1994 (12) TMI 184 - AT - Central Excise

Summary

Issues Involved:
1. Correctness of Tribunal's order in law.
2. Denial of money credit on Ethyl Alcohol for specified final products.
3. Classification of Solvent 75 as finished excisable goods.
4. Classification of Paraldehyde as by-product or waste.
5. Time limit applicability under Rule 57P.
6. Applicability of Section 11A time limit to Rule 57P disallowance.

Detailed Analysis:

Issue 1: Correctness of Tribunal's Order in Law
The Tribunal's order was questioned on whether it was correct in law given the facts and circumstances of the case. The applicants argued that the Tribunal's findings, particularly regarding the nature of Solvent 75 and Paraldehyde, were incorrect and thus affected their eligibility for money credit under Rule 57M(1). The Tribunal ultimately found that there was a question of law regarding the classification of Solvent 75, but not for Paraldehyde.

Issue 2: Denial of Money Credit on Ethyl Alcohol
The Tribunal denied money credit on Ethyl Alcohol used in the manufacture of specified final products, arguing that Solvent 75 and Paraldehyde, which arise during the manufacturing process, are not specified as final products under Notification 231/87. The applicants contended that both Solvent 75 and Paraldehyde should be considered waste or by-products, making them eligible for money credit. The Tribunal upheld the lower appellate authority's decision, denying the money credit.

Issue 3: Classification of Solvent 75 as Finished Excisable Goods
The Tribunal found that Solvent 75, due to its indeterminate composition, could not be classified as waste or by-product, affecting the eligibility for benefits under Rule 57M(1). The applicants argued that Solvent 75 should be considered waste/by-product, but the Tribunal's decision stood, leading to a question of law being referred to the High Court.

Issue 4: Classification of Paraldehyde as By-Product or Waste
The Tribunal held that Paraldehyde is a regular product and not a final product specified in Notification 231/87, thus denying money credit for it. The applicants argued that Paraldehyde should be considered a by-product or waste, but the Tribunal found no question of law arising from this classification.

Issue 5: Time Limit Applicability under Rule 57P
The Tribunal held that there is no time limit under Rule 57P for disallowance of money credit. The applicants argued that the time limit prescribed under Section 11A should apply to Rule 57P. The Tribunal agreed that this is a question of law requiring reference to the High Court due to the absence of authoritative pronouncements.

Issue 6: Applicability of Section 11A Time Limit to Rule 57P Disallowance
The Tribunal found that whether the provisions of Section 11A CESA, 1944, should be read into Rule 57P is a question of law requiring reference to the High Court. The applicants argued that Section 11A's time limit should apply to disallowance of money credit under Rule 57P, a point not previously addressed by any High Court or the Supreme Court.

Conclusion:
The Tribunal decided to refer two key questions of law to the High Court:
1. Whether Solvent 75 is not a waste or by-product, affecting eligibility under Rule 57M(1).
2. Whether the provisions of Section 11A CESA, 1944, are to be read into Rule 57P of the Central Excise Rules, 1944.

The draft reference was listed for hearing and finalization, with both sides agreeing to the questions framed for reference to the High Court.