2006 (4) TMI 288 - AT - Central Excise

Summary

Issues:
Challenge to Commissioner (Appeals) order dismissing appeals against duty and penalty imposition.

Analysis:
The appellant challenged the Commissioner (Appeals) order dismissing appeals against the imposition of duty amounts and penalties. The appeal involved two separate amounts - Rs. 10,98,867/- and Rs. 16,65,572/- demanded as duty, with a penalty of Rs. 10,000/- imposed in appeal No. C/636/06. The appellant contended that a portion of the duty amount had been paid, and the remaining amount along with the penalty should be waived. The appellant argued that the shortage in naptha was due to evaporation, citing a Supreme Court decision in BPL Display Devices Ltd. v. Commissioner of Central Excise, Ghaziabad, which emphasized the interpretation of the words "for use" in exemption notifications.

Under Exemption Notification No. 3/2001-C.E., naptha and natural gasoline liquid were granted exemption subject to specific conditions. The Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 applied in this case. Rule 6 stipulated that if the subject goods were not used for the intended purpose, the manufacturer had to pay the differential duty amount along with interest. The explanation to Rule 6 clarified that even if goods were lost or destroyed due to natural causes or unavoidable accidents, the duty would still be payable as the goods would be deemed as "not used." This provision differentiated the present case from the BPL Display Devices decision, as the deeming fiction in the rules made loss due to natural causes or accidents liable for duty payment. Consequently, the appellant failed to establish a prima facie case for waiving the pre-deposit, and the deposited amount was treated as pre-deposit for further proceedings.

In Appeal No. E/636/06, an interim stay of the order was granted upon the appellant depositing the duty amount of Rs. 1,09,867/- within eight weeks. Failure to make this payment would result in the appeal being dismissed. If the amount was paid, the balance amount under the order would be waived. A compliance report was scheduled for June 7, 2006, to monitor the payment. The judgment was dictated and pronounced on April 5, 2006, by the Appellate Tribunal CESTAT, New Delhi.