1988 (8) TMI 244 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 201/79-CE regarding set-off of duty on inputs used in manufacturing polyester fiber.
2. Admissibility of set-off on glycol contained in waste products like methanol, glycol residual waste, and polyester fiber waste.
3. Jurisdiction of the Superintendent to reduce the demand of duty.
4. Comparison between Rule 56A and Notification No. 201/79 for set-off eligibility.
5. Applicability of previous judgments in determining set-off eligibility.

Analysis:
1. The case involved the interpretation of Notification No. 201/79-CE concerning the set-off of duty on inputs used in manufacturing polyester fiber. The respondents claimed set-off for duty paid ethylene glycol used in production, subject to restrictions in the Notification.

2. The Assistant Collector initially disallowed set-off for glycol contained in waste products like methanol, glycol residual waste, and polyester fiber waste. However, an amending Notification No. 102/81 allowed set-off except for glycol used in the recovery of D.M.T. and in polyester fiber waste used for D.M.T. recovery at nil duty rate.

3. The Collector (Appeals) overturned the Assistant Collector's decision, holding that the set-off was admissible for waste products under Notification No. 201/79. The Revenue filed appeals against this decision, arguing that the exemption was only for inputs used in manufacturing excisable goods, not for non-excisable products like methanol.

4. The Revenue contended that prior to 11.4.1981, there was no provision in Notification No. 201/79 for set-off on waste products. They argued that the Trade Notice pertained to Rule 56 and not the Notification, emphasizing the distinction between the two enactments.

5. The respondents argued that they were eligible for full set-off even before 11.4.1981, citing a Bombay High Court judgment. They highlighted the process of production and the historical parity between Rule 56A and Notification 201/79 in claiming set-off eligibility.

6. The Tribunal analyzed the arguments and previous judgments, including the Bombay High Court case. They concluded that Rule 56A and Notification No. 201/79 were distinct enactments, and the amendment to one could not be automatically applied to the other. Therefore, they allowed the appeals, emphasizing the non-retrospective effect of the amending Notification 102/81.

7. The Tribunal clarified that the only question before them was the admissibility of set-off on inputs, regardless of the exemption status of the finished excisable goods. They distinguished the Bombay High Court judgment on Rule 56A from the present case involving Notification 201/79.

8. The Tribunal upheld the Revenue's argument that Rule 56A and Notification No. 201/79 were separate enactments, and the retrospective effect of the amending Notification 102/81 could not be assumed without explicit indication. Consequently, they allowed the appeals, and the Cross Objection was deemed not maintainable and abated.