2017 (11) TMI 1885 - AT - Central Excise

Goods procured under Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001 which was used in the export goods - demand on the ground that the appellant have contravened the condition given in the permission as per Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 - HELD THAT - The appellant have followed all the conditions of Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001 issued under Rule 19 of the Central Excise Rules, 2002 - there is no condition provided in the Rule or Notification or Concessional Duty Rules, 2001 for drawal of sample either of raw material or finished goods. Despite this, the Assistant Commissioner while giving the permission stipulated the said condition, which in extraneous condition which the Assistant Commissioner should not have imposed upon the appellant. However, even if such condition was provided merely for non-compliance of such condition, benefit of Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001 cannot be denied for the reason that the use of goods in the production and export of such final product is not under dispute. The object of allowing the duty free procurement of goods under Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001 is that the finished goods which is manufactured out of such duty free goods, should be exported. If this condition is not under dispute the benefit otherwise cannot be denied. Merely because the condition of drawal of sample was not complied with, the benefit of N/N. 43/2001 was wrongly denied - Appeal allowed - decided in favor of appellant.

Issues:
1. Duty demand confirmation on goods procured under Notification No. 43/2001-C.E. (N.T.)
2. Compliance with Condition No. 5 of the permission letter dated 16-8-2007
3. Imposition of extraneous condition for sample drawal
4. Denial of benefit of Notification No. 43/2001-C.E. (N.T.) due to non-compliance with sample drawal condition

Analysis:
1. The duty demand was confirmed on goods procured under Notification No. 43/2001-C.E. (N.T.) for export, as the appellant allegedly contravened a condition in the permission letter. The appellant argued that the demand was based solely on non-compliance with Condition No. 5, which required sample drawal for input and finished goods exported under Rule 19(2). The appellant contended that this condition was extraneous and not mandated by the relevant rules.

2. The appellant did not appear, but the grounds of appeal highlighted the contention that the sample drawal condition was not a requirement under the applicable rules. The Assistant Commissioner had imposed this condition, which the appellant believed was unjustified. The appellant emphasized that exports were made under a self-removal procedure that did not necessitate sample drawal for raw materials or finished goods.

3. The Revenue representative reiterated the findings of the impugned order, supporting the duty demand confirmation based on the non-compliance with the sample drawal condition. However, upon review, the Member (J) found that the appellant had adhered to all conditions of the relevant notification and rules. It was noted that there was no explicit requirement in the rules or notification for sample drawal, and the Assistant Commissioner's imposition of this condition was deemed extraneous.

4. The Member (J) concluded that even if the sample drawal condition was not met, the benefit of Notification No. 43/2001-C.E. (N.T.) should not have been denied, as the use of goods in production and export was undisputed. The primary objective of allowing duty-free procurement under the notification was to facilitate the export of finished goods manufactured from such goods. Since this objective was met, the denial of benefits due to non-compliance with an extraneous condition was deemed incorrect. Consequently, the impugned order was set aside, and the appeal was allowed on 29-11-2017.

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