2008 (7) TMI 753 - AT - Central Excise

Summary

Issues:
- Appeal by department to set aside penalty imposed under Rule 173Q
- Appeal by assessee against upheld demand of duty
- Classification of fat liquors as lubricating preparations for availing benefits under Notification 12/94

Analysis:
1. Appeal against penalty imposition:
The department filed an appeal seeking to set aside the penalty of Rs. 2,50,000 imposed under Rule 173Q by the Commissioner. The Commissioner (Appeals) had dropped the penalty, which led to the department's appeal to restore the original authority's order regarding the penalty. The Tribunal upheld the decision of the Commissioner (Appeals) in dropping the penalty, stating that no mala fide could be attributed to the assessee, and thus, the imposition of the penalty was not justified.

2. Appeal against demand of duty:
The assessee filed an appeal against the demand of duty amounting to Rs. 6,65,961 upheld by the Commissioner (Appeals). The Tribunal carefully examined the submission of both parties and perused the records. The issue revolved around the classification of fat liquors as lubricating preparations to avail benefits under Notification 12/94. The Tribunal analyzed the relevant tariff entry under Chapter heading 3403.00, which distinguished between lubricating preparations and preparations used for oil or grease treatment of various materials.

3. Classification of fat liquors:
The Tribunal considered the arguments presented by both sides. The assessee contended that fat liquors, containing raw oil that lubricates leather, should be classified as lubricating preparations under sub-heading 3403.00 of the Central Excise Tariff. The assessee relied on legal precedents to support their claim. On the other hand, the department argued that the product in question, fat lubricating, did not qualify as a lubricating preparation for the purpose of availing the exemption under Notification 12/94.

4. Decision on classification:
The Tribunal analyzed the tariff entry and the provisions of Notification 12/94. It concluded that fat liquors did not qualify as lubricating preparations eligible for the concessional rate of duty under the notification. The Tribunal upheld the decision of the Commissioner (Appeals) in confirming the demand of duty at the regular tariff rate of 20%. The Tribunal emphasized that fat liquors were used in the oil or grease treatment of textile materials, leather, and other materials, falling under a distinct category from lubricating preparations.

5. Final ruling:
The Tribunal decided not to interfere with the Commissioner (Appeals)'s decision regarding the duty demand. It held that while the duty demand was upheld, no penalty was warranted in this case due to the absence of any mala fide intent on the part of the assessee. Consequently, the Tribunal rejected both the appeal filed by the party and the appeal by the department, maintaining the decision on duty demand and penalty imposition.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi provides a comprehensive overview of the issues involved and the Tribunal's decision on each aspect of the case.