1988 (10) TMI 137 - AT - Central Excise

Summary

Issues:
1. Interpretation of exemption notification for Central Excise duty on manufactured foils.
2. Requirement of disclosure of manufacturing activity to avail exemption.
3. Application of Rule 56-A procedure for set off or reduction in duty.
4. Relevance of Supreme Court judgment in determining distinct products under tariff entry.

Analysis:

1. The case involved the manufacturing of etched aluminum foils from duty-paid plain aluminum foils falling under Tariff Item 27(c) of the Central Excise Tariff. An exemption notification fixed the effective rate of Central Excise duty at 32% ad valorem for the material period. The Collector (Appeals) granted the benefit of this exemption to the respondents, which was challenged by the Appellant Collector on the grounds of non-disclosure of manufacturing activity and non-application under Rule 56A.

2. The Tribunal found no merit in the grounds raised by the Revenue. It clarified that the concessional rate under the exemption notification was not contingent upon disclosing manufacturing activity to the department. The rate of duty was applicable to all manufacturers meeting the terms of the notification, irrespective of disclosure. Non-disclosure would impact the period of demand for duty but not the applicability of the concessional rate, as there was no legal basis to debar assesses from availing the exempted rate due to suppressed activity.

3. Additionally, the Tribunal highlighted that the exemption notification did not mandate following Rule 56-A procedure for set off or reduction in duty. In the absence of such a requirement in the notification, the Collector could not insist on adherence to Rule 56-A procedure by the respondents to avail the benefits of set off or reduction in duty.

4. The respondents referred to a Supreme Court judgment in the case of M/s. Kiran Spinning Mills, emphasizing the recognition of distinct products under tariff entries. However, the Tribunal noted that the relevance of this judgment would have been significant if the respondents had filed an appeal or cross-appeal. Since the Department was the appellant, the Tribunal dismissed the appeal, as the grounds raised lacked substance and did not warrant overturning the decision of the Collector (Appeals).

In conclusion, the Tribunal upheld the decision of the Collector (Appeals) to grant the benefit of the exemption notification to the respondents, emphasizing that non-disclosure of manufacturing activity and non-application under Rule 56-A did not invalidate their entitlement to the concessional rate of duty.