1992 (8) TMI 178 - AT - Central Excise

Summary

Issues:
Claim for exemption under Notification No. 95/83 - Availment of credit on inputs - Transfer of credit between factories - Disallowance of credit by Department - Nexus between inputs and final products.

Analysis:

The case involved a dispute regarding the appellant's claim for exemption from excise duty under Notification No. 95/83 for inputs used in the manufacture of finished excisable goods. The appellants argued that they were entitled to exemption based on the notification's provisions, which did not contain any stipulation regarding the nexus between inputs and outputs. They contended that the credit taken on inputs should not be expunged as there was no provision in the Central Excise Rules for such action. The Department, on the other hand, disallowed the claim, asserting that the credit taken on inputs was not directly related to the finished products and thus not eligible for exemption.

In the arguments presented by the appellants, it was emphasized that the masticated rubber, which was an intermediate product used in the manufacture of finished goods, was not cleared on payment of duty. They maintained that the transfer of masticated rubber between factories was a necessary part of their manufacturing process, and the benefit of exemption should be extended as per relevant case laws. The appellants relied on previous judgments to support their position regarding the interpretation of similar notifications and the eligibility for exemption based on the use of inputs in intermediate products.

Upon thorough consideration of the arguments from both sides and a review of the records, the Tribunal concluded that the Notification No. 95/83 did not impose a condition requiring a direct nexus between inputs and final products for availing exemption. The Tribunal also noted that the consumption of raw materials in the manufacture of intermediate products, which eventually contributed to the production of finished goods, justified the appellants' claim for exemption. The Tribunal found no justification for denying the benefit of exemption under the notification based on the manufacturing process adopted by the appellants and the utilization of inputs in the production chain.

In the final judgment, the Tribunal set aside the Department's decision to disallow the credit and allowed the appeal, granting consequential relief to the appellants. The decision was based on the interpretation of the notification's provisions and the application of relevant case laws to support the appellants' claim for exemption under Notification No. 95/83.