2009 (10) TMI 28 - HC - Central Excise

Exemption to HDPE Pipes - pipes were exempt from excise duty upto 28.2.1994 and after the said date the exemption was withdrawn and the pipes became exigable to excise. On 28.2.1994 - These goods were supplied and no excise duty was paid on it. These goods had been supplied to the Government Departments . The goods were cleared on 28.2.1994 but the inspection notes were issued as on 7.3.1994 held that - goods were cleared on 28.2.1994 and was eligible for exemption

Summary

Issues:
- Reference against the order passed by the Central Excise and Gold (Control) Appellate Tribunal
- Exemption of HDPE pipes from excise duty until 28.2.1994
- Clearance of goods without paying excise duty
- Issuance of inspection notes after goods clearance
- Interpretation of terms and conditions of supply orders
- Distinction between clearing goods for excise purposes and dispatching goods to customers

Analysis:
The judgment pertains to an application filed under Section 35H(1) of the Central Excise Act, 1944 seeking reference against an order by the Central Excise and Gold (Control) Appellate Tribunal dated 9.1.2003. The case involves two manufacturers of HDPE pipes who cleared certain goods on 28.2.1994, the last date of exemption from excise duty. The goods were supplied to Government Departments under rate contracts issued by the Director General Supplies and Disposals (DGS&D), with the condition that despatch should occur after inspection and acceptance of quality. The inspection notes were issued on 7th March, 1994, after the goods clearance, leading to a dispute regarding the timing of clearance in relation to the inspection notes.

The undisputed fact was that the goods had been inspected by the authorized authority before 28.2.1994, even though the inspection notes were issued later. The CEGAT's findings highlighted that the contract required goods to be despatched within a specified timeframe after inspection, with a provision for extension up to 60 days. Re-inspection was mandated if clearance occurred after the extended period. The judgment emphasized the distinction between clearing goods for excise purposes and dispatching them to customers, noting that manufacturers could store cleared goods for later dispatch. While the goods were to be supplied under DGS&D rate contracts, the critical point was that the goods had been inspected before the 28.2.1994 clearance date.

In conclusion, the Court found no merit in the application, rejecting it and not awarding any costs. The judgment's detailed analysis clarified the sequence of events, the contractual obligations regarding inspection and despatch, and the significance of the timing of clearance in relation to inspection notes, ultimately supporting the CEGAT's view on the matter.