TMI Blog2001 (10) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... n of applying this notification to the finished products (in this case tyres, tubes and flaps) if they are not subjected to any duty. We find it difficult to accept the contention that the omission of clause (ii) of the proviso contained in the earlier Notification No. 95/79 is significant. The omission of provision similar to clause (ii) of the proviso to Notification No. 95/79 does not, in our view, advance the case of the respondent. Even the words employed in the opening part of the Notification No. 95/83 are sufficient enough to take care of a situation which was provided for expressly in the proviso to Notification No. 95/79. We, therefore, see no force in this contention. Thus far from coming to the aid of the respondent the view expressed by the Delhi High Court makes it clear that the question of utilising the credit on inputs would arise only where the duty is payable on finished product. - 4090 of 1995 - - - Dated:- 9-10-2001 - B.N. Kirpal, N. Santosh Hegde and P. Venkatarama Reddi, JJ. [Judgment per : P. Venkatarama Reddi, Member (J)]. - In this appeal filed under Section 35L(b) of the Central Excise and Salt Act by the Revenue, the order of CEGAT dated 21- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) based on the Tribunal's decision in Vikrant case (supra). Aggrieved thereby, the Department filed an appeal before CEGAT. The CEGAT, by the impugned order, rejected the appeal, after quoting in extenso its earlier order in Vikrant Tyres case. In that case, the Tribunal while construing the Notification No. 95/79 held that the Notification did not have any condition that there should be nexus between the inputs and outputs. According to the Tribunal, "the only question that can arise while examining the question of eligibility to this notification is whether the inputs described in column (3) have been used in the outputs described in column (5)." The Tribunal further observed : "the learned JDR's argument that goods mentioned in column (5) (final products) are only those which pay duty is not supported by the wording of the Notification. No condition regarding payment of duty is contained anywhere in the Notification." The correctness of this view taken by the CEGAT is being assailed in this appeal. 4.In order to rationalise the overall impact of the duties of excise on the cost of the final manufactured product, the Central Government framed certain rules such as Rule 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. No. Item No. of the said First Schedule Description of inputs Item No. of said First Schedule Description of final products (1) (2) (3) (4) (5) 19 16AA Synthetic rubber 16 Tyres, tubes flaps 20 64 Carbon black 16 Tyres, tubes flaps 21 65 Rubber processing chemicals 16 Tyres, tubes flaps Be it noted that this notification dated 1-3-1983 was issued in supersession of the Notification No. 95/79 dated 1-3-1979. Reference has been wrongly made to this Notification of 1st March, 1979 both by the Assistant Collector and the Tribunal, as if that is the Notification applicable for the relevant period. However, it must be mentioned that the Notification No. 95/79 is substantially similar to the Notification dated 1-3-1983 except with this difference, i.e., the following proviso was omitted :- "(ii) where the duty of excise leviable on any final product is less than the amount of duty of excise (including special duty of excise aforesaid) of the amount of additional duty aforesaid, as the case may be, paid on the inputs used in the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plying this notification to the finished products (in this case tyres, tubes and flaps) if they are not subjected to any duty. 6.It is contended that the omission of clause (ii) of the proviso contained in the earlier Notification No. 95/79 is significant. It is pointed out that the extent of exemption was in restricted terms as it was made clear that it could not exceed the amount of duty paid on the inputs. That clause having been removed in 1983, the exemption should be construed widely and without regard to the question whether the inputs go into the manufacture of dutiable or non-dutiable finished products. We find it difficult to accept this contention. The omission of provision similar to clause (ii) of the proviso to Notification No. 95/79 does not, in our view, advance the case of the respondent. Even the words employed in the opening part of the Notification No. 95/83 are sufficient enough to take care of a situation which was provided for expressly in the proviso to Notification No. 95/79. We, therefore, see no force in this contention. 7.Having thus understood the true scope and purport of the notification, we shall proceed to consider whether the claim of the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming credit of duty paid on the inputs. Strong reliance is placed to support this argument on the decision of this Court in H.M.M. Ltd. v. Collector of Central Excise, New Delhi [1996 (87) E.L.T. 593]. While construing a somewhat similar Notification No. 201/79, it was observed therein :- "The rules do not require any exact correlation between the inputs and the finished products for claiming credit for the duty; paid on the inputs. It is not a condition-precedent for claiming set-off that the manufacturer must prove that - (a) the credit was taken in respect of inputs; and that (b) these very inputs were utilised in the manufacture of the goods on which duty is payable. Rule 2 merely provides that the manufacturer may take credit of the duty already paid on the inputs and utilise such credit for payment of duty of excise on the manufactured goods. The exact correlation of inputs with the manufacture of (emphasis supplied)the goods is not contemplated by this rule." 9.This Court relied on Rules 9 and 10 appended to the notification to infer the absence of correlation between the inputs and the finished goods. It was observed at paragraph 9 :- "All the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case is quite different, the issue being whether the credit of duty on inputs could be availed of notwithstanding the fact that the inputs were utilised only in the manufacture of duty-free finished products. That issue has to be answered against the respondent - assessee in the light of the foregoing discussion. The decision in H.M.M. Ltd. Case (supra) does not come to the aid of the respondent. On the other hand, the underlined portions in the passages extracted supra would indicate that the interpretation placed by the Court on the Notification is no different. 12. We may add that it has never been the case of the respondent that there was reasonable likelihood of the credit being set-off against the dutiable finished products in the near future. In fact, contentions of the parties have not focussed on the modalities/procedure of claiming credit on inputs in the given situation and the maintainability of refund applications. We need not therefore go into these procedural aspects. 13The decision of the Delhi High Court in. Good Year India Ltd. v. Union of India [1990 (49) E.L.T. 39] and that of the Bombay High Court in Jaysynth Dyechem Pvt. Ltd. v. Union of India [1991 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be quashed. 17.However, before parting with the case, it is necessary for us to advert to the preliminary objection raised on behalf of the respondent. It is contended that in the instant case the appeal under Section 35-L(b) does not lie for the reason that no question arises in the present appeal which has a relation to the rate of duty of excise or to the value of goods for purposes of assessment within the meaning of clause (b) of Section 35-L. Reference is made to the decision in Navin Chemicals Mfg. Trading Co. Ltd. v. Collector of Customs [1993 (68) E.L.T. 3]. In that case, this Court pointed out that the question to be decided must have direct and proximate relationship to the rate of duty and to the value of goods for the purposes of assessment. The contention is that no such question is involved in the present case. However, the following observations in the same case deserve notice :- "A dispute as to the classification of goods and as to whether or not they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment." 18.Based on the above dicta, it is possible to contend, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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