1989 (1) TMI 284 - AT - Central Excise

Summary

Issues:
Appeal against order of Collector of Central Excise (Appeals) regarding availing benefit of Notification 325/86 dated 27-5-1986 for aerated waters under Central Excise Tariff Schedule.

Detailed Analysis:

1. Issue of Notification and Procedure: The appeal challenges the order of the Collector of Central Excise (Appeals) regarding the appellants' claim for exemption under Notification 325/86 dated 27-5-1986. The Collector prescribed a procedure through a Trade Notice, requiring compliance with Rule 56A for availing the benefit. The appellants had stock of flavouring essences before the Notification and sought to benefit from it. The Assistant Collector refused citing non-compliance with the Trade Notice.

2. Rule 56A Procedure Contention: The appellants argued that Rule 56A procedure was not mandatory as it was not specified in the Notification itself. However, the Collector's stance was that the procedure outlined in the Trade Notice, which included Rule 56A, had to be followed.

3. Benefit of Exemption: The Tribunal observed that the essence of the Notification was to grant exemption to aerated waters if duty-paid essences were used in their manufacture. The focus was on verifying the use of duty-paid essences to determine the abatement on duty payable for the aerated waters.

4. Legal Interpretation: The Tribunal criticized the Collector (Appeals) for not addressing the legal aspect of invoking Rule 56A in the Notification. It emphasized that the procedure was to facilitate duty set-off for essences used in manufacturing aerated waters, and non-compliance with Rule 56A should not bar the benefit if duty payment on essences is proven.

5. Judicial Review and Remand: The Tribunal held that the appellants were entitled to the Notification's benefit for aerated waters using essences received before the Notification. Due to lack of factual verification on the extent of use and exemption quantum, the matter was remanded to the lower authority for determination. The Tribunal allowed the appeal on remand for proper assessment.

In conclusion, the Tribunal ruled in favor of the appellants, emphasizing the essence of the Notification's intent and the need for proper legal interpretation and factual verification in granting exemptions under Central Excise laws.