Customs, Excise and Gold Tribunal - Delhi
Mysore Lac And Paint Works Ltd. vs Cce on 19 October, 1989
Equivalent citations: 1990(31)ECR170(TRI.-DELHI)
ORDER D.M. Vasavada, Member (J)
1. As identical issues or rather similar issues arise in both these appeals we have heard both these appeals together on 9.10.1989 and disposed of them together by order "Appeals allowed". Hereunder we set out our reasons for the same.
2. Appeal No. 1077/86-C arises out of order-in-appeal No. 148/85 and therein the facts are as under:
The appellant company, which is a Government of Karnataka Undertaking, is mainly engaged in the manufacture of Paints and Varnishes. They also manufacture other items like Indelible Ink etc. falling under Tariff Item No. 68. For the purpose of manufacture of Paints and Varnishes, they procure duty-paid inputs i.e., Phthalic Anhydride and Pentaerythritol, coming under Tariff Item No. 68, From these inputs, they first manufacture an intermediate product called Alkyd Resin which is captively consumed by them in entirety in the manufacture of paints. As the output (paints) is dutiable and as the duty-paid inputs, falling under Tariff Item 68 are procured by them for this purpose, the appellant company had been availing set-off of duty in terms of Notification No. 201/79-CE dated 4.6.1979 as amended. They had filed a declaration in this connection which had been accepted by the department. The appellants received two Show Cause Notices intimating the appellants that as the Alkyd Resin manufactured from the two duty-paid inputs was wholly exempt from duty in terms of Notification No. 157/81-CE (as amended), the appellants were not entitled for set-off of duty in terms of the second proviso to Notification No. 201/79-CE and so the appellants were called upon to show cause as to why the amount of duty availed of as set-off by the appellants during the period from 1.12.1983 to 31.5.1984 and 1.6.1984 to 31.10.1984 should not be demanded from them. On adjudication the Assistant Collector confirmed the demand and appellants' appeal was rejected which has given rise to the present appeal. Subsequently the appellants were issued another Show Cause Notice for the period 1.11.1984 to 31.1.1985. wherein also demand was confirmed by the adjudicating authority and appeal was dismissed by the Collector (Appeals) by his order No. 149/85 wherein he relied upon the reasoning stated in order No. 148/85, which has given rise to appeal No. E/1076/86-C.
3. We heard Shri Satya Sheel, Id. Advocate for the appellants and Shri V. Chandrasekaran, S.D.R, for the respondent. The issue in both these appeals is whether set-off availed of duty paid on inputs by the appellants is proper and legal as per provisions of Notification 201/79-CE dated 4.6.1979 (as amended). Facts of both these appeals are not in dispute. So there is no dispute that the appellants have availed of benefit of Notification No. 201/79 by availing set-off of duty paid on two inputs of the amounts and for the periods stated in both the impugned orders. It is also admitted that in the process of manufacture of paints and varnishes which is the final product of the appellants an intermediate product called Alkyd Resin is produced which is captively consumed by them in entirety in the manufacture of their final product namely paints and varnishes. It is also not in dispute that the final product is dutiable. It is also an admitted position that the intermediate product namely Alkyd Resin is wholly exempt from duty in terms of Notification No. 157/81-CE dated 29.8.1981 as amended by Notification No. 70/84 dated 1.3.1984. According to the adjudicating authority the inputs in question are used in the manufacture of intermediate product namely Alkyd Resin and the same is not excisable or is assessable to nil rate of duty under provisions of Notification No. 157/81 as amended by notification No. 70/84 and so as the inputs are not used in the manufacture of the final product the set-off duty taken by the appellants was not proper and legal. Now this interpretation sought to be put on the Notification No. 201/79 as amended by Notification No. 105/82-CE dated 28.2.1982 is not proper. Mr. Satya Sheel has cited following orders of this Tribunal wherein it has been held that:
(i) It is not necessary that duty paid input should directly be utilized in the production of the final product and even if it is utilized in the production of intermediate product the manufacturer is entitled to avail of set-off, and
(ii) Even if the intermediate product is exempt from payment of duty the legal position remains the same.
1. C.C.E., Bhubaneshwar v. Titaghur Paper Mills 1985 ECR 1152 (Cegat)
2. C.C.E., Hyderabad v. The Sirsilk Ltd. 1985 ECR 1536
3. Ballarpur Industries Ltd. v. C.C.E., New Delhi 1989 (21) ECR 33.
4. We have perused the above citations and we are in full agreement with the views expressed therein and see no reason to depart from the said views. So the view taken by the lower authorities in the present appeals is not proper and legal and these appeals require to be allowed. So we pass the following order:
Both these appeals are allowed and the impugned orders are set aside with consequential relief to the appellants, if any.