2003 (3) TMI 519 - AT - Central Excise

Summary

Issues:
- Whether the benefit of Notification No. 305/79-C.E. is available for Caprolactum imported by the Appellants.

Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi involved the issue of whether the benefit of Notification No. 305/79-C.E. was applicable to Caprolactum imported by M/s. J.K. Synthetics Ltd. The Appellants argued that they should receive the benefit of the notification as they imported Caprolactum for manufacturing Nylon Filament Yarn and claimed partial exemption from duty under the said notification. They contended that since the only Indian manufacturer, M/s. GSFC, availed the benefit of the notification by using duty paid Benzene, the same should apply to them as well. The Appellants also argued against the imposition of penalty and interest under relevant sections of the Customs Act.

In response, the Respondent argued that the benefit of the notification was subject to the condition that Caprolactum must be manufactured from Benzene on which excise duty had already been paid. Since no excise duty was paid on the Benzene used for Caprolactum imported from abroad, the benefit of the notification could not be extended. The Respondent relied on legal precedents to support their argument, emphasizing that the conditions of the notification must be fully satisfied for the exemption to apply.

After considering the submissions from both sides, the Tribunal held that the benefit of Notification No. 305/79-C.E. was not available to the Appellants as they imported Caprolactum and did not fulfill the condition of manufacturing it from duty paid Benzene. The Tribunal referred to a Bombay High Court decision and emphasized that the conditions of an exemption notification must be met entirely for the benefit to be granted. The Tribunal rejected the Appellants' argument that the concessional rate of duty applicable to the Indian manufacturer should also apply to them, stating that the duty levied on imported goods is based on the excise duty applicable to a like article manufactured in India, not on a specific manufacturer's rate. Consequently, the Tribunal upheld the duty demand against the Appellants but agreed that penalty and interest could not be imposed due to procedural reasons and statutory provisions. Thus, the appeal was partly allowed, with the duty demand being upheld while penalty and interest were set aside.