1999 (6) TMI 184 - AT - Central Excise

Summary

Issues involved:
Availability of benefit under Notification No. 225/86-C.E. as amended.

Analysis:

1. Issue: Availability of benefit under Notification No. 225/86-C.E.
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the question of whether M/s. Vapi Paper Mills Ltd. was entitled to the benefit of Notification No. 225/86-C.E., dated 3-4-1986, as amended. The Appellants had availed of set off of duty paid on inputs like alum and rosin under the said Notification. A show cause notice was issued to them for demanding the excess set off availed. The Assistant Collector confirmed the demand, stating that the set off was available only on the quantity consumed in one metric ton of the final product, which the appellants had exceeded. The Collector (Appeals) upheld this decision, emphasizing that the exemption was limited to the duty paid on inputs used in the final product's manufacture.

2. Analysis of Arguments:
The Appellants' advocate argued that Notification No. 225/86 did not specify that the set off should be restricted to the quantity used in manufacturing the final product. He relied on precedents like Indian Petrochemicals Ltd. v. C.C.E. and J.K. Synthetics Ltd. v. C.C.E., Jaipur, which held that there was no requirement for a one-to-one correlation between the duty paid on inputs and the duty on final products. The advocate contended that the duty exemption should not be limited to the duty paid on inputs used in manufacturing the final products.

3. Decision and Analysis:
After considering both sides' submissions, the Tribunal examined Notification No. 225/86 and its amendment. Referring to the J.K. Synthetics case, the Tribunal held that the benefit of the Notification should be allowed as an abatement on the duty payable on the final products without strict correlation at every stage of clearance. The Tribunal emphasized that the duty paid goods must be used in or in relation to the manufacture of the final goods to avail the Notification's benefit. As per the decision, the matter was remanded to the Assistant Commissioner to allow the benefit if the appellants could demonstrate the use of specified inputs in manufacturing the final goods as per the Notification's Table. The appellants were directed to provide evidence within two months for the benefit's approval, and the appeal was allowed by remand.

In conclusion, the judgment clarified the conditions for availing the benefit under Notification No. 225/86, emphasizing the necessity of using duty paid goods in manufacturing the final products to qualify for the exemption. The decision highlighted the importance of demonstrating the use of specified inputs in or in relation to the manufacture of the final goods to claim the benefit of the Notification.