1990 (1) TMI 258 - AT - Central Excise

Summary

Issues Involved:
1. Entitlement to duty exemption under Notification No. 178/77.
2. Compliance with procedural requirements for claiming the exemption.
3. Eligibility for cash refund instead of set-off.
4. Consideration of the refund claims' propriety and limitation.

Detailed Analysis:

1. Entitlement to Duty Exemption under Notification No. 178/77:
The appellant company engaged in manufacturing soaps and organic surface active agents (OSAA) claimed entitlement to duty exemption under Notification No. 178/77, which exempted excisable goods to the extent of duty paid on input goods covered under T.I. 68. The company sought this exemption for oleo stearine used in soaps and STPP used in OSAA, as per the notification effective from 18-6-1977.

2. Compliance with Procedural Requirements for Claiming the Exemption:
The appellants faced issues with procedural compliance. Initially, no procedure was prescribed in the notification, leading the appellants to clear goods by paying full excise duty while reserving their right to claim the exemption. The procedural requirements were later communicated via Trade Notice No. 158/77 dated 3-8-1977 and further modified by Trade Notice No. 231/77 dated 4-11-1977. The appellants argued that these procedures were cumbersome and impracticable, making full compliance difficult. Despite this, they continued to submit D3 intimations, which were verified and accepted by the Central Excise Authorities.

3. Eligibility for Cash Refund Instead of Set-Off:
The appellants preferred refund claims for the period 18-6-1977 to 6-4-1978, which were rejected on grounds that the benefit could only be availed through set-off at the time of clearance of finished goods, not as a cash refund. The appellants contended that the notification did not restrict the benefit to set-off only and cited the case of Collector of Central Excise v. Sarabhai Chemicals to argue that procedural deviations should not deny substantive benefits. The Tribunal agreed, noting that the notification was silent on the procedure and that the appellants should not be denied the benefit if they could prove duty-paid inputs were used in the manufacture of finished goods.

4. Consideration of the Refund Claims' Propriety and Limitation:
The adjudicating authority had not assessed whether the refund claims were proper in terms of the amounts claimed or considered the point of limitation. Consequently, this was also not addressed by the Collector in the impugned order. The Tribunal remanded the case to the adjudicating authority to re-examine the refund claims in light of the Tribunal's findings and observations.

Conclusion:
The Tribunal found that the appellants were entitled to claim the exemption benefit, including cash refunds, if they could satisfy the department regarding the duty-paid inputs used in manufacturing the final products. The case was remanded to the adjudicating authority for a detailed re-examination of the refund claims, considering the amounts claimed and the limitation period.