2017 (2) TMI 1294 - AT - Central Excise

Benefit of N/N. 10/97-C.E., dated 1-3-1997 - goods supplied to the specified institution - cancellation of Essentiality Certificate - Held that - the clearance of the impugned goods was done properly on the basis of compliance of the prescribed conditions on the date of clearance and subsequent withdrawal of facility to issue Essentiality Certificate does not justify the demand raised by the department in the absence of any allegation of fraud or collusion - appeal allowed.

Summary

Issues:
Appeal against Order-in-Appeal No. 1000/CE/CHD/06 dated 24-10-2006 passed by the Commissioner of Customs and Central Excise (Appeals), Chandigarh.

Detailed Analysis:

Issue 1: Essentiality Certificate Withdrawal
The case involves the appellants appealing against a demand for duty along with interest and penalty due to the withdrawal of an Essentiality Certificate by Jawahar Lal Nehru Technological University (JLNTU), Hyderabad, which was utilized for availing Central Excise duty exemption under Notification No. 10/97-C.E., dated 1-3-1997. The Deputy Commissioner of Central Excise, Vijaywada, informed that the Essentiality Certificate was canceled for the Institute to which the goods were supplied. The appellants contested the demand, arguing that the transactions were conducted in compliance with the prescribed conditions at the time of clearance, and the subsequent withdrawal of the Essentiality Certificate did not affect the validity of the exemption claimed.

Issue 2: Compliance with Exemption Notification
Upon examination of the records and submissions, it was found that the appellants had met the conditions of the exemption notification by supplying goods to the specified institution as per Notification No. 10/97-C.E. dated 1-3-1997. The necessary certificates were issued before the clearance of goods, and the goods were supplied to the institution within the stipulated timeline. Although the University later withdrew the facility to issue Essentiality Certificates, the withdrawal was not retrospective, and there was no indication of fraud or collusion in obtaining the exemption. Therefore, the transactions conducted under the cover of the Essentiality Certificates remained valid despite the subsequent withdrawal of the facility.

Judgment:
The Tribunal held that the clearance of the goods was conducted in accordance with the prescribed conditions at the time of clearance, and the subsequent withdrawal of the Essentiality Certificate did not warrant the demand raised by the department. As there was no evidence of fraud or collusion, the Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal, concluding that the appellants were entitled to the duty exemption as per the Notification.