2000 (8) TMI 577 - AT - Central Excise

Excise duty exemption denied for lack of duty-paid inputs

The tribunal held that the appellants were not eligible for exemption under Notification No. 202/88-CE as the materials purchased from Railways had not ... Benefit of Notification No. 202/88-C.E. not available. Issues:- Whether the exemption under Notification No. 202/88-CE is available to the finished goods manufactured by the appellants using materials obtained from Railways through auction.Analysis:1. The primary issue in the appeals is whether the finished goods manufactured by the appellants using materials obtained from Railways through auction are eligible for exemption under Notification No. 202/88-CE. The appellants argued that the materials purchased from Railways were duty-paid as they were originally procured by the Railways from manufacturers who had paid the duty at the time of clearance. They relied on previous tribunal decisions and amendments to the notification to support their claim for exemption.2. The appellants contended that the onus is on the Revenue to prove that the inputs were not duty-paid. They highlighted the duty-paid nature of the materials purchased from Railways and argued that the Revenue failed to discharge the onus. They referenced tribunal decisions to support their argument that the benefit of the notification should be available to them as the inputs were duty-paid.3. In response, the Revenue argued that the discarded rails, sleepers, and wheels purchased by Railways for their own use did not attract central excise duty upon being sold in auction as rerollable scrap. They emphasized that the onus to prove duty-paid status lies with the appellants. The Revenue relied on tribunal decisions to support their position that duty-paid inputs are a prerequisite for availing the exemption under the notification.4. The appellants further argued that deemed Modvat credit had been granted on old and used rails in previous cases, and they should be entitled to the benefit of the notification as the items were now covered by the amended notification. The Revenue countered by stating that the benefit of the notification is subject to the condition that the inputs have incurred appropriate duty.5. After considering the submissions, the tribunal held that the appellants were not eligible for exemption from duty under Notification No. 202/88-CE. The tribunal agreed with the Revenue that the duty-paid condition specified in the notification had not been met as the materials purchased from Railways had not suffered excise duty. The tribunal distinguished previous cases and emphasized that the duty-paid nature of inputs is essential for availing the exemption. Consequently, the appeals were rejected based on the duty-paid nature of the inputs, and the larger period of limitation was deemed invokable despite subsequent inclusion of rails, sleepers, and wheels in the notification.This detailed analysis of the judgment outlines the arguments presented by both parties and the tribunal's reasoning in deciding the issue of exemption under Notification No. 202/88-CE for finished goods manufactured using materials obtained from Railways through auction.