1998 (3) TMI 248 - AT - Central Excise

Excisable goods must attract duty: CEGAT ruling on exemption claim for Acid Chloride

The Appellate Tribunal CEGAT, New Delhi, held that excisable goods used in manufacturing final products attracting a nil rate of duty do not qualify as ... Rate of duty - Words and Phrases Issues: Interpretation of Notification 214/86 regarding duty leviable on excisable goods used in manufacturing final products attracting nil rate of duty.Analysis:1. The appeals involved a common issue where the appellants, manufacturers of patent medicines, claimed exemption from duty under Notification 214/86 for manufacturing CMB Acid Chloride used in the production of pesticides attracting nil rate of duty. Show cause notices were issued for duty recovery on the Acid Chloride.2. The Chartered Accountant for the appellants argued that nil rate of duty on pesticides still qualifies as duty leviable, distinguishing between 'levy' and 'collection' based on legal precedents. He contended that Notification 214/86 only required the final product to be leviable to duty, not necessarily that duty must be paid, unlike other provisions like Rule 57C and Notification 217/86.3. On the other hand, the SDR opposed this interpretation, emphasizing that the term 'leviable in part' in Notification 214/86 implied a duty greater than zero, excluding nil rate duty from being considered as duty leviable.4. The Tribunal examined the dispute over the interpretation of 'duty leviable whether in whole or in part' in Notification 214/86. It concluded that nil rate duty cannot be equated to duty leviable, as the final product must actually attract duty, not just have a nil rate. Since the Acid Chloride was used in producing pesticides with nil duty, the Tribunal upheld the duty demand and rejected the appeal.This detailed analysis of the judgment from the Appellate Tribunal CEGAT, New Delhi, provides a comprehensive overview of the issues involved and the reasoning behind the decision regarding the interpretation of duty leviable under Notification 214/86 in the context of excisable goods used in manufacturing final products with nil rate of duty.