1988 (6) TMI 202 - AT - Central Excise

Summary

Issues:
The appeal involved the interpretation of Notifications 95/79-C.E. and 201/79-C.E. regarding the eligibility for proforma credit/set off of duty for inputs used in the manufacture of final products cleared without payment of duty under bond for home consumption.

Issue 1: Interpretation of Notification No. 95/79-C.E.
The question was whether a direct nexus between inputs and final products was required under Notifications 95/79-C.E. and 201/79-C.E. The appellants claimed proforma credit/set off of duty for tyres manufactured and cleared under bond. The Asstt. Collector initially allowed the benefit, but the Department appealed, leading to the Tribunal's consideration.

Issue 2: Arguments and Interpretation
The appellants argued that Notification No. 95/79 should be interpreted as it is, without adding conditions not explicitly stated. They emphasized that the inputs need to be used in the final products described in the notification, without the requirement of duty-paying clearances. On the other hand, the JDR contended that a direct nexus between inputs and outputs was necessary, especially when the final products were already exempt from duty.

Issue 3: Tribunal's Decision
The Tribunal considered both arguments and focused solely on Notification No. 95/79. It noted that the procedure under Rule 56A of the Central Excise Rules should be followed, without requiring all provisions of the rule to apply. The Tribunal agreed with the appellants that there was no stipulation in the notification regarding duty payment for the final products, emphasizing the usage of inputs in the described final products.

Issue 4: Conclusion and Ruling
The Tribunal held that Notification No. 95/79 did not mandate a direct nexus between inputs and outputs. It referenced a previous judgment supporting the allowance of proforma credit even if finished goods later became exempt. Consequently, the appeal was allowed, and consequential relief was ordered.

Separate Judgment by V.P. Gulati, Member (T):
Member V.P. Gulati disagreed with the interpretation and ruling of the main judgment. He highlighted the specific conditions in proviso 2 of Notification No. 95/79, stating that if the end product had nil duty, the credit on inputs would also be nil. As the tyres in question were cleared without duty payment, he concluded that the credit on inputs was not available, leading to the disallowance of the appeal.