2000 (6) TMI 350 - AT - Central Excise

Summary

Issues:
1. Interpretation of ad hoc exemption order regarding differential duty on imported TMBP Coils used in manufacturing Electrolytic tinplates.
2. Determination of whether the quantity of scrap generated during manufacturing affects the liability for paying differential duty on TMBP Coils.

Analysis:
Issue 1: The case involved interpreting an ad hoc exemption order regarding differential duty on imported TMBP Coils used in manufacturing Electrolytic tinplates. The order required a declaration that the coils were intended for the specified purpose. The appellant argued that as long as this condition was met, there should be no liability for paying additional duty. The advocate emphasized that the exemption order did not mandate a tonne-to-tonne output-input correlation but focused on the intended use of the imported coils. The Tribunal agreed with this interpretation, stating that the fulfillment of the condition in the exemption order was sufficient to avoid differential duty liability.

Issue 2: The second issue revolved around whether the quantity of scrap generated during the manufacturing process affected the liability for paying differential duty on TMBP Coils. The Department contended that any scrap generated indicated that a portion of the imported coils was not utilized for manufacturing, warranting additional duty. However, the appellant argued that process losses and scrap generation were inherent in the manufacturing process and did not signify underutilization of the imported coils. The Tribunal concurred with the appellant, noting that it was technologically impossible to have a tonne-to-tonne correlation between input and output in such manufacturing processes. Therefore, the Tribunal held that the entire quantity of imported coils should be considered used for manufacturing, regardless of scrap generation, and set aside the order imposing the additional duty.

In conclusion, the Tribunal allowed the appeal, setting aside the order imposing the additional duty on the imported TMBP Coils used in manufacturing Electrolytic tinplates.