1991 (2) TMI 264 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 56A of the Central Excise Rules regarding the utilization of duty credit.
2. Whether the credit of duty taken under Rule 56A can be used for payment of duty on waste products arising in the manufacture of main products.
3. Application of Rule 56A (3) (vi) (a) in determining the eligibility of utilizing duty credit.
4. Discrepancy in classification of waste products and its impact on duty payment.
5. Validity of denying credit utilization for waste products based on the purpose of bringing in duty paid inputs.
6. Applicability of Rule 56A (3) (vi) (a) in cases where specific permission was not sought for waste product manufacturing.

Analysis:

1. The appeal was filed against the order rejecting the utilization of duty credit for payment of duty on Bell ends and Front ends and Boring and Turnings arising in the manufacture of seamless pipes and tubes. The Collector of Central Excise upheld the decision based on Rule 56A (3) (vi) (a) of the Central Excise Rules, which restricts the use of credit for specific finished goods only.

2. The issue revolved around whether the proforma credit could be utilized for waste products arising in the manufacturing process. The Bench decided that the appeal fell within its jurisdiction, emphasizing that no rate of duty or valuation matter was involved, making it suitable for their decision.

3. The contention was raised that the waste products were not finished excisable goods, but the Bench disagreed, stating that if they were considered as such, their dutiability would apply. The interpretation of Rule 56A (3) (vi) (a) was crucial in determining the eligibility of utilizing the credit for payment of duty on finished excisable goods.

4. The classification of waste products and the subsequent demand of duty created a discrepancy. The appellant had been utilizing credit for payment of duty on waste products, leading to a show cause notice and demand of duty. However, the Collector (Appeals) had previously allowed their appeal in a similar matter.

5. The Department argued that the permission granted was for the manufacture of seamless pipes and tubes, not for waste products, thus justifying the denial of credit utilization for waste. The Bench disagreed, stating that the application for permission implicitly included benefits for waste products arising in the main product's manufacture.

6. The Bench concluded that the denial of credit utilization for waste products was incorrect in law. The appellants' subsequent application for utilizing credit for waste products should be considered valid under Rule 56A (3) (vi) (a), overturning the previous orders and allowing the appeal.

7. The Bench highlighted that even if the credit was disallowed for waste products, the equivalent amount in RG-23A should be available for duty payment on seamless pipes and tubes, preventing double taxation on the same material.