2006 (5) TMI 377 - AT - Central Excise

Summary

Issues:
1. Denial of benefit of Notification No. 16/2000-Cus. and imposition of duty and penalty.
2. Shortage of furnace oil and theft en route affecting duty remission.
3. Interpretation of relevant entry in the Notification for exemption eligibility.
4. Comparison with Supreme Court judgment on the meaning of "for use."
5. Treatment of theft as an accident for remission of duty.
6. Prima facie case against duty demand and penalty.

Analysis:

1. The Commissioner demanded duty and imposed a penalty on the appellants due to the denial of the benefit of Notification No. 16/2000-Cus. for importing furnace oil for fertilizer manufacture. The appellants sought waiver of pre-deposit and stay of recovery for the duty and penalty amounts.

2. A shortage of 478.139 MTs of furnace oil was noted, including 45 MTs stolen en route. The Commissioner did not allow remission of duty on the stolen quantity. The Tribunal considered theft as an accident for remission of duty under Rule 49 of Central Excise Rules, supporting the appellants' case against the duty demand and penalty.

3. The dispute centered on the interpretation of the Notification's entry, which exempts goods for fertilizer manufacture from duty subject to specific conditions. The appellants argued that all goods "intended for use" in fertilizer manufacture qualify for exemption, citing a Supreme Court judgment for support.

4. The appellants relied on the Supreme Court's interpretation of "for use" in a different notification to mean "intended for use." However, the absence of these words in the relevant entry of Notification No. 16/2000-Cus. was highlighted by the SDR, raising interpretative challenges.

5. The Tribunal acknowledged the appellants' prima facie case against the duty demand and penalty, emphasizing the need to treat theft as an accident for remission of duty. The Tribunal's consistent stance on treating theft as an accident for remission further supported the appellants' position.

6. Considering the interpretative nature of the dispute, the Tribunal found merit in the appellants' arguments and granted waiver of pre-deposit and stay of recovery for the duty and penalty amounts, indicating a favorable stance towards the appellants' contentions.