1986 (2) TMI 239 - AT - Central Excise

Summary

Issues:
1. Classification of molasses for Central Excise duty under Item 15-CC.
2. Exemption Notification No. 118/75-C.E. and its applicability.
3. Interpretation of judgments in similar cases.
4. Comparison with conflicting decisions from Bombay High Court and Allahabad High Court.
5. Conditional exemption and its relevance in determining liability for Central Excise duty.

Analysis:
1. The main issue in this appeal was the classification of molasses for Central Excise duty under Item 15-CC. The dispute centered around molasses produced before 19-6-1980 and used in the distillery after that date. The exemption under Notification No. 118/75-C.E. was crucial in determining the duty liability for the appellants.

2. The Tribunal considered the applicability of Notification No. 118/75-C.E., which exempted goods intended for use in the same factory of manufacture from Central Excise duty. The appellants had benefited from this exemption until 18-6-1980. The introduction of a new Tariff Item 15-CC without a corresponding duty exemption raised the question of duty liability for molasses used post-19-6-1980.

3. The arguments presented by the learned Advocate for the appellants relied on previous judgments, including the case of Kirloskar Brothers, which involved conditional exemptions and liability for duty based on the time of manufacture versus removal. The Tribunal analyzed these judgments to determine the applicability of duty in the present case.

4. The Tribunal addressed the conflicting decisions from Bombay High Court and Allahabad High Court but gave precedence to the judgment of Madhya Pradesh High Court in Kirloskar Brothers, which had been upheld by the Supreme Court. The Tribunal found no reason to deviate from the principles established in these cases.

5. The issue of conditional exemption was also discussed, with the Tribunal rejecting the argument that the case of Kirloskar Brothers was different due to the conditional nature of the exemption. The Tribunal emphasized that the exemption for molasses was also conditional, and therefore, the duty liability was not applicable in this scenario.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief to the appellants based on the analysis of relevant legal principles and precedents.