2004 (7) TMI 237 - AT - Central Excise

Summary

Issues:
Eligibility to clear Naphtha without payment of Central Excise duty under Notification No. 3/2001-C.E.

Analysis:
The appeal filed by M/s. Indian Oil Corporation raised the issue of whether they were entitled to clear Naphtha without paying Central Excise duty as per Notification No. 3/2001. The appellant argued that the clearance was made during a transitional period when Chapter X was replaced by new rules, and they had applied for permission accordingly. They contended that the buyers had a valid license and the goods were used for manufacturing fertilizers. The appellant relied on previous decisions to support their case.

Department's Argument:
The Senior Departmental Representative countered the appellant's arguments by stating that the goods were cleared without the required certificates under both the old and new rules. The representative emphasized that the appellants should not have removed the goods without complying with the conditions of the Notification. The Commissioner's finding highlighted the failure to receive the necessary Annexure I even after a year.

Judgment:
The Tribunal considered the provisions of Notification No. 3/2001-C.E. and emphasized that the appellants could clear Naphtha at a nil rate of duty only if the procedure outlined in Chapter X was followed. It was noted that the appellants did not possess the required Annexure I when clearing the goods, as confirmed by the buyer's letter. The Tribunal agreed with the Department's argument that the appellants were not eligible for duty exemption due to non-compliance with the Notification conditions. The Tribunal referenced a previous case to support the denial of exemption for non-compliance with mandatory provisions. The penalty imposed on the appellants was deemed excessive and reduced to Rs. One lakh. Ultimately, the Tribunal upheld the duty demand and disposed of the appeal accordingly.