1997 (8) TMI 273 - AT - Central Excise

Summary

Issues:
Interpretation of Notification 202/88 for exemption eligibility based on duty paid inputs in the manufacturing process.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras revolves around the interpretation of Notification 202/88 concerning the eligibility for exemption based on the usage of duty paid inputs in the manufacturing process. The lower authority had denied the benefit of the exemption to the appellants on the grounds that the input material used was recognizable as non-duty paid. The appellants, represented by their advocate, argued that the unusable moulds returned to them for remanufacturing should not be considered as non-duty paid items. They contended that the authorities must establish that the input materials did not suffer duty before denying the benefit of the notification. The advocate emphasized that the unusable moulds, despite having only scrap value, should still be considered duty paid items as they had initially been subject to duty. He argued that the benefit of the notification should not be denied unless it is proven that the input material had not suffered duty.

The Departmental Representative (JDR) countered the appellants' arguments by asserting that the unusable moulds, being in the form of scrap, did not retain their character as duty paid items. The JDR contended that once the moulds became unusable and were reduced to mere scrap, they lost their original characteristics and could only be considered as scrap material. The JDR maintained that since the scrap did not undergo any duty payment, it could not be deemed as duty paid material. Furthermore, the JDR argued that the creation of new moulds from the scrap did not alter the fact that the original material had not been subject to duty.

After considering the arguments presented by both parties, the Tribunal concluded that the unusable moulds, which had initially suffered duty, lost their duty paid status once they became scrap material. The Tribunal emphasized that the purpose of the notification was to prevent double taxation on inputs that had already been subject to duty. The Tribunal rejected the appellants' plea, stating that the unusable moulds, being transformed into scrap, did not qualify as duty paid items as they had not undergone duty payment at the supplier's end. The Tribunal cited a similar case involving Shri Ram Refrigerators to support its decision.

Ultimately, the Tribunal dismissed the appeals, finding no merit in the appellants' arguments. Additionally, a cross-appeal filed as comments was deemed legally misconceived and dismissed accordingly.