1988 (6) TMI 254 - AT - Central Excise

Summary

Issues:
1. Determination of duty demand on fatty acids destroyed in a fire accident.
2. Interpretation of Central Excise Notification No.118/75 regarding duty exemption.
3. Consideration of intention versus actual use for duty exemption.
4. Comparison with a previous Tribunal decision on duty concession based on intention and actual use.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi revolves around the issue of whether duty of Rs. 3143.36 is justifiable on 4.465 Metric Tonnes of fatty acids destroyed in a fire accident, despite being removed within the factory for production of other goods. The Assistant Collector insisted on duty payment, while the Collector (Appeals) ruled otherwise, citing Central Excise Notification No.118/75, which exempts goods intended for use in the factory from duty. The Collector (Appeals) emphasized that the intention to use for the specified purpose suffices, without requiring proof of actual use, leading to the current appeal by the Collector of Central Excise, Guntur.

The Tribunal deliberated on the interpretation of Notification No.118/75 and the necessity of proving actual use versus intention for duty exemption. Despite the Collector (Appeals)' stance on intention being sufficient, the Tribunal refrained from delving into this academic exercise due to the goods' loss in a fire accident. The Tribunal noted corroborative evidence of the fire accident, including a report from the Fire Officer and insurance settlement, leading to the conclusion that duty demand could not be justified in this scenario. The Tribunal upheld the Collector (Appeals)' decision based on the goods' destruction in the fire accident and their intended use as per the notification.

Furthermore, the Appellant-Collector referenced a previous Tribunal decision in the Hindustan Insecticides Ltd. case, emphasizing the necessity of actual use following intention for duty concession unless events like natural causes or unavoidable accidents intervene. However, the Tribunal distinguished this case by highlighting the destruction of goods in a fire accident in the present scenario, rendering the referenced decision inapplicable. Consequently, the Tribunal dismissed the appeal, affirming the Collector (Appeals)' decision based on the goods' loss in the fire accident and their intended use as per the notification.