Captive consumption under the same tariff entry cannot attract double excise duty where Rule 56A credit applies.

Central excise duty was held not recoverable on compressed wood board captively consumed in making articles of wood where both the intermediate and final products fell under the same tariff sub-item and the Rule 56A proforma credit scheme applied. The Tribunal followed its earlier view that levy in such a chain would amount to impermissible double taxation, because duty was already borne on the final dutiable articles under the same tariff entry. The issue was resolved in favour of the assessee for the relevant period, including the period before Notification No. 187/83-C.E.

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Issues: Whether central excise duty was recoverable on compressed wood board captively consumed in the manufacture of articles thereof when both the intermediate and final products fell under the same tariff item and the proforma credit procedure under Rule 56A applied.

Analysis: The Tribunal followed its earlier decisions holding that, even for the period prior to Notification No. 187/83-C.E., duty could not be levied on an intermediate product captively consumed for manufacture of the final product where both products were covered by the same tariff sub-item and the proforma credit scheme under Rule 56A was applicable. On that reasoning, recovery of duty on the captively consumed compressed wood board would result in impermissible double taxation, because duty was already paid on the final articles of wood covered by the same tariff entry.

Conclusion: No duty was recoverable on the compressed wood used captively during the relevant period, and the issue was decided in favour of the assessee.

Ratio Decidendi: Where an intermediate product and the final product fall under the same tariff sub-item and Rule 56A applies, excise duty cannot be collected twice on the same commodity chain merely because the intermediate product is captively consumed in the manufacture of the dutiable final product.

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