2004 (5) TMI 453 - AT - Central Excise

Summary

Issues:
1. Demand of duty on plastic granules exempted under Notification 14/92-C.E.
2. Imposition of penalty under Section 11AC of the Central Excise Act.

Analysis:
1. The main issue in this case was the demand of duty on plastic granules arising in the manufacture of PVC suction hose pipes, which were exempted from duty under Notification 14/92-C.E. The Commissioner of Central Excise confirmed a demand of Rs. 10,01,374/- along with interest under Section 11AB of the Central Excise Act and imposed a penalty of equal amount under Section 11AC. The appellants contended that the product in question was PVC compound and not PVC granules, and therefore eligible for the duty exemption under Sr. No. 3 of the table annexed to Notification 14/92. The Revenue did not refute this contention. The Tribunal found that the product in dispute fell under the purview of Notification 14/92, and since no duty had been paid on the product, the condition for availing the exemption was fulfilled. Consequently, the Tribunal extended the benefit of the notification to the goods in question, set aside the impugned order, and allowed the appeal.

2. The second issue pertained to the imposition of a penalty under Section 11AC of the Central Excise Act. However, since the Tribunal decided in favor of the appellant regarding the demand of duty and extended the benefit of Notification 14/92 to the goods in dispute, the penalty imposed under Section 11AC was also set aside along with the impugned order. The Tribunal's decision was based on the factual position that the product manufactured was PVC compound and not PVC granules, making it eligible for the duty exemption under the relevant notification. The Tribunal's analysis focused on the specific provisions of the notifications and the absence of duty payment on the product, leading to the conclusion that the appellants were entitled to the benefit of the exemption. The judgment highlighted the importance of correctly interpreting the scope and conditions of the relevant notifications to determine the applicability of duty exemptions in excise matters.

This detailed analysis of the judgment showcases how the Tribunal considered the factual and legal aspects of the case to arrive at a decision favorable to the appellant based on the interpretation of the relevant notifications and provisions of the Central Excise Act.