Exemption notification eligibility sustained for PVC compound, with duty demand, interest and penalty held unsustainable.

PVC compound, not PVC granules, was the product manufactured, and that factual position remained unrebutted. On that basis, the goods fell within Sr. No. 3 of Notification No. 14/92-C.E., and the related condition regarding non-availment of input credit under Rule 57A was satisfied because no duty had been paid on the product and no such credit issue arose. A prior claim under a later notification did not defeat entitlement under the applicable exemption entry. The exemption was therefore available, and the corresponding duty demand, interest and penalty were unsustainable.

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Issues: Whether the goods in dispute were entitled to exemption under Notification No. 14/92-C.E. dated 1-3-1992 and, if so, whether the duty demand, interest and penalty could be sustained.

Analysis: The product initially manufactured was found to be PVC compound and not PVC granules, and that factual position was not controverted by the Revenue. On that unrebutted basis, the goods fell within Sr. No. 3 of the table annexed to Notification No. 14/92-C.E. The condition attached to the entry, namely that no credit of duty paid on inputs used in manufacture had been availed under Rule 57A of the Central Excise Rules, 1944, was also satisfied, since no duty had been paid on the product and there was no question of taking such credit. The earlier claim under a later notification did not defeat entitlement to the applicable exemption notification.

Conclusion: The exemption under Notification No. 14/92-C.E. was available to the goods in dispute, and the duty demand, interest and penalty were unsustainable.

Ratio Decidendi: Where the unrebutted factual matrix brings the goods within the scope of an exemption notification and the stipulated input-credit condition is satisfied, the benefit of exemption must be granted and consequential duty, interest and penalty cannot survive.

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