Proportionate excise exemption applies to mixed scrap inputs, with refund claims governed by the limitation law in force when filed.

Exemption under Notification No. 17/71-C.E. was treated as available on a proportionate basis where steel castings were manufactured from both duty-paid and non-duty-paid scrap; the cited decisions rejected denial of the benefit merely because mixed scrap was used, and the assessee's contention prevailed on that point. Refund limitation was held to follow the law in force when the claims were filed, so claims lodged before 6-8-1977 remained subject to Rule 11 read with Rule 173J rather than Section 11B, even if later revised at the department's instance. The order was set aside and remanded for verification of the factual position and grant of admissible refund on that basis.

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Issues: (i) Whether benefit of Notification No. 17/71-C.E. was available on a proportionate basis where the steel castings were manufactured partly out of duty-paid scrap and partly out of non-duty-paid scrap; (ii) whether the refund claim was governed by the limitation applicable to claims filed before 6-8-1977.

Issue (i): Whether benefit of Notification No. 17/71-C.E. was available on a proportionate basis where the steel castings were manufactured partly out of duty-paid scrap and partly out of non-duty-paid scrap.

Analysis: The cited decisions established that the exemption under Notification No. 17/71-C.E. could not be denied merely because the manufacture used both duty-paid and non-duty-paid scrap. The benefit had to be worked out proportionately with reference to the duty-paid and non-duty-paid scrap used in manufacture.

Conclusion: The issue was answered in favour of the assessee and against the departmental view.

Issue (ii): Whether the refund claim was governed by the limitation applicable to claims filed before 6-8-1977.

Analysis: The limitation period continued to apply notwithstanding that the refund claim was later revised at the instance of the department. Since the claims had been filed prior to 6-8-1977, they were governed by the limitation then in force under Rule 11 read with Rule 173J, and not by the later limitation regime under Section 11B.

Conclusion: The issue was answered in favour of the assessee to the extent that the earlier limitation provisions applied.

Final Conclusion: The impugned order was set aside and the matter was remanded for verification of the factual position and grant of refund admissible in law on a proportionate basis, with the earlier limitation rules applied to the claims.

Ratio Decidendi: Where an exemption notification applies to duty-paid inputs used in manufacture, the benefit may be granted proportionately even if the manufacture also uses non-duty-paid inputs, and refund limitation is determined by the law in force on the date of the refund claim.

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