Decided on November 18,1991

I.T.C. LIMITED Respondents


N.K. Bajpai, Member (T) - (1.) THE short question to be decided in these five appeals is whether the respondents could claim the benefit of set -off of duty on use of duty paid material under Notification 178/77 -C.E., dated 18 -6 -1977 as amended by Notification 295/77 -CE., dated 28 -9 -1977 by way of a claim for refund. All these appeals were heard together and are being disposed of by this common order.
(2.) THE respondents were using filter rods, on which duty was paid under Item 68 of the erstwhile Central Excise Tariff, in the manufacture of cigarettes during the period 1 -6 -1978 to 31 -10 -1979. As many as four claims were submitted between December, 1978 and December, 1979 to the Assistant Collector, Central Excise, Saharanpur claiming refund of duty paid on the filter rods used in the manufacture of cigarettes on the ground that set -off of duty paid on filter rods was permissible under Notification 178/77 as amended by Notification 295/77. The Assistant Collector rejected all the four claims on the ground that set -off of duty could only be availed of at the time of clearance and payment of duty on the excisable goods in the manufacture of which the inputs are actually used subject to the condition laid down in the notification. Collector of Central Excise (Appeals) New Delhi allowed all the five appeals on the ground that there was no stipulation either in the aforesaid notification or in any other provision in the Central Excise laws to support the view taken by the Assistant Collector.
(3.) THE Assistant Collector had also taken the view that the assessable value of cigarettes was required to be revised after taking into account the set -off of duty paid on filter rods as inputs. Collector (Appeals) held that in view of the Explanation to Section 4(4)(d)(ii) of the Central Excises and Salt Act, 1944 added by Section 47 of Finance Act, 1982 (giving retrospective effect to it with effect from 1 -10 -1975), set -off paid under Notification 178/77 would not affect the assessable value of cigarettes and there was therefore no need for revision of assessable value. The ground taken in the Department's appeal is that the respondents had not established the co -relation between the input and output on a unit -to -unit basis at the time of clearance as required under the notification. It is stated in the appeal that it was necessary for the respondents to have furnished a statement showing the quantity of inputs used in the manufacture of every unit of the manufactured goods to the proper officer and this not having been done, the benefit of the notification was rightly denied. Further, exemption notifications have to be interpreted strictly and there is no warrant to relax the conditions subject to which exemption is available.;

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