Duty-paid input set-off remains available for post-amendment clearances, with relief granted through RG 23A credit adjustment.

An exemption under Rule 8(1) of the Central Excise Rules, 1944 applied to final products cleared after an amending notification where duty-paid inputs were already in stock on the date of amendment and were used in manufacture thereafter. The operative condition was that the inputs had suffered duty and the resulting products were cleared after the relevant notification; on those facts, the exemption by way of set-off was available. The relief was to be implemented as credit adjustment in the RG 23A account rather than as cash refund, consistent with the scheme of the exemption.

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Issues: (i) Whether final products manufactured after the amending notification were entitled to the exemption benefit where the inputs were duty-paid and were already in stock on the date of the amendment; (ii) whether the relief, if admissible, had to be granted by way of credit in the RG 23A account rather than cash refund.

Issue (i): Whether final products manufactured after the amending notification were entitled to the exemption benefit where the inputs were duty-paid and were already in stock on the date of the amendment.

Analysis: The exemption operated under Rule 8(1) of the Central Excise Rules, 1944 and exempted the final products to the extent duty had already been paid on the inputs used in their manufacture. The relevant condition was that the inputs were duty-paid and the final products were cleared after the notification or amending notification, as applicable. Since the respondents had duty-paid inputs in stock on the date of the amendment and used them in manufacturing final products cleared thereafter, the conditions of the scheme were satisfied.

Conclusion: The assessees were entitled to the exemption by way of set-off in respect of such clearances.

Issue (ii): Whether the relief, if admissible, had to be granted by way of credit in the RG 23A account rather than cash refund.

Analysis: The scheme of the exemption provided relief in the nature of adjustment against duty. In the circumstances of the case, the respondents did not object to grant of relief through credit in the RG 23A account, and the appellate authority's direction on the mode of grant was found unobjectionable.

Conclusion: The relief was to be granted by way of credit in the RG 23A account.

Final Conclusion: The exemption claim succeeded on merits, and the Revenue's challenge failed, with the consequential relief restricted to credit adjustment.

Ratio Decidendi: Where an exemption notification grants relief to final products to the extent of duty already paid on inputs, the benefit is available if duty-paid inputs are used in final products cleared after the notification or amending notification, and the relief may be implemented by credit adjustment in the prescribed account.

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