1990 (8) TMI 253 - AT - Central Excise

Summary

Issues:
Eligibility of the respondent for availment of proforma credit of duty paid on BOPP film used as separators in the manufacture of rigid plastic laminated sheets under Rule 56A of the Central Excise Rules.

Detailed Analysis:

1. Issue of Eligibility for Proforma Credit:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the eligibility of the respondent to avail proforma credit of duty paid on BOPP film used as separators in manufacturing rigid plastic laminated sheets under Rule 56A of the Central Excise Rules. The Assistant Collector initially disallowed the credit, stating that BOPP film was neither a raw material nor a component part of the finished product. However, the Collector of Central Excise (Appeals) overturned this decision, granting relief to the respondents based on a previous decision of the West Regional Bench of CEGAT. The West Regional Bench held that the material need not be a raw material and that the conditions of Rule 56A were met in this case. The Collector observed that Rule 56A does not confine the special procedure to raw material alone, and the benefit of Notification 71/71 was also applicable to BOPP film.

2. Appellate Decision and Legal Precedents:
The Appellate Tribunal heard arguments from both parties and considered relevant legal precedents. The learned SDR for the appellant highlighted a subsequent decision of the Southern Regional Bench of the Tribunal, which emphasized that Rule 56A pertains only to raw materials. However, the Tribunal referred to several Supreme Court judgments to support its decision. In these cases, the Supreme Court interpreted terms like "component parts" and "raw materials" broadly to include items necessary for the manufacturing process or marketability of the final product. Applying this reasoning, the Tribunal concluded that BOPP film, being used as separators in the manufacturing process, was eligible for proforma credit under Rule 56A. Additionally, the Tribunal affirmed that BOPP film fell under the category of "any plastic material" mentioned in Notification 71/71.

3. Final Decision and Dismissal of Appeal:
Based on the analysis of the legal provisions, precedents, and the specific circumstances of the case, the Appellate Tribunal upheld the decision of the Collector of Central Excise (Appeals) and dismissed the appeal of the Department. The Tribunal found no reason to interfere with the lower authority's ruling, confirming the eligibility of the respondent for proforma credit of duty paid on BOPP film and the applicability of Notification 71/71. The judgment emphasized the broad interpretation of terms like "component parts" and "raw materials" in line with the Supreme Court's decisions, ensuring that materials essential for the manufacturing process are covered under relevant excise rules and notifications.