1984 (11) TMI 74 - HC - Central Excise

Summary

Issues:
1. Interpretation of exemption notification under Central Excise Rules for ethyl benzene import.
2. Customs authorities' demand for additional duty on imported ethyl benzene.
3. Validity of show cause notices issued by Customs authorities.
4. Reliance on Customs authorities' representation by the petitioners.
5. Legal consequences of audit objection on Customs authorities' actions.

Detailed Analysis:
1. The judgment dealt with the interpretation of an exemption notification under the Central Excise Rules regarding the import of ethyl benzene. The notification exempted ethyl benzene from excess Excise duty if certain conditions were met, including end-use confirmation as per Chapter X of the Central Excise Rules. The petitioners sought confirmation from Customs authorities before importing ethyl benzene based on this notification.

2. The Customs authorities demanded additional duty on imported ethyl benzene despite the petitioners furnishing bonds and end-use certificates for the consignments. Show cause notices were issued for some consignments, while demands were made without notice for others. The petitioners contested these demands based on the exemption notification's conditions.

3. The validity of the show cause notices issued by Customs authorities came into question, especially when the demands were made without prior notice for certain consignments. The petitioners argued that they had complied with the requirements laid down by the Customs authorities and should not be penalized due to audit objections.

4. The petitioners relied on the representation made by the Customs authorities regarding the concessional rate of duty for ethyl benzene import. The judgment emphasized that the Customs authorities could not backtrack on their representation, especially considering that the petitioners had fulfilled the requirements set by them.

5. The judgment also addressed the legal consequences of audit objections raised by the authorities. It was highlighted that the petitioners had acted in good faith based on the Customs authorities' guidance, and any subsequent actions due to audit objections should not penalize the petitioners. The judgment ultimately favored the petitioners, making the petition absolute and directing the respondents to pay costs. The bank guarantees provided by the petitioners were also discharged as per the ruling.