Per Shri G.R. Sharma : The captioned appeal is filed against the order-in-appeal dated 5.9.94 passed by the Collector (Appeals). The Collector (Appeals) upheld the order of Asstt. Collector. The Asstt. Collector held that modvat credit is not admissible on the portion of input, the corresponding final product of which are cleared under exemption. The Asstt. Collector confirmed the demand for Rs. 13,390.11.

2. The facts of the case, in brief, are that the appellants are engaged in the manufacture of pine oil. They procured certain inputs and took modvat credit on those inputs. A part of pine oil manufactured by the appellants was cleared by them in terms of Notification No. 191/87-CE dated 4.8.87 following the Chapter X procedure. The Department alleged that pine oil was cleared by the appellants without payment of duty in terms of exemption Notification No. 191/87-CE dated 4.8.87 and therefore, modvat credit of duty on that portion of input which was used in the manufacture of this quantity of pine oil was not available to the appellants. The lower authorities accordingly, confirmed the demand.

3. Shri J.S. Agarwal, the learned Advocate appearing for the appellants submitted that Notification No. 191/87-CE was a conditional exemption notification, that the appellants were required to follow the Chapter X procedure; that provisions of Chapter X procedure are covered by Rule 192; that Rule 192 speaks of remission of duty; that remission is not the same as exemption; that Chapter X procedure does not totally absolve the appellant from payment of duty; that Chapter X procedure specifically says that if the goods are not properly accounted for then duty shall be payable on the goods not accounted for. He also went through the dictionary meaning of the term 'remission' and "exemption'. The learned counsel submitted that the terms 'remission' and 'exemption' are different terms and do not connote the same thing. He also referred to the Larger Bench decision of this Tribunal in the case of Kirloskar Oil Engines Ltd. Vs. C.C.E., Pune reported in 1994 (73) ELT 835. He submitted that though this issue was raised in para 11.2 of this Tribunal's decision however, no final finding was rendered by the Tribunal. He also cited and relied upon by the decision of the Allahabad High Court in the case of Synthetic Chemicals Ltd. reported in 1988 (33) ELT 62 on the question of interpretation of statute. He also relied on the judgment of the Apex Court in the case of UOI Vs. Wood Papers Ltd. reported in 1990 (47) ELT 500 also on the issue of interpretation of statute. The learned Counsel submitted that Rule 57C talks of exemption whereas Rule 192 covering the movement of the goods under Chapter X procedure stipulates the word 'remission' and since the words 'exemption' and 'remission' are not the same and since their case was covered by Rule 192 and since they were required to follow Chapter X procedure, their case shall be the case of remission and hence the denial of modvat credit was not warranted in their case.

4. Shri P. Das, the learned SDR submits that the appellants availed the benefit under Notification No. 191/87-CE dated 4.8.87; that the notification exempts the goods, therefore, the learned SDR submitted that the word for interpretation in this notification is 'exemption' and not 'remission'. He submitted that no doubt the notification is a conditional one and required that Chapter X procedure should be followed. He submitted that the same word 'exemption' is used in Rule 57C and therefore, the two rules using the same word hardly need a different interpretation. He submitted that the appellants have not brought on record any evidence that any duty was paid on the pine oil cleared by the appellants under Chapter X procedure. Summing up his argument, the learned SDR submitted that the lower authorities have rightly denied them modvat credit on that portion of the inputs which were used in the pine oil cleared by the appellants under Cha