2007 (8) TMI 242 - AT - Central Excise

Benefit of Notification No. 16/87 cannot be denied mere for non-compliance with the procedural conditions of Chapter X, if substantive condition of intended use of parts of battle tanks in mfg. of tanks as per the exemption notification was satisfied Radiators are confiscable as they weren t used in mfg. of T- 72 battle tanks - penalty can be imposed on a company u/r 26 (equivalent to erstwhile Rule 209A) Appeal partly allowed

Summary

Issues:
1. Exemption eligibility under Notification No. 164/87
2. Treatment of price as cum-duty-price and entitlement for deduction under Section 4(4)(d)(ii) of the CEA
3. Eligibility for Modvat credit
4. Imposition of penalty under Section 11AC of the CEA
5. Denial of benefit of Notification No. 16 dated 10-6-87
6. Confiscation of radiators
7. Imposition of penalty on a company under Rule 209A of the Central Excise Rules, 1944

Analysis:

1. The Tribunal considered various issues in the appeal, including the eligibility of the appellants for exemption under Notification No. 164/87, treatment of goods price as cum-duty-price, entitlement for deduction under Section 4(4)(d)(ii) of the CEA, eligibility for Modvat credit, and imposition of penalty under Section 11AC of the CEA. The Commissioner had ruled against the appellants on all these issues, leading to the present appeals challenging the decision.

2. The Tribunal addressed the denial of the benefit of Notification No. 16 dated 10-6-87 to the assessee by the Commissioner. The benefit was denied based on the non-satisfaction of procedural conditions, despite substantive conditions being met. Citing relevant case law, the Tribunal held that failure to adhere to procedural conditions would not deny exemption if substantive conditions were fulfilled. Consequently, the benefit of the Notification was deemed admissible to the assessee.

3. The Tribunal discussed the confiscation of radiators, noting that the goods were not intended for use in the manufacture of T-72 battle tanks. The Tribunal upheld the confiscation, deeming the redemption fine imposed by the Commissioner as reasonable and sustaining this part of the Commissioner's order.

4. Regarding the penalty imposed on a company under Rule 209A of the Central Excise Rules, 1944, the Tribunal referred to a relevant order acknowledging the non-imposability of such penalty on a company. Citing precedent and the dismissal of the Revenue's appeal, the Tribunal concluded that the penalty on the company was not justified and ordered its vacation.

5. Ultimately, the Tribunal allowed Appeal No. E/486/2003 and Appeal No. E/487/2003, except concerning the confiscation of radiators. The decision was pronounced in open court, providing a comprehensive resolution to the various legal issues raised in the appeals.