2009 (8) TMI 873 - AT - Central Excise

Summary

Issues involved: Interpretation of Notification No. 6/2002-C.E. regarding exemption for Ethanol Blended Petrol, compliance with duty payment requirements, eligibility for exemption under Section 11AC, and proper documentation of clearances within the factory.

Comprehensive Details:

1. Exemption under Notification No. 6/2002-C.E.:
During the period from 1st July, 2003 to 31st July, 2006, the appellants availed exemption under the mentioned Notification for Ethanol Blended Petrol. The Commissioner concluded that the appellants were not entitled to the exemption as duty on Motor Spirit used for blending with Ethanol had been paid after the 5th of the next month, contrary to the Notification's requirement of duty payment at the time of captive clearance for blending. A substantial duty amount was demanded along with penalties and interest.

2. Interpretation of Duty Payment Requirement:
The advocate for the appellants argued that duty payment before the due date in the next month, as per Rule 8 of Central Excise Rules, should suffice for the Notification's conditions. She emphasized that the duty was calculated based on clearances for blending within the factory, and invoices were issued accordingly. The advocate contended that the appellants fulfilled the duty payment requirements as per the law and should be eligible for the exemption.

3. Revenue's Contention and Compliance with Notification:
The Revenue's representative highlighted that the duty amount on captive invoices showed as payable and not paid, indicating non-compliance with the Notification's conditions. He insisted on strict adherence to the Notification's requirements and argued that the appellants did not fulfill the duty payment criteria, hence were ineligible for the exemption.

4. Tribunal's Analysis and Decision:
After considering both parties' submissions, the Tribunal noted that Rule 8 of Central Excise Rules allows treating goods as duty paid even if duty is paid subsequently, which supports the appellants' argument. The Tribunal found merit in the advocate's contentions regarding compliance with duty payment and issuance of captive invoices. It concluded that the appellants had substantially complied with the Notification's conditions and were eligible for the exemption. The Tribunal dismissed the Revenue's arguments and allowed the stay petition unconditionally, clarifying that the observations made were specific to the stay petition and would not impact the final case hearing.

This judgment by the Appellate Tribunal CESTAT, New Delhi, clarified the interpretation of duty payment requirements under Notification No. 6/2002-C.E. for Ethanol Blended Petrol, emphasizing substantial compliance with the law's provisions for duty payment and documentation within the factory for blending purposes.