2008 (2) TMI 49 - AT - Central Excise

Assessees procuring Furnace Oil free of duty, under CT-2 certificate following Chapter X procedure, for mfg. of single super phosphate - department raising demand on ground that assessee has misdeclared furnace oil as feedstock, in not acceptable - appellant have utilized the material received for the intended purpose, have discharged their obligation as per bond executed by them no misdeclaration - In such a situation, the demand of duty from the recipient unit does not arise

Summary

Issues:
1. Appeal by M/s. Nirma Limited against Commissioner (Appeals) order.
2. Department's appeal against the reduction in duty demanded.
3. Common issue involving M/s. Nirma Limited in multiple appeals.

Analysis:

Issue 1: Appeal by M/s. Nirma Limited against Commissioner (Appeals) order
The case involved M/s. Nirma Limited, engaged in manufacturing single super phosphate, procuring materials under Chapter X procedure. The jurisdictional authorities initially authorized procurement of furnace oil as feedstock. However, a subsequent departmental order demanded duty for the period March 1999 to June 2002, contending that furnace oil was not feedstock. The appeals challenged this duty demand. The Advocate for M/s. Nirma Limited acknowledged the Supreme Court's ruling on furnace oil not being feedstock but argued that they had procured it based on a CT-2 certificate issued without objection by the department. The Advocate cited relevant case laws to support their position, emphasizing that they used the furnace oil as declared. The department argued for duty payment as the goods were procured under a bond. However, the Tribunal found no mis-declaration by M/s. Nirma Limited and ruled in their favor, emphasizing that the duty demand did not apply in this case.

Issue 2: Department's appeal against the reduction in duty demanded
The Department's appeal focused on the application of lower duty rates during a specific period. The Department contended that the Commissioner (Appeals) had incorrectly applied a lower rate of 8% instead of 16% for a period from 1-3-2000 to 25-6-2002. The learned SDR argued for duty payment based on the bond executed for procuring goods under CT-2 certificate. However, the Tribunal observed that M/s. Nirma Limited had used the material for the intended purpose as per the bond, without any mis-declaration. The Tribunal emphasized that if duty was to be demanded, it should be from the supplying unit, not the recipient, and ruled against the Department's appeal, stating that the duty demand was not applicable in this scenario.

Issue 3: Common issue involving M/s. Nirma Limited in multiple appeals
All the appeals involving M/s. Nirma Limited were consolidated due to a common issue. The Tribunal analyzed the procurement of goods under Chapter X procedure, the issuance of CT-2 certificates, and the utilization of materials by M/s. Nirma Limited as intended. The Tribunal highlighted the absence of mis-declaration and the fulfillment of obligations by M/s. Nirma Limited as per the executed bond. Consequently, the Tribunal allowed the appeals by M/s. Nirma Limited while rejecting the Department's appeal.