2005 (2) TMI 649 - AT - Central Excise

Summary

Issues:
1. Appeal filed by Revenue challenging duty demand on phosgene gas captively consumed in the manufacture of final product.
2. Applicability of Notification No. 67/95-C.E. and Chapter X procedure on the duty liability.
3. Interpretation of exemption and assessable Nil rate of duty in the context of clearance under Chapter X procedure.

Analysis:
1. The case involved an appeal by the Revenue concerning the duty demand on phosgene gas captively consumed in the manufacture of Diethyl Carbamyl Chloride (DECC). The Revenue issued a Show Cause Notice proposing duty recovery for the period from May 1994 to August 1998. The Additional Commissioner confirmed the duty demand, leading to an appeal by the appellants.

2. The appellants contended that the demand was time-barred and cited the case of M/s. Swastic Tin Works v. CCE. The Commissioner (Appeals) ruled that phosgene gas used in manufacturing DECC was not chargeable to duty as the clearances under Notification No. 5/98-C.E. could not be considered exempted or assessable to Nil rate of duty. This decision led to the Revenue's appeal.

3. The Commissioner (Appeals) based the decision on cases like M/s. Indian Aluminium Cables Ltd. v. State of Haryana and M/s. Arun Auto Spinning & Manufacturing Co. v. CCE. These cases highlighted that goods cleared under Chapter X procedure, with no duty paid on DECC due to remission under Chapter X, did not fall under exemption or Nil rate of duty. The Tribunal found that the clearances under Chapter X procedure did not equate to exemption from duty. The Revenue's appeal was dismissed, upholding the Commissioner (Appeals) decision based on relevant citations and the nature of clearances under Chapter X procedure.