1991 (4) TMI 267 - AT - Central Excise

Issues Involved:
1. Applicability of Exemption Notification No. 201/79 after reclassification of chlorinated rubber.
2. Jurisdiction of the Regional Bench vs. Special Bench.
3. Validity of duty credit reversal for inputs received before and after reclassification.
4. Provisional assessment and time bar for demand notices.
5. Interpretation of para 8 of Notification No. 201/79.

Issue-wise Detailed Analysis:

1. Applicability of Exemption Notification No. 201/79 after reclassification of chlorinated rubber:
The appellants, M/s. Berger Paints India Ltd., contested the decision that the credit of Central Excise duty taken under Exemption Notification No. 201/79 became inadmissible after the reclassification of chlorinated rubber from Tariff Item 68 to Item 15A effective from 1-3-1982. The Tribunal held that the reclassification does not affect the duty-paid status of the inputs already received and credited before the change. The Tribunal relied on the precedent set in Collector of Central Excise v. Addisons Paints & Chemicals, where it was established that the duty-paid character of inputs does not change due to subsequent reclassification.

2. Jurisdiction of the Regional Bench vs. Special Bench:
Initially, there was a jurisdictional issue whether the appeal should be heard by the Special Bench or the Regional Bench. Despite the majority decision in the Kashmir Vanaspati case that such matters fall under the Special Bench, the Tribunal, considering the peculiar facts and the inconvenience to the appellants, decided to hear the appeal as a Special Bench as per the President's directive.

3. Validity of duty credit reversal for inputs received before and after reclassification:
The Assistant Collector's order to reclassify the inputs and demand duty for the stock lying unutilized after 28-2-1982 and for the goods received on 23-3-1982 was challenged. The Tribunal found that the goods were correctly assessed under Item 68 before the reclassification and that the date of receipt in the appellants' factory is irrelevant for reassessment. The Tribunal concluded that the Assistant Collector erred in demanding duty on the pretext of non-duty paid status due to reclassification.

4. Provisional assessment and time bar for demand notices:
The Tribunal noted that the issue of provisional assessment and time bar raised by the Assistant Collector was not addressed by the Collector (Appeals). However, since the appellants succeeded on merits, the Tribunal did not delve into the time bar issue. It was observed that any wrong availment of credit should be regulated under Section 11A, and the time limit for demand notices would run from the date of finalisation of the assessment of the final product.

5. Interpretation of para 8 of Notification No. 201/79:
The Departmental Representative argued that para 8 of Notification No. 201/79 was not satisfied, thus disallowing the credit. The Tribunal rejected this argument, stating that the notification exempts goods manufactured using inputs that had paid duty under Item 68, irrespective of subsequent tariff changes. The Tribunal found no grounds in para 8 to disqualify the appellants from the benefits of the notification.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order of the Collector (Appeals) and the Order-in-Original of the Assistant Collector. The appellants were entitled to consequential reliefs, affirming that the reclassification of chlorinated rubber did not affect the duty credit already availed under Notification No. 201/79.

← Previous Next →