Duty-paid inputs retain their character despite credit, allowing separate exemption for finished goods absent express exclusion.

Taking credit under Notification No. 201/79-C.E. did not, by itself, strip duty-paid inputs of their duty-paid character. The notification was treated as an exemption scheme working along proforma credit lines, and paragraph 6 was read as governing clearance of inputs as such rather than their identity when used in manufacture. Notification No. 217/79-C.E. therefore remained available for finished goods made from those inputs, because it exempted varnish manufactured from duty-paid ingredients and contained no express exclusion for assessees who had also used Notification No. 201/79-C.E. The principle applied is that a separate exemption is not denied unless the notification expressly bars it.

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Issues: Whether duty paid inputs lose their duty paid character when credit is taken under Notification No. 201/79-C.E., and whether the benefit of Notification No. 217/79-C.E. can still be claimed for the finished goods manufactured from such inputs.

Analysis: Notification No. 201/79-C.E. was treated as an exemption notification under Rule 8(1), though its working was on the lines of the Rule 56A proforma credit procedure. The taking of credit did not convert the inputs into non-duty-paid goods for all purposes. Paragraph 6 of the notification was read as dealing with clearances of the inputs as such, not as destroying their duty-paid character when they were actually used in manufacture. Notification No. 217/79-C.E. exempted varnish manufactured from duty-paid ingredients, and there was no express clause excluding assessees who had also availed the benefit under Notification No. 201/79-C.E. The presence of express exclusion clauses in other notifications showed that, where such a bar was intended, it was stated expressly.

Conclusion: The duty-paid character of the inputs was not lost on taking credit under Notification No. 201/79-C.E., and the respondent was entitled to the benefit of Notification No. 217/79-C.E. as well.

Ratio Decidendi: Unless a notification expressly bars it, availing credit or exemption on duty-paid inputs does not extinguish their duty-paid character so as to deny a separate exemption on the finished goods manufactured from those inputs.

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