Judgment

SEN, J.

( 1 ) THIS is an appeal against an order passed by the Customs, Excise and Gold (Control) Appellate tribunal. There is no dispute about the facts of this case, which are recorded in the order of the tribunal.

( 2 ) THE appellants are engaged in the manufacture of enamelled copper winding wire from duty-paid copper wire bars under Ch. Heading 7403. 12 of the central Excise Tariff Act. 1985. They send the copper wire bars for jobwork under Rule 57-F (2 of the central Excise Rules, 1944 for converting them into copper wires above 6 mm diameter which is classifiable under Ch. Heading 7408. 11. The jobwork is done after obtaining due permission from the authorities for operating under Rule 57-F (2 as well as for the benefit of Notification No. 214/86-CE. The appellants manufacture from the copper wires of above 6 mm various other final products of copper viz. copper wires falling under Ch. Heading 7408. 11 and Ch. Heading 7408. 19 and copper strips falling under Ch. Heading 7408. 90 which are liable to central Excise Duty. They also manufacture enamelled copper winding wires which fall under the Ch. Heading 8544. They avail of credit of duty paid on copper wires of above 6 mm received from the job workers. They either sell the same in the market on appropriate payment of duty or convert the copper wire of above 6 mm into wires of below 6 mm. They sell these on payment of appropriate rate of duty or captively consume them by transferring them to the enamelling section. The enamelled copper winding wires are either cleared at nil rate of duty or on payment of appropriate duty under Notification No. 69/86-CE as amended. At the stage when the copper wires of less than 6 mm are cleared internally, the appellants reverse the MODVAT credit availed of by them on the copper wire above 6 mm in their RG. 23, Part II Register maintained for Ch. 74. After clearing the copper wire of less than 6 mm internally for enamelling, the appellants manufacture the enamelled copper winding wires which is either cleared at nil rate of duty or on payment of appropriate duty. The appellants while doing so take the MODVAT credit in their RG. 23a, Part II Register maintained for Ch. 84 insofar as it pertains to the goods to be cleared on appropriate payment of duty. They submit that they do not take the credit of duty paid on the copper wire bars in their RG. 23a, Part II Register for Ch. 84 insofar as it pertains to goods to be cleared at nil rate of duty as of less than 6 mm as they are aware of the quantity of goods to be cleared at nil rate of duty. They submit that the enamelled copper winding wires which are to be cleared at nil rate are manufactured only on specific orders. They state that they clear enamelled copper winding wires either on payment of appropriate duty or at nil rate of duty under Notification No. 69/86-CE dated 10/2/1986 which at Serial Nos. 1 and 2 lays down thecondition for clearing the same either on payment of appropriate rate of duty or at nil rate.

( 3 ) THE case of the appellants is that if a manufacturer clears various final products utilising duty-paid inputs, according to central Excise Rules, he was entitled to the benefit of MODVAT Scheme and was entitled to get credit for the duty of excise paid on the inputs which were utilised for manufacture of final product. The credit amounts were adjusted against the duty leviable on the final product. As soon as the inputs were purchased, the duty paid on the inputs was entered in a register which had to be maintained statutorily recording the amount of credit allowable to the manufacturer.

( 4 ) THE problem in this case arose because, some of the goods manufactured by the appellants were exempted from duty by Notification No. 69/86-CE dated 10/2/1986. This notification was amended by a further Notification No. 106/88 dated 1/3/1988 by which copper winding wires were exempted from payment of the whole of the duty subject to the condition that the final products were m