Exemption and deemed credit under revenue-neutral duty structure left no sustainable duty demand on the products

Final products were treated as exempt up to 28-2-1986, and for the period from 1-3-1986 the assessee was found entitled to deemed credit because the inputs and finished goods carried the same specific rate of duty. On that basis, the duty burden was treated as revenue neutral and the demand was held unsustainable. The text states that, as a result, no enforceable duty demand survived and consequential relief followed.

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Issues: Whether the final products were entitled to exemption up to 28-2-1986 and whether, for the period from 1-3-1986, the assessee was entitled to credit so that no duty demand survived.

Analysis: The dispute was found to be materially identical to an earlier Tribunal decision on the same factual pattern. For the period up to 28-2-1986, the final products were held eligible for exemption. For the period from 1-3-1986, the inputs and the finished products were found to carry the same specific rate of duty, making the availment of deemed credit equal to the duty on the final products. On that basis, the exercise was treated as revenue neutral and the demand was held unsustainable.

Conclusion: The assessee was held entitled to exemption for the period up to 28-2-1986 and to credit treatment for the subsequent period, with no sustainable duty demand remaining.

Final Conclusion: The appeal succeeded with consequential relief, and the impugned demand could not be sustained.

Ratio Decidendi: Where the inputs and finished goods carry the same effective duty incidence and the applicable credit mechanism neutralises the duty burden, no enforceable demand survives.

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