1988 (4) TMI 190 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 118/75 and 105/82 regarding availing benefits.
2. Compliance with Chapter X procedure for availing exemptions.
3. Delay in granting permission and its impact on availing benefits.
4. Legal implications of starting manufacturing operations without a formal license.
5. Application of Rule 56A in availing credits.
6. Requirement of L-6 license under Chapter X procedure.
7. Observance of Chapter X procedure for clearance of goods.
8. Compliance with excise formalities during delays in granting permissions.

Analysis:
1. The appeal involved the interpretation of Notification No. 118/75 and 105/82 concerning the availing of benefits for certain inputs cleared for use in another factory. The dispute arose as the respondents cleared goods before obtaining the Collector's sanction, leading to a demand for duty payment for the period before the sanction was received.

2. The key issue was the compliance with Chapter X procedure for availing exemptions. The department argued that following Chapter X procedure was a prerequisite for availing benefits under the notification. The respondents contended that filing an application sufficed, citing precedents and Central Board of Excise and Customs instructions supporting their stance.

3. The delay in granting permission by the Collector was a significant concern. The tribunal noted that the respondents had applied for permission and fulfilled Chapter X requirements promptly, but the sanction was delayed unreasonably. The tribunal emphasized that manufacturing operations should not halt due to administrative delays if all other excise formalities were met.

4. The legal implications of starting manufacturing operations without a formal license were discussed, referencing Rule 174 of the Central Excise Rules. The tribunal highlighted that penal action might be taken if a license was not granted, but manufacturing and clearance could continue if all formalities were otherwise complied with, as per the Central Excise Law Guide.

5. The application of Rule 56A in availing credits was also deliberated, with the respondents citing a Bombay High Court case to support their contention that benefits could be availed from the date of application, even before formal permission was granted.

6. The requirement of an L-6 license under Chapter X procedure was debated, with the respondents arguing that filing an application was sufficient, while the department insisted that permission was necessary before availing benefits under the notification.

7. The observance of Chapter X procedure for clearance of goods was analyzed, emphasizing that the respondents had informed authorities of their intention to avail benefits, and all necessary information was provided, with compliance with record-keeping and waste disposal requirements.

8. Lastly, the compliance with excise formalities during delays in granting permissions was underscored. The tribunal concluded that since the respondents had fulfilled all requirements and no fault could be found with their actions, the demand raised by the department was deemed not maintainable, leading to the dismissal of the appeal.