V.T. Raghavachari, Member (J)

1. Since the issue involved in these three appeals is common they were heard together. The said issue relates to eligibility of benefit under Notification No. 201/79 to M/s. Madras Rubber Factory Ltd. in respect of duty paid by them on rubber process oil, renacit-VII and Stearic acid, consumed by them in the manufacture of masticated rubber in their Kottayam factory, which masticated rubber they removed to their other factories at Madras, Arkonam and Goa for further manufacture of rubber tyres and other rubber products. Their request in this regard had been turned down by the Collector of Central Excise, Madras under his orders dated 17.11.1980 and 20.10.1980 but on appeal the said orders had been set aside by the Central Board of Excise and Customs. The Central Government was of the view that the said order of the Central Board was not proper, legal and correct. Accordingly, notice dated 21.12.1981 was issued by the Central Government under Section 36(2) of the Central Excises and Salt Act. The proceedings so initiated were subsequently transferred to this Tribunal and the same is the subject matter of appeal No. 1413/ 81 -D. The other two appeals arise out of the refund applications made by M/s. Madras Rubber Factory Ltd., the claims arising with reference to benefit under Notification No. 201/79 in respect of duty paid on the 3 raw materials mentioned supra. The lower authorities had rejected their claims and the appeals are against the said orders.

2. The reasons for rejection of the refund claims were that the 3 raw materials (falling under Item 68 GET) were consumed in the manufacture of masticated rubber [falling under Item 16-A(2) CET] Which was free of duty and was then transferred to other factories (though of the same manufacturer) and hence the benefit under Notification No. 201/79 was not available. This was also the view of the Collector of Central Excise who had passed the order-in-original in appeal No. 1413/81. In setting aside the said order the Central Board of Excise and Customs was of the view that Notification No. 201/79 does not deny benefit even if the product manufactured out of raw-materials falling under Item 68 CET is subsequently removed to another factory of the same manufacturer for further processing into yet another product. The Central Board was of the view that given the organisation of Madras Rubber Factory Ltd. and the pattern of manufacture adopted by them it was unavoidable that they should spread their manufacturing process over different factories. The Board held that the intention behind Notification No. 201/79 was to allow the assessee relief in respect of duty paid on the goods under Item 68 CET when such goods are used in the manufacture of other excisable products and in the circumstances the further manufacture in another factory of the same manufacturer would not be a ground to reject the benefit claimed. The Board observed that it may be necessary for the Department to make suitable administrative arrangements for identification of the duty paid inputs with reference to the clearances of the final product manufactured by the same manufacturer and that once such identification is established the exemption in terms of Notification No. 201/79 would be admissible. It is this view that did not find favour with the Central Government resulting in the issue of the notice dated 21.12.1981.

3. We have heard Shri F.S. Nariman, Sr. Advocate for M/s. Madras Rubber Factory Ltd. and Shrimati Dolly Saxena, SDR for the Department.

4. In the notice issued by the Central Government under Section 36(2) of the Central Excises and Salt Act the Government had in para 8 thereof directed that pending decision by the Government in the said proceedings the operation of the order of the Central Board was being stayed. M/s. Madras Rubber Factory Ltd. had taken objection to the said ex parte stay and had approached the Delhi High Court under Civil Writ Petition No. 948/82. Und