2012 (1) TMI 158 - AT - Central Excise

Summary

Issues involved: Interpretation of Notification 214/86-C.E. for availing exemption from Excise duty on sodium silicate, whether all raw materials must be supplied by the person getting goods manufactured, and applicability of extended period for demanding duty payable.

Summary:
In the case involving two appeals, E/692/2006 by Sneh Silicate Industries and E/3760/2006 by Revenue, the issue pertained to the eligibility for Excise duty exemption on sodium silicate under Notification 214/86-C.E. The assessee procured some raw materials themselves, leading to a dispute with Revenue regarding the exemption and the imposition of duty for certain periods.

The assessee, engaged in manufacturing sodium silicate, used raw materials supplied by Hindustan Lever Ltd. along with materials procured from the market. Revenue contended that the assessee could not avail the exemption under Notification 214/86-C.E. as they procured some raw materials themselves, contrary to the conditions of the notification. Additionally, there were allegations of non-declaration of production and value in monthly returns, leading to the invocation of an extended period for demanding duty.

The Counsel for the assessee argued that the notification did not explicitly require all raw materials to be supplied by another person for availing the exemption. They highlighted the cost distribution of raw materials in the final product to support their claim for exemption. On the other hand, the Authorized Representative for Revenue emphasized the substantial procurement of materials by the assessee, making them ineligible for the exemption.

Upon considering the arguments, the Tribunal noted that the exemption under Notification 214/86-C.E. was subject to the condition that the person supplying raw materials used the goods in further manufacture of dutiable products, a condition not violated in this case. Referring to a previous case, the Tribunal held that minor materials procured by the job-worker could still allow for the exemption. The Tribunal disagreed with the argument that the main raw material should be determined solely by weight, stating that some materials procured by the manufacturer would inevitably be used in the manufacturing process. Consequently, the appeal by the assessee was allowed, and the appeal by Revenue was rejected.