S. Venkatesan, Sr. Vice-President

1. These two appeals raise a question regarding the interpretation of Notification No. 201/79-CE, dated 4-6-79. They arise out of two orders passed by the Assistant Collector of Central Excise, IDO, Mysore, and the two corresponding Orders-in-appeal passed by the Collectors of Central Excise (Appeals), Madras.

2. When these two appeals were taken up for hearing, a question arose whether they were properly matters for a Special Bench. It was seen that the West Regional Bench of the Tribunal, in its Order dated 10-1-84 in Appeal No. A. 154/83 of Bajaj Tempo Limited, had also decided a matter in which the above notification was involved. Again, the South Regional Bench, in its Order in the case of Warner Hindustan Ltd., Hyderabad, reported in MANU/CC/0024/1983 : 1984 (16) E.L.T. 373, dealt with a matter arising out of the same notification. However, we also found that these two appeals originally came up before the South Regional Bench, and that Bench itself had taken the view that jurisdiction to decide these two appeals would lie with a Special Bench and had accordingly transferred them from itself. We were inclined to agree with the South Regional Bench that these appeals could be regarded as involving a question having relation to a rate of duty. Shri Ravinder Narain, the learned advocate for the appellants in both cases, submitted that he had no strong views on the issue of jurisdiction and would leave the matter for our decision. Shri Verma, the learned representative of the Department, submitted that the appeals would appropriately fall within our jurisdiction. We accordingly held that the appeals fell within our jurisdiction and proceeded to hear them.

3. In the two orders of the Assistant Collector referred to above, he had disallowed the entire proforma credit of duty taken by the appellants on duty-paid raw materials falling under Item 68 of the Central Excise Tariff Schedule brought by them into their factory and utilised in the manufacture of tyres of various specifications, some of which were cleared on payment of duty and others free of duty. Since there is some confusion and lack of correspondence between the respective show-cause notices, orders-in-original and orders-in-appeal, we are setting out below the salient issues in each of the cases.

4. Appeal No. E-2891/83D relates to the period February to July, 1981. (It appears that the above period refers to the utilisation of proforma credits for duty-paid on the inputs, and not the taking of such credits). In the show cause notice dated 4-9-81 issued by the Superintendent of Central Excise, rive grounds have been specified, and the appellants have been called upon to show cause with reference to them. These five grounds are as follows :-

(i) Taking wrong credits and utilising such credits;

(ii) Not furnishing accounts of inputs used in the manufacture of each variety of tyres;

(iii) Using the inputs in the manufacture of T.I. 68 goods and T.I. 16A (2) exempted goods;

(iv) Using the inputs in the manufacture of goods falling under T.I. 22 and T.I. 15A (1) (this ground is stated to be without prejudice to any decision to be taken by the Hon'ble Delhi High Court); and

(v) Exemption under Notification No. 201/79 not available to exempted tyres [This is covered by ground No. (iii) above].

5. In his order-in-original dated 18-5-82, the Assistant Collector started by setting out the same grounds, except that grounds (i) and (ii) were merged. After setting out the appellants' reply to the show cause notice and their submissions during the personal hearing, the Assistant Collector observed that "there are two questions involved in this case, i.e. (i) whether the assessee is required to furnish full details of the inputs required for the manufacture of each of the goods; and (ii) whether the set-off of duty is available in respect of finished goods (outputs) which are cleared under 'nil' rate of duty or which are exempted from duty". After disc