1999 (5) TMI 344 - AT - Central Excise

Summary

Issues involved:
- Availability of benefit of Notification No. 432/86-C.E., dated 6-10-1986 for M/s. Atul Products Ltd.

Detailed Analysis:

Issue 1: Availability of benefit of Notification No. 432/86-C.E.
The appeal filed by M/s. Atul Products Ltd. centered around the availability of the benefit of Notification No. 432/86-C.E., dated 6-10-1986. The appellants manufactured various products, including Dye-intermediates, and sought exemption under this notification. The dispute arose when the Superintendent Central Excise disallowed the set off claimed by the appellants for not following the procedure outlined in Trade Notice No. 126/81. However, the Collector (Appeals) overturned this decision, emphasizing that no one-to-one correlation was required for availing the set off. The Assistant Collector later disallowed the credit, leading to a series of orders and appeals. The Collector Central Excise eventually confirmed a demand on final goods removed and imposed a penalty on the appellants.

Issue 2: Interpretation of Notification No. 432/86-C.E.
The General Manager of the appellants argued that the Notification did not specify any conditions for availing the exemption, except for using Naphthalene in the manufacture of Dye-intermediates. He cited precedents and provisions from Board's letters to support their eligibility for the set off. The General Manager contended that the Assistant Collector had approved the input-output ratio required for the set off, as evidenced in official correspondence. He also relied on a previous decision highlighting that strict compliance with Trade Notice 126/81 was not mandatory for availing the benefit of the notification.

Issue 3: Compliance and Utilization of Set Off
The Department's representative argued that the appellants had misinterpreted the Collector (Appeals) order by availing set off for all issued Naphthalene without following the 'first in first out' principle. The disputed credit amount covered a specific period, and the appellants utilized it for goods cleared at a later date, which was deemed incorrect. The Department emphasized the need for verification by the Assistant Collector before utilizing the set off amount.

Judgment:
The Tribunal acknowledged that the appellants were eligible for utilizing the set off under Notification No. 432/86, as they had used the duty-paid Naphthalene in manufacturing the final products. However, the Tribunal agreed with the Department that the appellants should have obtained verification from the Assistant Collector before utilizing the set off amount. Despite this, considering the prolonged dispute and taking a lenient view, the Tribunal set aside the imposed penalty and allowed the appeal filed by the appellants, granting them the benefit of the notification.