Duty set-off under Notification No. 71/71-C.E. allowed where technical non-compliance with Rule 56A would cause double duty.
Duty paid on intermediary treated paper and cotton fabric could be adjusted against duty on the final product under Notification No. 71/71-C.E. because the notification was intended to avoid double duty on specified inputs used in manufacture of rigid plastic boards, sheetings, sheets or films. Although Rule 56A procedure had not been complied with earlier, that lapse was treated as technical in the circumstances, since the assessee had disputed the levy on the intermediary product and could not realistically have followed the procedure before the dispute was resolved. The assessee was permitted to complete the Rule 56A requirements to the Department's satisfaction and avail the set-off benefit.
Issues: Whether the assessee was entitled to set off the duty paid on intermediary treated paper and cotton fabric against the duty payable on the final product under Notification No. 71/71-C.E., and whether compliance with Rule 56A could be permitted at the appellate stage.
Analysis: The Notification granted adjustment of duty already paid on specified input materials used in the manufacture of rigid plastic boards, sheetings, sheets or films, subject to the procedure under Rule 56A. The Court held that once the intermediary goods were found dutiable and the final product had already suffered duty, denial of the notification benefit merely because the Rule 56A procedure had not been complied with earlier would result in double duty on the same input. The Court treated the lapse as technical in the circumstances, especially since the assessee had contested the very levy on the intermediary product and therefore could not have complied earlier. The assessee was accordingly permitted to satisfy the departmental requirements under Rule 56A at that stage.
Conclusion: The assessee was entitled to avail the notification benefit and to claim set off upon complying with Rule 56A to the satisfaction of the Department.
TaxTMI 
AI Drafter ✕
TaxTMI 
