1999 (10) TMI 680 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 181/88-C.E. regarding exemption of metal containers.
2. Application of Rule 196 of Central Excise Rules for demand of duty.
3. Compliance with Chapter X procedure for duty exemption.

Analysis:

Issue 1: Interpretation of Notification No. 181/88-C.E.:
The case involved a dispute over the applicability of Notification No. 181/88-C.E., which exempts metal containers from duty if used for specific purposes. The appellant contended that their product, "New Sapan Dairy Special," was different from skimmed milk powder and thus, not covered under the notification. The Ld. Collector (Appeals) rejected this argument, emphasizing that the appellant's claims were contradictory and not eligible for the exemption. The Tribunal upheld the appellant's position that their product was indeed different from skimmed milk powder, leading to the conclusion that the exemption under the notification was not available to them.

Issue 2: Application of Rule 196 for duty demand:
The Department alleged that the appellant had not paid Central Excise Duty (CED) for metal containers used for packing their product. The Additional Collector confirmed the demand under Rule 196, stating that the appellant had not fulfilled their duty liability. However, the Tribunal found that Rule 196 could not be invoked as there was no failure to account for the goods under Chapter X, despite the non-applicability of Notification No. 181/88 to the appellant's goods. The demand raised under Rule 196 was deemed inappropriate as there was complete accounting of the goods used for packing the product, and the duty was paid accordingly.

Issue 3: Compliance with Chapter X procedure for duty exemption:
The appellant argued that they followed the Chapter X procedure for obtaining metal containers at a nil rate of duty under Notification No. 181/88. They maintained that the conditions stipulated in Rule 196 for raising a demand were not met in their case. The Tribunal agreed with the appellant, emphasizing that the Chapter X procedure was correctly followed, and there was no violation that warranted invoking Rule 196. The appellant's compliance with the procedure and the absence of any violation of Rule 192 or Chapter X conditions led to the allowance of the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeals. The judgment highlighted the importance of correctly interpreting statutory notifications, following prescribed procedures, and ensuring compliance with relevant rules to determine duty liabilities accurately.