1997 (9) TMI 239 - AT - Central Excise

Summary

Issues:
- Appeal against Order-in-Appeal No. 83-CE/Alld./89 regarding duty set off on electric stampings and laminations used in the manufacture of electric fans.
- Interpretation of Notification 95/83 dated 1-3-1983 for duty set off on electric motors used in the manufacture of electric fans.
- Applicability of Rule 56(A) for claiming set off credit and refund in cash.
- Rejection of duty set off claim due to non-payment of duty on electric motors.
- Consideration of Ministry's instructions dated 11-4-1984 allowing the option to pay duty on electric motors.

Analysis:

The appeal was filed against Order-in-Appeal No. 83-CE/Alld./89, where the appellants sought duty set off under Notification 95/83 for using stampings and laminations in the manufacture of electric fans, which were initially used in electric motors. The benefit was denied as no duty was paid on the electric motors. The appellant argued that the notification allowed duty set off on inputs used in the manufacture of finished products and cited relevant cases to support their claim.

The ld. DR contended that while credit could be allowed under normal Rule 56(A) procedure, the current case involved set off proceedings, and the Collector was justified in rejecting the claim. The appellant had the option to apply for provisional credit under Rule 56(A) but did not follow the required procedure for refund in case of exemption. The Tribunal noted that the notification was primarily for set off, designating electric stampings as inputs and electric motors as finished products for duty relief.

The Tribunal observed that even though the appellants did not pay duty on electric motors, they had the option to do so as per Ministry's instructions dated 11-4-1984. The Collector's rejection of the appeal solely based on non-payment of duty on inputs was deemed insufficient. The Tribunal referred to precedents where cash refunds were allowed in special circumstances and emphasized that the net effect on revenue would remain the same as long as duty was paid on stampings and laminations. The order was set aside, and the matter was remanded for further examination by the Assistant Collector.

Considering all aspects, including the failure to address the offer to pay duty on electric motors and the admissibility of cash refunds, the Tribunal found the Collector's order lacking in reasoning. The appellants were granted the opportunity to present additional evidence to support their claim during the re-examination by the Assistant Collector. The decision highlighted the importance of considering all relevant factors and following proper procedures in duty set off cases.