I.J. Rao, Member (T)

1. The question that arises in this appeal is whether, for the purpose of Notifications 95/79-C.E. and No. 201/79-C.E. there should be a direct nexus between inputs and final products. This question arose because the appellants filed classification lists (Nos. 29,30,31 32) claiming proforma credit/set off of duty, in terms of Notification No. 95/79-C.E. as amended by Notification No. 58/82-C.E. as well as under Notification No. 201/79-C.E. as amended in respect of tyres manufactured and cleared by them as O.E. tyres cleared under bond under Chapter X procedure. A notice was issued to the appellants proposing the denial of their claim for set off proforma credit under Notifications Nos. 95/79 201/79-C.E. in respect of inputs used by them in the manufacture of those tyres which were cleared without payment of duty under bond for home consumption. The Asstt. Collector after hearing the appellants extended the benefit. The Department went in appeal against the Asstt. Collector's order dated 22.6.83. The Collector allowed the appeal. As a result the Appellants approached the Tribunal through this appeal.

2. Shri Harish Salve, the Ld. Counsel for the appellants pleaded that Notification No. 95/79 has to be interpreted as it is and nothing can be added to the words to create conditions which are not there. He submitted that proviso (iii) to the notification prescribed that as a condition the procedure set out under Rule 56A Central Excise Rules should be followed. This does not mean and could never mean that all the conditions of the said Rule are applicable. He submitted that in the notification itself there is no stipulation that the inputs should go only into duty paying clearances of final products. It is enough if the inputs are used in the final products described therein.

3. As against this the Ld. JDR Shri Chakraborthy argued that the provisions of Notification No. 201/79 have been interpreted by the Tribunal in their earlier order in Vikrant Tyres Ltd. v. C.C.E. Bangalore [ MANU/CE/0091/1985 : 1985 (21) ELT 620 (Tribunal)]. Insofar as Notification No. 95/79 is concerned he submitted that this notification should be interpreted on its own. According to him the main body read together with the proviso shows that there should be a nexus of inputs to outputs and such nexus should be direct. The Ld. JDR argued that when the goods (outputs) are already exempt being eligible under nil rate of duty, there was no question of applying Notification No. 95/79 to the goods. Referring to the second proviso to Notification No. 201/79 to the effect that nothing contained in the said notification shall apply to the said goods (outputs) which are exempted from the whole of excise duty leviable, Shri Chakraborthy argued that in the Notification No. 201/79 this proviso was inserted though it was not necessary to do so. He submitted that such a necessity did not arise because the position was so obvious but still the proviso was inserted because even so obvious a position is sometimes missed. In sum, the Ld. JDR argued that the goods appearing in column 3 to the Notification No. 95/79 should be used in the manufacture of the final products mentioned in column 5 thereof on which duty has been paid.

4. We have considered the arguments of both sides. The appellants pressed their claim only under 95/79 before us. We, therefore, do not propose to go into the scope of Notification No. 201/79.

5. We find that Notification No. 95/79 in proviso 3 makes it a condition that procedure set out under Rule 56A-CE Rules should be followed. This does not mean that all the provisions of the said Rule are applicable. It is enough if the procedure under Rule is followed. We agree with the appellants' pleas in this regard and also note that at no stage was there any finding that the appellants did not follow the procedure. In fact the only ground on which the Collector of Central Excise (Appeals) found against the appellants was that some of