1998 (9) TMI 265 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 56B of Central Excise Rules regarding the movement of goods between two units of a manufacturer.
2. Applicability of Notification 217/86 for non-duty paid utilisation of goods.
3. Entitlement to Modvat credit of duty paid on semi-finished parts.
4. Whether goods cleared from the first unit before completion are liable to Central Excise duty.

Analysis:
1. The case involved a dispute regarding the movement of semi-finished parts from one unit of the manufacturer to another without payment of duty and without obtaining permission under Rule 56B of the Central Excise Rules. The appellant contended that they were entitled to Rule 56B and had been granted specific permission for such movement until a certain period. However, the permission was not extended for a subsequent period, leading to a demand for duty. The adjudication order confirmed the duty demand based on the absence of authority under Rule 56B.

2. The appellant argued that they were entitled to the benefit of Notification 217/86, which allows non-duty paid utilisation of goods. The lower authorities did not consider this provision while confirming the duty demand. The appellant emphasized the applicability of Notification 217/86 as the most convenient provision for their case. The appellant also raised concerns about the inconvenience and financial burden of the Modvat credit procedure, advocating for the extension of the benefit under Notification 217/86.

3. The issue of Modvat credit of duty paid on semi-finished parts was raised during the appeal. The Collector (Appeals) modified the adjudication order to allow the benefit of Modvat credit. However, the appellant stressed the preference for the benefit under Notification 217/86 over the Modvat credit procedure due to its convenience and financial implications.

4. The question of whether goods cleared from the first unit before reaching the stage of completion are liable to Central Excise duty was also addressed. The appellate tribunal examined the records and submissions from both sides. It was noted that the goods manufactured in the first unit and utilized in the second unit for further manufacture were covered by Notification 217/86, which allows non-duty paid utilisation of goods. Therefore, the demand of duty was deemed unjustified, and the appeal was allowed with consequential relief to the appellants, setting aside the impugned order.