Appellants entitled to tax benefit for using oils in manufacturing paints. Appeals allowed with reliefs.

The Tribunal held that the appellants are entitled to the benefit of Notification No. 69/84-C.E., dated 1-3-1984, as the "Processed Vegetable Non-essential Oils" were used within the factory for manufacturing paints and varnishes, and the resins were considered intermediate products. The appeals were allowed with consequential reliefs granted to the appellants.

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Issues Involved:
1. Entitlement to exemption under Notification No. 69/84-C.E., dated 1-3-1984.
2. Classification of resins as intermediate or final products.
3. Applicability of Rule 57D(2) of the Central Excise Rules, 1944.
4. Relevance of prior judicial decisions.

Issue-wise Detailed Analysis:

1. Entitlement to exemption under Notification No. 69/84-C.E., dated 1-3-1984:
The appellants argued that "Processed Vegetable Non-essential Oils" used in the manufacture of paints and varnishes should be exempt under Notification No. 69/84-C.E., dated 1-3-1984. The Department contended that since the oils were used to manufacture synthetic resins, which are exempt from duty, the exemption did not apply. The Tribunal concluded that the appellants are entitled to the exemption because the oils were used within the factory to manufacture paints and varnishes, and the resins were intermediate products.

2. Classification of resins as intermediate or final products:
The Tribunal examined whether resins should be classified as intermediate or final products. It was established that resins, although marketable, were not cleared from the factory but were used in the manufacture of the final products, i.e., paints and varnishes. The Tribunal referenced Rule 57D(2) of the Central Excise Rules, 1944, which allows credit for intermediate products used in the manufacture of final products. Therefore, the resins were considered intermediate products in this context.

3. Applicability of Rule 57D(2) of the Central Excise Rules, 1944:
Rule 57D(2) states that credit shall not be denied for intermediate products exempt from duty if used within the factory for manufacturing final products subject to excise duty. The Tribunal found that the appellants met these conditions, as the resins were used in producing excisable paints and varnishes. Thus, the appellants were entitled to the benefit of the notification.

4. Relevance of prior judicial decisions:
The Tribunal referenced several decisions to support its conclusion. In cases like Swadeshi Polytex Ltd. v. Collector of Central Excise and Goodlass Nerolac Paints Ltd v. Collector of Central Excise, it was held that intermediate products used in manufacturing final products eligible for exemption should not disqualify the inputs from receiving benefits. The Tribunal also distinguished the present case from B. Rajendra Oil Mills Refinery and Others v. Union of India and Others, where the intermediate product (hardened oil) was marketable and could be sold independently, unlike the resins in the current case.

Conclusion:
The Tribunal held that the appellants are entitled to the benefit of Notification No. 69/84-C.E., dated 1-3-1984, as the "Processed Vegetable Non-essential Oils" were used within the factory for manufacturing paints and varnishes, and the resins were intermediate products. The appeals were allowed with consequential reliefs to the appellants.

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