Set-off relief under Notification 95/83 required consideration of duty payment offer and possible refund under Rule 56A.

Notification No. 95/83 was treated as a set-off scheme granting duty relief on specified inputs and finished products. The appellants argued that if duty were paid on electric motors used as an intermediate product, the net revenue effect would remain unchanged, and they had sought permission to do so. The rejection of their claim was found unsustainable because the Collector (Appeals) had not considered that material offer and had also failed to examine whether cash refund could be admissible in appropriate cases under Rule 56A. The matter was remanded for fresh consideration after hearing the appellants and admitting additional evidence.

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Issues: Whether the appellants were entitled to relief under Notification No. 95/83 where electric motors used as an intermediate product were exempt from duty, and whether the rejection of their claim without considering their offer to pay duty on the motors could stand.

Analysis: The notification operated as a set-off scheme covering duty relief on specified inputs and finished products. The appellants' case was that the net revenue effect would remain the same if duty were paid on the electric motors, and the record showed that they had sought permission to do so. The order of the Collector (Appeals) did not address this offer and also did not examine the settled position that cash refund may be admissible in appropriate circumstances under Rule 56A.

Conclusion: The rejection of the claim was unsustainable for want of consideration of a material aspect, and the matter was remanded for fresh examination of admissibility after hearing the appellants and allowing additional evidence.

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