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TMI Blog2010 (5) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... (MEG). The dispute in this case pertains to January, 1987 to May, 1991 period. During that period Notification No. 225/86-C.E. issued under the then Rule 8(1) of Central Excise Rules, 1944 exempted PSF including tops and polyester filament yarn (PFY) from so much of duty of excise chargeable under the Central Excise Act, 1944 or additional Customs Duty chargeable under Customs Tariff Act, 1975, as the case may be, already paid on the MEG used in the manufacture of such PSF or PFY. During the period from May, 1989 to August, 1991, nine show cause notices were issued to the Respondent for recovery of allegedly wrongly availed input duty exemption amounting to ₹ 1,15,54,845/- on the following grounds :- (a) the Respondent are not el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the set off of ₹ 6,50,090/- in respect of the quantity of MEG which was short received. 1.3 The Respondent filed the appeal before the Commissioner (Appeals) challenging the Assistant Commissioner s order - (a) disallowing the set off of the duty of ₹ 15,63,263/- on MEG contained in the PSF cleared without payment of duty for manufacture in bond of finished goods for export under Rule 191BB; and (b) disallowing the set off of ₹ 6,50,090/- in respect of the quantity of the MEG held to have been short received. The Commissioner (Appeals) vide order-in-appeal No. 126-C.E./LKO/04 dated 1-6-2004 allowed the appeal on the following grounds :- (i) so far as set off of ₹ 15,63,263/- of the duty on the quantity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come in appeal before the Tribunal. 2. Heard both the sides. 2.1 Shri B.K. Singh, the learned Jt. CDR assailing the impugned order and reiterating the grounds of appeal pleaded that notification No. 225/86-C.E. issued under Rule 8(1) of then Central Excise Rules, 1944 exempting the PSF from so much of the duty of excise leviable thereon as it is equivalent to Central Excise Duty paid under Central Excise Act, 1944 or additional Customs Duty paid under Customs Tariff Act, 1975, on the MEG used in the manufacture of such PSF is just like any other exemption notification, that this exemption notification would not be applicable if no duty is payable on the finished product - PSF for any reason, that when PSF had been cleared without pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 225/86-C.E. would be admissible, that same view has been taken by the Tribunal in the case of CCE, Chandigarh v. JCT Ltd. (supra), that in the case of Reliance Industries Ltd. v. CCE, Bombay (supra), the Tribunal with regard to the Modvat provisions - Rule 57F(3) held that the inputs used in the manufacture of final products cleared under bond for export purposes in terms of Rule 191B/191BB of Central Excise Rules are eligible for the benefit of proviso to Rule 57F(3) and the goods cleared for export under bond without payment of duty are neither the goods exempt from whole of duty nor are the goods chargeable to nil rate of duty and hence, input duty credit in respect of such goods would be available, that the same principle would app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed goods - PSF in this case have been cleared without payment of duty under Rule 191BB for use in the manufacture of finished goods for export. 3.1 Rule 191BB permits removal of excisable goods from the place of manufacture or storage without payment of duty for use in the manufacture of finished goods for export, subject to the conditions prescribed in this Rule. The PSF, in question, in respect of which the set off of duty on MEG used in its manufacture is sought to be denied, had been cleared without payment of duty for use in the manufacture of finished goods for export in terms of the provisions of Rule 191BB. The Tribunal in the case of Orissa Synthetics v. CCE (supra) and CCE, Chandigarh v. JCT Ltd. (supra), has with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared for home consumption on payment of duty and where for any reason such adjustment is not possible, by refund to the manufacturer subject to such safeguards, conditions and limitations, as may be specified by the Central Government by notification in the Official Gazette. In the case of Reliance Industries Ltd. v. CCE, Bombay (supra), the dispute arose as to whether the final products cleared under bond without payment of duty in terms of Rule 191BB for use in the manufacture of finished product for export would be eligible for the benefit of the proviso to Rule 57F(3) and the Tribunal answered this question in the affirmative, holding that in respect of clearances of finished product without payment of duty under Rule 191BB, the ben ..... X X X X Extracts X X X X X X X X Extracts X X X X
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