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TMI Blog1991 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... item No. 14 of the First Schedule to the Central Excises and Salt Act, 1944 - the Schedule being referred to hereafter as C.E.T. ) and synthetic resins falling under Item No. 15A. In terms of Central Excise Notification No. 201/79 dated 4-6-1979, the excise duty payable on finished products stood exempted to the extent of the duty already paid on inputs used in their manufacture provided inter alia such duty had been paid under item No. 68, CET. The procedure in this regard was that the duty paid on the inputs was allowed as a credit to be used for payment of duty on the final products. The appellants had declared Melamine and Butanol as such inputs, to be brought into the factory, to be used in the manufacture of Melamine Formaldehyde Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer could not have detected this erroneous utilisation of credit by perusal of the monthly assessment returns and their enclosures. However, he concluded that since M.F resin had been cleared on payment of duty (by adjustment in the Personal Ledger Account-PLA) without availing of the credit of duty paid on Melamine, no credit had, in fact, been utilised in excess or wrongly. There had been a technical error in the utilisation of the credit. In this view of the matter, he directed the appellants to pay Rs. 76,320/- which had been short-levied on clearances of paints and varnishes cleared against credit of duty on Melamine. 4. We have heard Shri N.I. Mehta, advocate, for the appellants and Shri L. Narasimhamurthy, DR, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention that for the purpose of Notification 201/79, it was not necessary that inputs should be used directly in the manufacture of finished goods; the use could be though an intermediate product. He also submitted that the Collector was in error in invoking the extended period of limitation. 6. In reply, the learned DR defended the impugned order for the reasons set out therein. Paints and varnishes had not been specified as a finished product in the appellant s declarations. Therefore, there had been no proper declaration. It was not that credit of duty paid on inputs was not available if inputs were used in the manufacture of the finished product not directly but via an intermediate product. However, there should be a correct and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey would be using the credit of duty paid on the above items (the above items , here, were Melamine and M.F. Resins), the department should have instructed the appellants not to utilise credit of the duty paid on M.F. resins for payment of duty on any other goods if, in its view, M.F. resin was a finished product and such use of the credit was not proper and correct. On the other hand, we find that the appellants had contended before the Collector - and before us -that their monthly RT 12 returns with accompanying gate-passes etc. had been duly accepted by the department. Surely, the department is obliged to check whether utilisation of input duty credit was proper and correct and permissible? Aside from this, the Collector himself has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d product. The department did not allow set-off of the duty paid on the inputs phenol and formaldehyde (under Item 68 CET) in terms of Notification No. 201/79 since resin, treated paper and treated fabrics came into existence at intermediate stages of manufacture. In its order, the Tribunal considered several decisions and noted that there was nothing in the notification to hold that the inputs falling under Item 68 CET should form an integral part of the finished product, or that such inputs must go directly into the finished product - see Sirsilk Limited v. Collector of Central Excise, Hyderabad 1988 (34) E.L.T. 399 (Tribunal). It was, therefore, held that the benefit of the notification would be available even though in the process of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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