2007 (8) TMI 113 - AT - Central Excise

Exemption - Appellant supplied the impugned goods to ONGC for purpose of oil exploration and availing the benefit of Notification No. 5/98-C.E. but revenue disallowed on the ground of non fulfillment of condition - Benefit allowed on the ground of all substantive conditions are fulfilled

Summary

Issues:
- Appeal against Order-in-Appeal No. 7/2000 dated 21-1-2000 affirming demand of differential duty for clearances of caustic soda under Notification No. 5/98- C.E.
- Denial of exemption availed by the appellants due to failure to fulfill conditions mentioned in Notification No. 5/98- C.E.
- Interpretation of conditions for concessional rate of duty under Notification No. 5/98- C.E.
- Applicability of procedural conditions in exemption notifications.

Analysis:
1. The appeal was filed against the Order-in-Appeal affirming the demand of differential duty for clearances of caustic soda under Notification No. 5/98- C.E. The Commissioner denied the exemption availed by the appellants as they did not fulfill the conditions specified in the notification. The issue revolved around whether the appellants met the conditions for concessional duty under the said notification.

2. The appellants argued that the impugned goods were supplied to ONGC and used in oil exploration, supported by certificates from ONGC. They cited a Supreme Court judgment emphasizing that once substantive conditions of a notification are met, procedural conditions should not be used to deny the exemption. The Tribunal noted that the substantive condition for eligibility was satisfied as the goods were indeed used for oil exploration by ONGC, as evidenced by the purchase order and end-use certificate.

3. The Senior Departmental Representative (SDR) contended that exemption notifications must be strictly construed, and since M/s. SPIC Ltd. did not fulfill the conditions of Notification No. 5/98-CE, the benefit should be denied. However, the Tribunal disagreed, emphasizing that once the substantive condition for eligibility is met, procedural conditions should not be used to deny the benefit, as it would defeat the legislative intent behind the notification.

4. After considering the submissions and evidence, the Tribunal found that the appellants had correctly paid the concessional duty on the goods at the time of clearance. They concluded that the benefit due to the assessee should not be recovered, overturning the impugned order and allowing the appeal. The Tribunal's decision was based on the principle that once the substantive condition for eligibility is fulfilled, procedural conditions should not be used to deny the benefit under an exemption notification, in line with the Apex Court's observations in a similar case.