1998 (7) TMI 580 - AT - Central Excise

Summary

Issues: Interpretation of Notification 175/86 and Notification 1/93 regarding exemption eligibility for goods cleared under specific conditions.

Analysis:
The appellant cleared goods on payment of duty components of machinery, but a notice was issued proposing that the goods cleared during a specific period were entitled to exemption under Notification No. 175/86 or its successor Notification of 1/93. The question for decision required an interpretation of para 7 of Notification 175/86 and para 10 of Notification 1/93. The contention was that the benefit of exemption was not claimed for goods as it was not known where they were intended to be used. The departmental representative adopted the reasoning in the Commissioner's order confirming the demand.

In the classification list filed by the appellant, it was evident that the benefit of the notification was not claimed for the goods manufactured by it. The department would have been aware of the description of the goods as part of components of electrical switchgear. The notice cited evidence of suppression but lacked proof that the appellant was informed the goods were to be used as original equipment. The demand for an extended period was barred by limitation, and the order of the Commissioner was deemed unsustainable on merits.

Paras 4 and 7 of the Notifications contained conditions disallowing exemption to certain goods, with the proviso providing exemption to the condition in those paragraphs. The proviso made it mandatory for the Chapter X procedure to be followed, which was to be initiated by the person procuring the goods. The manufacturer had the right not to claim exemption if there was uncertainty about the intended use of the goods. The clearance of goods without claiming exemption benefits was deemed correct, and the demand was found unsustainable. The appeal was allowed, and the impugned order was set aside.