2007 (10) TMI 513 - AT - Central Excise

Petroleum products - Supply to EOU - N/N. 17/2004-C.E. (N.T.) dated 4-9-2004 - removal of goods without payment of duty - The department took the view that, with the withdrawal of warehousing facility, the stock of petroleum products in the appellant s warehouse should have instantly suffered duty.

Summary

Issues:
1. Interpretation of Notification No. 17/2004-C.E. (N.T.) dated 4-9-2004 by the Central Government.
2. Entitlement to exemption under Notification No. 22/2003-C.E.
3. Application of duty on stock of petroleum products after withdrawal of warehousing facility.
4. Confirmation of demand of duty and imposition of penalty by the original authority.
5. Consideration of previous decisions in similar cases.

Analysis:
1. The case involves the interpretation of Notification No. 17/2004-C.E. (N.T.) by the Central Government. The appellant, a Public Sector Undertaking engaged in the manufacture of petroleum products, used to avail warehousing facility for their goods. However, after the promulgation of the said Notification, they were no longer allowed to move goods between warehouses without paying duty. The issue arose when there was a stock of petroleum products in their warehouse at the time of the notification, and a part of it was subsequently cleared to an EOU under an exemption notification.

2. The appellant's entitlement to exemption under Notification No. 22/2003-C.E. was crucial in this case. The department contended that the stock of petroleum products in the appellant's warehouse should have incurred duty immediately after the withdrawal of the warehousing facility. However, the appellant argued that they should be allowed the benefit of the exemption notification for clearing goods to the EOU, even though the warehousing facility had been withdrawn.

3. The original authority confirmed a demand of duty amounting to over Rs. 10 lakhs against the appellants, along with interest and a penalty. The Commissioner (Appeals) upheld this decision, leading to the present appeal before the Tribunal. The Tribunal considered the submissions made by both sides and noted that a similar issue had been decided in favor of the assessee in a previous case involving M/s. Bharat Petroleum Corporation Ltd. v. CCE, Coimbatore [2007 (216) E.L.T. 240 (Tri.-Chen.)].

4. The Tribunal referred to its decision in the Bharat Petroleum Corporation Ltd. case, where it was held that denying the appellants the benefit of a general exemption notification due to the withdrawal of the warehousing facility would be unjust. The Tribunal emphasized that the appellants should not be deprived of the exemption simply because the warehousing facility was lifted. Citing a similar case decided by a coordinate Bench, the Tribunal set aside the impugned orders and allowed the appeals, following the reasoning provided in the previous judgment.

5. In conclusion, the Tribunal relied on its previous decision and allowed the appeal, setting aside the order confirming the demand of duty and penalty imposed on the appellants. The judgment highlighted the importance of upholding the benefit of exemption notifications for the assessee, even in cases where the warehousing facility had been withdrawn.