2004 (2) TMI 500 - AT - Central Excise

Summary

Issues:
Duty demand under show cause notices, admissibility of exemption claimed, penalty imposition for contravention of rules.

Analysis:
The case involved a duty demand of Rs. 18,48,507 raised under two show cause notices dated 4-3-1996 and 10-5-1996. The authorities contended that the exemption claimed by the appellants for the product "VINOPRENE" was not admissible under Serial No. 3 of Notification No. 18/95-C.E. The product was described as unvulcanised rubber compound in sheet-like form, not falling under the category of rubber product in the form of sheet as per Serial No. 3. Additionally, a penalty of Rs. 10,000 was imposed for rule contravention.

During the proceedings, it was established that the product in question was processed by mixing masticated rubber with other ingredients to form compounded rubber, which was then rolled into a sheet-like form. Despite initial findings that the product was not a rubber sheet, the appellants presented technical literature supporting their claim. The literature demonstrated that the product, after rolling in a roll mill, met the definition of a rubber sheet as per Serial No. 3 of the notification. It was acknowledged that the condition of not availing Modvat credit on inputs for manufacturing rubber sheets was satisfied by the appellants.

Consequently, the Tribunal concluded that the product qualified for total exemption from duty payment as per Serial No. 3 of the notification. The impugned order was set aside, and the appeal was allowed in favor of the appellants.