G. Sankaran, President

1. The facts of the case, briefly stated, are that the appellants were, during the material period, engaged in the manufacture of "Met rosyl DM Silicone Fluid" which was claimed by them as classifiable under sub-heading No. 3910.00 of the Schedule to the Central Excise Tariff Act, 1985, ("The Schedule", for short) attracting Central Excise duty at 35% ad valorem in terms of Serial Number 15 of the Table annexed to Central Excise Notfn. No. 132/86 dt. 1-3-1986. The notification provided inter alia the said concessional rate of duty for silicones in primary form if they were manufactured out of Chlorosilanes on which the excise duty, or the additional duty of customs, leviable thereon, as the case may be, had already been paid. The appellants were manufacturing the product using imported Chlorosilanes on which additional duty of customs had been paid. The Asstt. Collector, however, denied the benefit of the concessional rate of 35% ad valorem on the ground that the appellants had availed themselves of the Modvat credit of the additional duty of customs paid on Chlorosilane in terms of Central Excise Rule 57A and that, therefore, it (Chlorosilane) could no longer be considered as duty paid Chlorosilane for the purpose of the said notification. In appeal, the Collector (Appeals) held that inputs in respect of which credit of duty had been availed of ceased to be duty-paid inputs and upheld the Assistant Collector's order.

2. We have heard Shri K.K. Banerjee, Advocate, for the appellants and Shri M. Jayaraman, DR, for the respondent-Collector.

3. Shri Banerjee drew our attention to Central Excise Notification Nos. 54/88 dated 1-3-1988 and 178/88 dated 13-5-1988. The former exempts inter alia all goods of flexible polyurethane foam, waste, parings and scrap of flexible P.U. foam from excise duty in excess of 35% ad valorem.

"If-

(i) the said goods are manufactured from flexible polyurethane foam on which the duty of excise leviable thereon under the Central Excises and Salt Act, 1944 (1 of 1944) has already been paid; and

(ii) no credit of duty paid on flexible polyurethane foam has been taken under Rule 57A of the said rules."

The latter notification exempts certain specified copper products from excise duty provided that they are made from copper and copper articles on which the excise duty or the additional duty of customs leviable thereon, as the case may be, has already been paid -

"Provided further that no credit of the duty paid on the inputs has been taken under Rule 56A or Rule 57A of the said rules."

It was the learned counsel's contention that in the absence of any such prohibition or restriction in Notification No. 132/86, the department was in error in denying the benefit of the notification. In this connection, he relied on the Madras High Court's judgment in BHEL Ancillary Association v. CCE -MANU/TN/0432/1990 : 1990 (49) ELT 33 (Mad.) which lays down that an "exemption should not be whittled down by importing limitations not specifically inserted by the language used in Exception Clause".

4. The learned DR countered the above contention by referring to Central Excise Rule 57F(1)(ii) which provides that inputs in respect of which credit had been taken of the duty paid were allowed to be cleared for home consumption or for export on payment of the duty leviable thereon which would not be less than the amount of credit availed of which, according to the DR, meant that such inputs ceased to be duty-paid inputs. And, therefore Notification No. 132/86 would not apply. Shri Jayaraman also justified the denial of the concession on the ground that unlike Notification Nos. 54 of 1988 and 178 of 1988, Notification No. 132 of 1986 did not provide for 'nil' rate of duty for the subject goods.

5. In his rejoinder, Shri Banerjee submitted that the provisions of Rule 57F had no relevance to the present case.

6. We have carefully considered the rival submissions. As pointed out by the learned counsel for the appellant