Exemption for specified steel inputs denied where goods were described as bars; excise duty to be recomputed on cum duty basis.

Exemption under Notification No. 202/88-C.E. was confined to specified inputs such as skelp, hoops, sheets, strips and flats of prescribed thickness, and did not extend to inputs described by the supplier as bars. The supplier's description could not be ignored, and the classification could not be reopened at the receiver's end, so the exemption was not available and Central Excise duty remained payable. Where additional duty is demanded and the incidence has not been passed on, the assessable value must be recomputed on a cum duty price basis by abating the duty element from the sale price.

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Issues: (i) Whether the goods manufactured from inputs described as bars were eligible for exemption under Notification No. 202/88-C.E. dated 20-5-88. (ii) Whether the duty liability required recomputation on a cum duty price basis.

Issue (i): Whether the goods manufactured from inputs described as bars were eligible for exemption under Notification No. 202/88-C.E. dated 20-5-88.

Analysis: The inputs received were admittedly described by the suppliers as bars. The notification exempted specified inputs such as skelp, hoops, sheets, strips and flats of prescribed thickness, but not bars. The description given by the supplier could not be ignored, and the classification of the product could not be reopened at the receiver's end.

Conclusion: The exemption was not available and the assessee was liable to Central Excise duty.

Issue (ii): Whether the duty liability required recomputation on a cum duty price basis.

Analysis: Where additional duty is demanded and the burden has not been passed on, the assessable value has to be worked out by treating the original consideration as cum duty price and abating the duty element from that price. The duty liability therefore had to be recalculated accordingly.

Conclusion: The duty was directed to be recomputed on a cum duty price basis.

Final Conclusion: The denial of exemption was upheld, but the quantum of duty was required to be reworked in accordance with the cum duty price principle.

Ratio Decidendi: A benefit of exemption confined to specified inputs cannot be claimed when the received inputs are described as bars, and any additional excise duty demand must be recomputed by treating the sale price as cum duty price where the duty incidence has not been passed on.

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