61. Rule 56A allows credit for duty paid on inputs used in manufacturing notified goods, subject to specified conditions and exceptions.

The Tribunal observed that the Notification exempted dyestuffs without specifying tariff headings for intermediates. The permission for proforma credit under Rule 56A was restricted for certain goods, including those falling under Tariff Item 68. While synthetic organic dyestuffs were notified under Rule 56A, the appellants were not claiming proforma credit but exemption under Notification No. 103/61. The Tribunal concluded that the appellants must comply with Rule 56A procedure to avail the Notification's benefit, but the extent of exemption was not subject to specific exclusions like C.V. duty on particular goods.

The Tribunal emphasized that the procedural compliance under Rule 56A related to availing the exemption, not reducing the exemption extent. The Notification's proviso only pertained to the procedure, not the exemption extent. Therefore, the Tribunal found the lower authorities' decision unsustainable and allowed the appeal, granting consequential relief to the appellants.