S. Venkatesan, Sr. Vice-President

1. This is an appeal to the Tribunal against the order-in-appeal No. 129-CE/DLH/83 dated 23.2.1983 of the Collector (Appeals) Central Excise, New Delhi, in which he has upheld the order-in-original No. 20/81 dated 1.7.81 issued by the Assistant Collector of Central Excise, Division III, Faridabad.

2. The facts in brief are that the appellants have been manufacturing urea formaldehyde moulding power (UFMP) falling under Item 15A(1) of the Central Excise Tariff Schedule. They filed a series of classification lists, namely No. 18/80 effective 27.2.80, 26/80 effective 18.6.80 and 35/80 effective 19.6.80, in respect of UFMP. In each of these classification lists they claimed the benefit of the concessional rate of duty under Notification No. 7/80, dated 27.2.1980. This notification provided for a concessional rate of duty, namely 33%, in respect of UFMP "manufactured from raw naphtha or any chemical derived therefrom, on which the appropriate amount of duty of excise has already been paid". The classification lists were duly approved by the concerned Assistant Collector. Subsequently, a show cause notice dated 15.1.81 was issued to the appellants, requiring them to show cause to the Assistant Collector why the approval to the three classification lists should not be revoked, the appropriate amount of duty on the UFMP should not be approved at 40% instead of at 33% as leviable under Notification in /80, and the differential duty should not be demanded from them under Rule 10 of the Central Excise Rules. After following the adjudication procedure, the Assistant Collector passed his order dated 1.7.81 containing decision as proposed In the show cause notice. An appeal to the Collector of Central Excise (Appeals) having been rejected, the appellants have come before us.

3. On behalf of the appellants, their Advocate, Shri K. Narasimhan, raised a number of points, on which he argued at length. It is, however, necessary to consider in detail only two of his contentions, which are as follows :-

(i) The Assistant Collector's order dated 1.7.81 amounted to a "review" of the decision of his predecessor, and such a review or revision was not within the jurisdictional competence of the Assistant Collector. This power at the material time vested only in the Collector of Central Excise under Section 35A of the Central Excises and Salt Act as in force before 11.10.1982; and

(ii) The Assistant Collector as well as the Collector (Appeals) proceeded on the erroneous assumption that formaldehyde, being the only essential input, was brought from outside sources into the factory for the manufacture of UFMP.

4. For reasons which will be apparent later, we shall deal with the second ground first. The reason given In the show cause notice dated 15.1.81 for proposing to take action was as follows :-

"Whereas the concessional rate of duty @ 33% adv. can only be availed under Notification No. 7/80, dated 27.2.80 if the Urea Formaldehyde Moulding Powder is manufactured out of raw-Naphtha or Chemical derived therefrom (Formaldehyde in this case) on which the appropriate amount of duty has already been paid.

Whereas it appears that the appropriate amount of duty had not been paid by the party because they have availed the facility of proforma credit under Rule 56-A on the formaldehyde falling under Tariff Item 68."

5. In the order issued by the Assistant Collector the following conclusion has been recorded :-

"As regards the application of Notification No. 201/79, dated 4.6.79, it is correct that the end product UFMP pays the duty and that the in-put "formaldehyde" before being brought into the factory has also discharged the duty liability under Tariff item No. 68. But this position no longer remains valid after the party take credit of the amount of duty paid on it in terms of Notification No. 201/79, dated 4.6.79. In doing so, the Input "formaldehyde" becomes defacto a non-duty paid item". (Notification No. 201/79-C.E., dated 4.6