1987 (6) TMI 152 - AT - Central Excise

Summary

Issues:
1. Availability of exemption under Notification No. 164/69-CE for ammonium chloride used in manufacturing Navasagar.
2. Liability of Central Excise duty demanded in Show Cause Notices dated 25-2-1980 and 10-4-1980 under Rule 196 of the Central Excise Rules, 1944.

Analysis:
1. The main issue in this appeal was whether the appellants were entitled to the benefit of exemption under Notification No. 164/69-CE for using ammonium chloride in the manufacture of Navasagar. The appellants argued that they had followed the prescribed procedures, obtained the necessary licenses, and used the material as declared in their application. They contended that the Department had been aware of their activities since November 1974 and did not object to the use of ammonium chloride for manufacturing Navasagar. The appellants relied on a previous Tribunal decision to support their case. The Tribunal found that the appellants had indeed used the ammonium chloride for the declared purpose, and since the Department had wrongly granted the benefit of the Notification, the demand for duty was restricted to a period of six months under Rule 10(1) of the Central Excise Rules.

2. The second issue revolved around the liability of Central Excise duty demanded in the Show Cause Notices dated 25-2-1980 and 10-4-1980 under Rule 196 of the Central Excise Rules. The Department contended that the demand for duty was justified beyond the six-month period, citing a previous Tribunal decision. However, the Tribunal held that since the Department had mistakenly granted the L-6 license to the appellants, the demand for duty beyond the six-month period was barred by limitation. The Tribunal confirmed the decision to cancel the L-6 license due to the mistake in granting it.

In conclusion, the Tribunal partially allowed the appeal, holding that the Department was entitled to recover duty for a period of six months only under Rule 10(1) of the Central Excise Rules. The demand for duty beyond this period was deemed barred by limitation, and the decision to cancel the L-6 license was upheld.