1989 (4) TMI 159 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 58/74, dated 1.3.74 exempting excisable goods from auxiliary duty.
2. Interpretation of Notification No. 4/78, dated 10.1.78 allowing credit of auxiliary duty for finished products.

Detailed Analysis:

Issue 1: Interpretation of Notification No. 58/74, dated 1.3.74 exempting excisable goods from auxiliary duty:
The case involved a dispute regarding the utilization of proforma credit of auxiliary duty paid on raw material for the manufacture of finished products exempt from auxiliary duty. The Appellate Collector had allowed the credit balance of auxiliary duty for payment of basic excise duty on the finished products. However, the Central Government tentatively held that this order was not legal, as per Notification No. 58/74. This notification exempted excisable goods from auxiliary duty to the extent that the duty had already been paid on the raw material used in their manufacture. The Government's contention was that since the finished products were exempt from auxiliary duty, the credit under this notification was not applicable.

Issue 2: Interpretation of Notification No. 4/78, dated 10.1.78 allowing credit of auxiliary duty for finished products:
Notification No. 4/78, issued under Section 37 of the Act, allowed the utilization of credit of auxiliary duty paid on raw materials for payment of duty on finished excisable goods. The Revenue argued that this credit could only be used for auxiliary duty on finished products, not for basic excise duty. They cited a Supreme Court judgment supporting this argument. However, the respondents relied on a Tribunal decision involving a similar issue, where it was held that the credit of auxiliary duty on raw material could be used for payment of basic excise duty on finished products.

In the judgment, the Tribunal analyzed the notifications and legal provisions involved. They distinguished between basic excise duty and auxiliary duty, emphasizing that Notification No. 4/78 permitted the use of auxiliary duty credit for payment of basic excise duty on finished products. Referring to the Supreme Court's judgment, the Tribunal concluded that the notifications under consideration did not conflict, and the credit could indeed be utilized for basic excise duty. Therefore, the Tribunal vacated the show cause notice and dismissed the appeal in favor of the respondents.