1999 (10) TMI 176 - AT - Central Excise

Summary

Issues:
- Interpretation of Notification No. 214/86 and Rule 173N
- Applicability of Rule 173A to the goods in question

Analysis:

Interpretation of Notification No. 214/86 and Rule 173N:
The case involved a dispute regarding the application of Notification No. 214/86 and Rule 173N. The appellants, engaged in manufacturing shoes and job work, had followed Rule 173N instead of claiming the benefit under Notification No. 214/86 after the Budget of 1995-96. The department contended that Rule 173A applied to specified goods under Rule 139, and since shoe uppers were not specified under Rule 139, the appellants were not entitled to the benefit under Rule 173N. The appellants argued that they had followed Notification No. 214/86 consistently, except for a brief period based on verbal instructions. They maintained that the procedures for availing benefits were being adhered to, and any lapses were procedural. The Tribunal noted that the essence of Notification No. 214/86 was the receipt of raw materials and the return of manufactured goods to the supplier, which had been fulfilled in this case. The Tribunal found that any discrepancies were procedural and not substantial, leading to the decision to set aside the lower authorities' order and allow the appeal.

Applicability of Rule 173A to the goods in question:
The department had argued that Rule 173A applied to specified goods under Rule 139, implying that since shoe uppers were not specified, the appellants were not entitled to the benefit under Rule 173N. However, the appellants contended that they had followed the prescribed procedures, including Rule 173N, during a short period based on verbal instructions. The Tribunal, after considering the provisions of Notification No. 214/86, found that the key requirement was the receipt of raw materials and the return of manufactured goods to the supplier. As there was no dispute regarding these transactions, the Tribunal concluded that any lapses were procedural and did not warrant denial of substantive benefits. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per the law.

This judgment primarily focused on the correct interpretation of Notification No. 214/86 and Rule 173N, emphasizing the importance of procedural compliance while ensuring that substantive benefits are not denied due to procedural lapses. The Tribunal's decision underscored the significance of fulfilling the fundamental requirements of the applicable rules and notifications to determine entitlement to benefits, ultimately leading to the favorable outcome for the appellants in this case.