1984 (7) TMI 331 - AT - Central Excise

Exemption - Benefit of Notification - Eligible to exemption preferably under Notification No. 276/67-C.E.

Summary

Issues:
Interpretation of Notification No. 276/67 and Notification No. 35/73 for exemption of excisable goods. Validity of C.T. 2 certificate for availment of duty exemption. Determination of eligibility for duty exemption on mixed-xylene used in the manufacture of paints and varnishes. Assessment of penalty imposed under Central Excise Rule 9(2).

Analysis:
The appeal involved the interpretation of Notification No. 276/67 and Notification No. 35/73 regarding the exemption of excisable goods. The appellant, IPCL, cleared mixed-xylene under Notification No. 276/67 but faced a challenge from the Department regarding the entitlement to the exemption. The Assistant Collector imposed a penalty and demanded duty on the clearances, leading to an appeal by IPCL. The Appellate Collector found a valid C.T. 2 certificate covering certain clearances, granting relief to IPCL for consignments cleared after a specific date. However, for other clearances, the Appellate Collector held IPCL liable to pay differential duty due to the absence of a valid certificate.

During the hearing, IPCL contended that Notification No. 276/67 applied to their case, asserting eligibility for total duty exemption based on the use of mixed-xylene in the manufacture of chemicals like paints and varnishes. The appellant argued that paints and varnishes were considered chemicals under the Excise Tariff, justifying the application of Notification No. 276/67. On the other hand, the Department argued that Notification No. 35/73, specific to mixed-xylene used in the manufacture of paints and varnishes, was applicable.

The Tribunal analyzed the provisions of both notifications. Notification No. 276/67 exempted excisable goods for use in the manufacture of specified commodities, including chemicals, while Notification No. 35/73 provided partial exemption for goods intended for use as solvent or diluent in paints and varnishes. Despite paints being classified as chemicals in the Excise Tariff, the Tribunal found that the specific application of Notification No. 35/73 to mixed-xylene used in paints and varnishes did not preclude the more beneficial Notification No. 276/67. Considering this, the Tribunal ruled in favor of IPCL, granting them the benefit of Notification No. 276/67 and overturning the penalty imposed. The Tribunal emphasized that no clandestine removals occurred, justifying the decision to revoke the penalty.

In conclusion, the Tribunal allowed the appeal, providing consequential relief to IPCL within a specified timeframe. The judgment clarified the eligibility of IPCL for duty exemption under Notification No. 276/67, highlighting the distinction between the two notifications and the principle of applying the more beneficial provision in case of ambiguity.