1990 (3) TMI 158 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification 118/75 for excise duty exemption on steam generated and utilized by different units of the same company.
2. Application of Chapter X procedure under the Central Excise Rules.
3. Bar on demand for duty due to limitation period.
4. Precedents regarding captive consumption and procedural compliance under similar notifications.

The judgment by the Appellate Tribunal CEGAT, New Delhi, involved an appeal where the appellant company had two units, one for manufacturing Rayon Grade Wood Pulp and the other for viscose staple fiber. The dispute arose regarding the duty demand on steam generated from boilers used by these units. The Assistant Collector initially dropped the proceedings based on an exemption under Notification 118/75. However, the Department appealed, arguing non-compliance with Chapter X procedure. The matter was remanded for fresh adjudication. The subsequent demand for duty was confirmed by the Asstt. Collector and Collector, citing non-observance of Chapter X procedure. The principal issue was the eligibility of the appellant for exemption under Notification 118/75, which required adherence to Chapter X procedure for inter-factory use. The appellant contended that the demand was time-barred for the period before 11-4-1983. The Tribunal held that the extended period of limitation was not applicable due to lack of suppression by the appellant.

Regarding the eligibility for the Notification 118/75 exemption, the appellant argued that they satisfied the captive consumption requirements, citing precedents where technical non-compliance did not disentitle the benefit. The Tribunal referenced past decisions emphasizing that failure to follow procedures should not hinder substantive benefits unless deliberate and mala fide. The Tribunal also noted a similar case where the appeal was allowed based on the same issue of eligibility. It was established that the failure to follow Chapter X procedure did not negate the substantive benefit under the notification.

Ultimately, the Tribunal set aside the impugned order and allowed the appeal, following the precedent that failure to comply with Chapter X procedure should not deprive the appellant of the substantive benefit under Notification 118/75. The cross-objection filed by the Department was dismissed, affirming the appellant's entitlement to the excise duty exemption based on captive consumption despite procedural non-compliance.