1998 (11) TMI 321 - AT - Central Excise

Summary

Issues:
1. Availing duty credit under Rule 56A(8) of the Central Excise Rules.
2. Eligibility for proforma credit under Notification No. 432/86.
3. Requirement of one-to-one co-relation between inputs and final products for availing benefits.

Analysis:

Issue 1: The appellant, a manufacturer of Dye-Intermediates, sought permission to avail duty credit under Rule 56A(8) of the Central Excise Rules. The Assistant Collector denied permission, stating that Napthalene was not notified under Rule 56A(1). Upon appeal, the Collector (Appeals) acknowledged eligibility for proforma credit but mandated one-to-one co-relation for availing benefits under Notification No. 432/86. The appellant contested this direction.

Issue 2: The appellant argued that the Delhi High Court precedent in Good Year India v. Union of India established that no co-relation was required between inputs and final products under Notification No. 201/79. They contended that a similar interpretation should apply to Notification No. 432/86. The Tribunal examined Notification No. 432/86, which exempted duty on Dye Intermediates equivalent to duty paid on Napthalene used in manufacturing final products. The Tribunal noted that the exemption was based on input utilization in final product manufacture, without a stipulated one-to-one co-relation requirement.

Issue 3: The Tribunal referenced the Delhi High Court decision in Good Year India Ltd. and a ruling by the Larger Bench of the Appellate Tribunal in J.K. Synthetics Ltd. The decisions emphasized that duty exemption on final products did not necessitate a direct link to the duty paid on specific inputs. The Tribunal concluded that no one-to-one co-relation was mandated between inputs and finished goods for availing benefits under Notification No. 432/86. Consequently, the appeal was allowed based on the established legal interpretations and precedents.

This judgment clarifies the interpretation of Notification No. 432/86 regarding duty exemptions for Dye Intermediates, emphasizing the absence of a strict one-to-one co-relation requirement between inputs and final products. The decision aligns with established legal principles and precedents, ensuring consistency in the application of excise duty regulations.