1988 (11) TMI 274 - AT - Central Excise

Summary

Issues:
- Interpretation of Central Excise Rules regarding refund claims for duty suffered by raw materials.
- Applicability of Rule 56A and Rules 9 & 49 of the Central Excise Rules to the manufacturing process.
- Classification of intermediate product as HDPE fabric or semi-finished sacks.
- Entitlement to set-off duty on raw materials used in manufacturing HDPE sacks.

Analysis:
The judgment deals with appeals arising from the rejection of refund claims filed by the Collector of Central Excise, Hyderabad, regarding the duty suffered by raw materials used in manufacturing HDPE sacks. The main contention was whether the intermediate product should be classified as HDPE fabric or semi-finished sacks and the applicability of Rule 56A and Rules 9 & 49 of the Central Excise Rules to the manufacturing process. The Assistant Collector rejected the claims, which were later set aside by the Collector of Central Excise (Appeals), Madras.

The learned D.R. argued that the intermediate product is HDPE fabric, not semi-finished sacks, and hence, Rules 9 & 49 would not apply. Conversely, the Consultant for the respondents cited precedents to support the claim that even if the product is exempted from duty, the manufacturers are entitled to credit under Rule 56A if the input and finished product fall under the same tariff heading.

The Tribunal examined the submissions and noted that both tapes used as input and HDPE sacks fall under the same Central Excise Tariff heading. Even if the intermediate product is considered HDPE fabric, the benefit under Rule 56A or Rules 9 and 49 would still apply. Citing a Special Bench ruling and the Bombay High Court decision, the Tribunal held that the finished product is entitled to duty exemption under Rules 9 and 49. The appeals were dismissed, and the order of remand for the question of refund was upheld.

It was clarified that the impugned orders favored the respondents entirely, rendering the filing of Cross Objections unnecessary and thus dismissed. The judgment provides a detailed analysis of the interpretation of Central Excise Rules, the classification of the intermediate product, and the entitlement to set-off duty on raw materials used in manufacturing HDPE sacks.