2016 (7) TMI 1549 - AT - Central Excise

Captive consumption - Oxygen and Acetylene Gas - benefit of N/N. 67/95, dated 16-3-1995 - Benefit of notification denied on the ground that the finished goods namely, Oxygen Acetylene were used within the factory for repair/maintenance purpose, and not intended for use in the manufacture of any further excisable goods - penalty imposed u/r 25 of Central Excise Rules, 2002 - HELD THAT - In the present case, since the finished goods namely, Oxygen Acetylene were used within the factory for repair/maintenance purpose, and not intended for use in the manufacture of any further excisable goods, the conditions of Notification dated 16-3-1995 has not been fulfilled by the appellant - Therefore, the confirmation of duty demand in the circumstances of the present case is justified. Penalty - HELD THAT - Considering the fact that the issue involved in the case in hand relates to interpretation of the notification and goods in question have not been removed from the factory clandestinely, we are of the view that penalty imposed under Rule 25 of Central Excise Rules, 2002 is not proper. Appeal allowed in part.

Summary

Issues:
Captive consumption of Oxygen and Acetylene Gas for further manufacture of excisable goods under Notification No. 67/95 - Interpretation of the notification - Imposition of penalty under Rule 25 of Central Excise Rules, 2002.

Analysis:
The dispute in this case revolves around the captive consumption of Oxygen and Acetylene Gas within the factory for the further manufacture of excisable goods. The exemption under Notification No. 67/95, dated 16-3-1995, allows captive consumption subject to the condition that the goods used captively are for the manufacture of excisable goods cleared on payment of duty. In this instance, the finished goods, Oxygen & Acetylene, were used within the factory for repair/maintenance purposes and not for manufacturing further excisable goods. Consequently, the conditions of the notification were not met by the appellant. Hence, the confirmation of duty demand is deemed justified by the Tribunal.

Moreover, the Tribunal acknowledged that although the goods in question were not removed clandestinely from the factory and the issue primarily pertained to the interpretation of the notification, the penalty imposed under Rule 25 of the Central Excise Rules, 2002, was deemed inappropriate. Therefore, the Tribunal partially allowed the appeal by setting aside the penalty but upheld the confirmation of duty liability. The decision was made considering the specific circumstances of the case and the non-compliance with the conditions stipulated in the notification.

In conclusion, the Tribunal's ruling highlights the importance of adhering to the conditions outlined in notifications related to captive consumption of goods for further manufacturing processes. While penalty imposition was deemed improper in this case due to the nature of the violation, the duty liability confirmation was upheld based on the failure to fulfill the conditions specified under Notification No. 67/95, dated 16-3-1995. The judgment emphasizes the significance of strict compliance with excise regulations to avoid potential liabilities and penalties.