Set-off on scrapped moulds denied where used cast iron had lost its identity and entered production only as scrap iron.

Duty paid on cast iron moulds that had already been used for moulding and then scrapped was not eligible for set-off under Notification No. 201/79. The decisive point was that the moulds had ceased to function as moulds and were being used only as scrap for metal recovery; the notification was intended to grant credit for fresh inputs, not for goods already consumed in their original manufacturing use and stripped of their identity. On that basis, what entered the manufacturing process was scrap iron, not cast iron moulds as such, and the set-off was treated as inadmissible.

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Issues: Whether duty paid on cast iron moulds, after they had been used for moulding and then scrapped, was eligible for set-off under Notification No. 201/79 dated 04.06.1979.

Analysis: The scrapped moulds had ceased to function as moulds and were being used only as scrap for recovery of metal. The basis of the set-off notification was the use of fresh inputs, and credit could not be extended to goods that had already been consumed for their original manufacturing purpose and had lost their identity as moulds. On the facts, what entered the manufacturing process was scrap iron, not cast iron moulds as such.

Conclusion: The set-off was not admissible and the appeal failed.

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