2012 (10) TMI 456 - AT - Central Excise

Denial of benefit of Notification No. 75/84-C.E. - respondents are found to have brought into their factory Benzene and Toluene on payment of duty at concessional rate in terms of Notification No. 75/84, and the same were, admittedly, used in the manufacture of thinners, which were cleared without payment of duty - once thinners were removed from L-6 premises intended use of the same are in manufacture of paints, varnishes, lacquers etc., and no end use verification is necessary. Therefore, condition of the exemption notification has been fulfilled in this case - demands are not sustainable

Summary

Issues:
- Appeal against order-in-appeal granting benefit of Notification No. 75/84-C.E.
- Fulfillment of conditions of exemption notification for concessional rate of duty.
- Interpretation of end use verification requirement for goods received under L-6 licence.
- Adjudication on whether the demands are sustainable based on facts and circumstances.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Kolkata involved a dispute where the Revenue challenged an order-in-appeal granting the benefit of Notification No. 75/84-C.E. to the respondent. The case revolved around the fulfillment of conditions of the exemption notification for the concessional rate of duty. The respondents, as holders of an L-6 licence, had obtained Benzene and Toluene at a concessional rate of duty and used them in manufacturing thinner, which was cleared without payment of Central Excise duty. The Department initiated proceedings alleging non-fulfillment of exemption conditions, which were confirmed by the lower adjudicating authority. The Commissioner (Appeals) set aside the lower authority's order, leading to the Revenue's appeal.

The main contention was whether the grant of an L-6 licence absolved the respondents from demonstrating the end use of the goods received under the licence. The Commissioner (Appeals) found that the respondents had fulfilled the conditions of the exemption notification. It was established that the thinners manufactured were intended for use in paints, varnishes, lacquers, etc., and no end use verification was necessary. The Commissioner's decision was supported by the fact that an adjudication order from a previous case had been accepted by the Department, indicating a settled matter. The Tribunal concurred with the Commissioner's findings, noting that all issues raised by the Department had been addressed satisfactorily, and no contradictory evidence was presented by the Department.

In conclusion, the Tribunal dismissed the Revenue's appeal, ruling that there was no reason to interfere with the Commissioner (Appeals)'s decision. The judgment emphasized that the demands were not sustainable based on the facts and circumstances presented, ultimately upholding the decision in favor of the respondent.