TMI Blog1989 (11) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... elief to the respondents. 2. The present appeal directed against the aforesaid order proceeds on the basis that the order of the Assistant Collector disallowing the credit was in conformity with the relevant provisions of law and the order-in-appeal setting it aside is not legal and proper. The Assistant Collector passed his order based on the show cause notice which raised two issues (i) Oxygen Gas and Dissolved Gas were received and utilised prior to 1-3-1986 i.e. prior to coming into effect of the Modvat Scheme; (ii) These were utilised in the manufacture of the intermediate products which were exempted under Notification and not used in the manufacture of the assessee s finished products viz. Bogies and Couplers. The Assistant Collector gave a hearing to them before deciding the issue. From a record of the personal hearing enclosed with the present appeal it is seen that the Company had admitted that though these were received during the month of February, 1986 and were not in stock on 1-3-1986, the finished products manufactured out of these were cleared after 1-3-1986. They also contended that they use these goods for making steel castings, the intermediate product fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice dated 8-6-1988 on the subject issued by the Collectorate issued under Board s Circular No. 22/88, dated 24-5-1988. It is stated that it has been decided by the Board that when Oxygen Gas and Dissolved Acetylene Gas are not used in the manufacture of finished goods, rather used as consumables for cutting runners, risers etc. of steel castings, these cannot be said to be used in or in relation to the manufacture of finished product. In view of the reasons made out it was submitted that the appeal may be allowed restoring the order of the Assistant Collector and setting aside the order-in-appeal passed by the Collector (Appeals). 6. Arguing the case on behalf of the appellant Collector, Shri M.N. Biswas, learned Senior Departmental Representative referred to the grounds indicated in the appeal and stressed the point that the gases in question were received in February, 1986. The facility is available for inputs received on or after 1-3-1986 or were lying in stock on 1-3-1986. He also contended that the conditions prescribed under Notification No. 351/86 had not been satisfied. He pleaded that the appeal may be allowed. 7. Replying to the contentions of the learned Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of this long delay, the Department seeks to take advantage of the clarification issued by the Department subsequently vide their letter dated 24th May, 1988. Had the order-in-appeal been issued promptly after the Collector(Appeals) had passed the order on, as may be made out from the date of the order, 26th March, 1987, the authority relied upon in the appeal for disallowing credit of duty for Oxygen and Dissolved Acetylene Gases used for cutting runners, risers etc. of steel castings which are then used in the manufacture of the products of the respondents namely bogies and couplers would not have been available. In the circumstances, and in view of the reasons adduced by him, he pleaded that the Department s appeal be dismissed. 8. We have given our most anxious consideration to the submissions made by both the sides. We find that the reasoning adopted by Revenue in their appeal for justifying the original adjudication of the Assistant Collector by referring to the non-fulfilment of the conditions stipulated in Notification No. 351/76, dated 20th June, 1986 is not correct. This reliance on the provisions of the said Notification has got no relevance to the present issue. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finished products. On this point the learned Consultant has expressed a justifiable grievance that the Department s reliance on Board s Circular No. 22/58, dated 24-5-1988 later embodied in Collectorate Trade Notice circulated to Trade would not have been available to them had there not been such an inordinate delay in the issue of the order-in-appeal of more than 16 months. While we are, no doubt, concerned about the said delay we feel that the delay on that score alone cannot invalidate the correct application of the legal position or any interpretation or clarification leading to the same. But then what is the correct position on the question? Whether the gases used in relation to the manufacture of steel castings which are in turn used in the manufacture of final products like bogies, couplers etc. can be said to be inputs used in relation to the manufacture of such final products themselves or not. This is the moot question now, notwithstanding the Collectorate Trade Notice and the authority therefor, namely the circular of the Central Board of Excise and Customs. 9. The question of intermediate products exempt from duty arising in the course of manufacture of final products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diate product which alone later went into the manufacture of the final product. As earlier mentioned, there is nothing in the words in the notification which militates against this interpretation. We are therefore satisfied that the benefit of Notification No. 201/1979 cannot be refused to the respondents with reference to their bought out inputs under T.I. 68 merely for the reason that the inputs were used for the immediate production of other Intermediate goods (under T.I. 68) which alone subsequently went in production of the final manufactured product under T.I. 68. (reported in 1985-ECR-1536-CEGAT) In Sl. No. 3 relating to M/s. Hindustan Lever, the Tribunal held that finished excisable goods means goods produce at the conclusion of the manufacturing processes and not any intermediate excisable goods. There the assessee was engaged in the manufacture of soap from vegetable oil through the stage of vegetable tallow. The question concerned the utilisation of credit of duty paid in the vegetable oil for the payment of duty on soap, the final product. The intermediate product, vegetable tallow was exempt from duty and the credit facility asked for by the assessee was turned do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully exempted from the payment of excise duty leviable thereon and held that it was not open to the Department to say that the assessee was not entitled to the credit in respect of VNE oil merely because the same was converted at an intermediate stage into Alkyd Resin. In the last of the above-mentioned list of cases (Serial No. 5 supra) the Karnataka High Court had to deal with the question of exemption from duty for electrical stampings used in the manufacture of final products, electric motors. The stampings had to be initially made into diecast rotors before the latter could be used for the manufacture of electric motors. The Department sought to disallow the exemption on the ground that the electrical stampings had been used in the manufacture of diecast rotors which are themselves an excisable item. This stand was rejected by the court who held that the assessee was eligible for the exemption applied for. In other words, it was held that notwithstanding the emergence of an exempted intermediate product namely diecast rotors the starting material electrical stampings was held to be used in the manufacture of final product, electric motors to satisfy the condition of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... couplers. In that view of the matter, we feel that the Trade Notice and its source, the Circular issued by the Central Board of Excise and Customs need a second look by the authorities concerned. We, however, have not had the privilege of even a first look at these references as these have not been annexed to the appeal papers but we are not in agreement with the views attributed to them. Having come to the above conclusion on the second of the two issues raised in the show cause notice, we have to examine the first issue therein which incidentally was the only point which weighed with the Assistant Collector and was applied by them. This, as we have been, however, was not endorsed by the Collector (Appeals) leading to the present appeal before us. In this regard, the learned Consultant for the respondents submitted before us a xerox copy of the instructions of the Ministry of Finance, reproduced in Excise Law Times, June 1986 issued at page T-70. It is clarified therein that it is permissible to allow credit in cases where credit of duty paid on inputs (on or after 1-2-1986) which are used in final products manufactured prior to 1-3-1986 but cleared on or after 1-3-1986. This wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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