1992 (10) TMI 186 - AT - Central Excise

Summary

Issues:
- Dispute over set off of duty on specific chemicals due to tariff classification change
- Eligibility for duty exemption post-tariff amendment
- Interpretation of Notification No. 201/79 regarding duty exemption on inputs
- Impact of reclassification of goods on exemption eligibility
- Comparison between MODVAT credit and Notification No. 201/79 provisions
- Application of Supreme Court decisions on duty liability

Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi involved two appeals concerning the set off of duty on chemicals following a tariff classification change. The central issue was the eligibility for duty exemption post-amendment when the chemicals were used in manufacturing after the tariff change. The appellants argued that since the inputs were classified under a different item before the amendment, they should still be entitled to the exemption. They relied on previous court decisions to support their claim.

The Tribunal noted that the exemption from duty was contingent on using goods falling under a specific item, as outlined in Notification No. 201/79. Despite the inputs being received before the tariff change, they were used post-amendment when they were no longer classified under the relevant item. The Tribunal emphasized that the exemption criteria were not met when the inputs were used after the reclassification, leading to the denial of the exemption.

The Tribunal distinguished the scope of MODVAT credit from the provisions of Notification No. 201/79, highlighting that the latter was limited to set off of duty on specific inputs. Once the classification of the inputs changed, the set off was no longer applicable, regardless of when the duty credit was taken. The Tribunal emphasized the importance of the condition of use for availing the set off, making the appellants ineligible post-reclassification.

The Tribunal also considered Supreme Court decisions on duty liability in cases where goods were manufactured during an exemption period but removed later. However, in the present appeals, the finished goods' manufacture occurred after the inputs were reclassified, rendering the duty set off inapplicable post-amendment. After thorough consideration, the Tribunal found no merit in the appellants' arguments, leading to the rejection of both appeals.