1997 (9) TMI 189 - AT - Central Excise

Summary

Issues:
1. Whether the respondent is eligible for the benefit of exemption from duty under Notification No. 178/77 for cartons used in packing nylon and polyester yarn.
2. Whether cartons and paper cones are considered inputs in the manufacture of synthetic yarn.
3. Whether the benefit of exemption under Notification No. 178/77 can be claimed at the refund stage.
4. Whether the Tribunal correctly dismissed the application for recalling the order.

Analysis:

Issue 1: Eligibility for exemption under Notification No. 178/77
The Tribunal previously partly allowed the appeal by the Central Excise Department, holding that the respondent was not eligible for the duty exemption under Notification No. 178/77 for cartons used in packing nylon and polyester yarn. The Supreme Court remanded the matter to the Tribunal for a fresh decision on merits after hearing both sides.

Issue 2: Classification of cartons and paper cones as inputs
The Senior Departmental Representative argued that cartons and paper cones are not inputs in the manufacture of synthetic yarn, as they are not raw materials or component parts directly used in the manufacturing process. However, the Counsel for the respondent contended that the term "input" in the notification refers to goods used in the manufacture of excisable goods, without the requirement that they must be raw materials or component parts. Citing relevant Supreme Court and Tribunal decisions, it was argued that such goods can be considered inputs even if they do not directly contribute to the duty incidence on the final product.

Issue 3: Claiming exemption at the refund stage
The Department argued that the benefit of the notification must be claimed at the assessment stage and not through a refund claim. However, the Tribunal cited previous decisions stating that the benefit of the notification can indeed be claimed at the refund stage. The Tribunal found this alternative contention by the Department to be unacceptable as it was not supported by the plain language of the notification.

Issue 4: Dismissal of application for recalling the order
The Tribunal had dismissed an application for recalling the order, stating it was not maintainable under the CEGAT (Procedure) Rules, 1982. The Supreme Court allowed the respondent's Civil Appeal, leading to the matter being remanded for a fresh decision. The Tribunal ultimately upheld the order passed by the Collector (Appeals) and dismissed the Department's appeal based on the settled legal position discussed in the judgment.

In conclusion, the Tribunal upheld the order, confirming the respondent's eligibility for the exemption under Notification No. 178/77 for cartons used in packing synthetic yarn. The judgment clarified the classification of cartons and paper cones as inputs and affirmed that the benefit of the notification can be claimed at the refund stage.