1990 (7) TMI 218 - AT - Central Excise

Summary

Issues: Misuse of concessional facilities under Central Excise Rules, procedural lapses in removal of excisable goods, factual verification of utilization of benzene, denial of benefit of exemption notification, violation of Rule 196BB of Central Excise Rules

In this case before the Appellate Tribunal CEGAT, New Delhi, the respondents, manufacturers of goods falling under T.I. 68 of the Central Excise Tariff, were alleged to have obtained benzene under nil or concessional duty rates and sent it to another factory for conversion without following proper procedures under Chapter X of the Central Excise Rules. The Department's case was based on statements indicating that the benzene was sent to another factory due to the respondents' esterification plant being out of order. However, the adjudicating authority dropped proceedings against the respondents citing lack of evidence such as panchnama or inventory. The Department appealed this decision. The Tribunal noted that the Department's case relied on retracted statements and lack of verification, leading to the benefit of doubt favoring the respondents due to procedural lapses and absence of evidence of benzene misuse or sale to third parties.

During the hearing, the Department argued that the statements supported their case without any indication of coercion or retraction, while the respondents' advocate contended that procedural lapses should not deny the concessional rate benefit if the benzene was used for the intended purpose. The Tribunal agreed with the respondents, emphasizing that procedural lapses should not override factual entitlement to exemptions. It highlighted the absence of allegations regarding non-receipt of benzene or its sale to third parties. However, it noted the lack of factual verification on benzene utilization for manufacturing the final product, Sodium Oxal Acetic Ester, to determine eligibility for concessional duty rates under the notifications.

The Tribunal set aside the previous order and remanded the matter to determine if all benzene obtained was used for manufacturing the final product. Any unaccounted benzene would attract duty liability. The failure to obtain prior permission under Rule 196BB was not a barrier to granting relief, but the Department could take separate action for Rule 196BB violation. The Tribunal emphasized the need for factual verification while remanding the matter for further proceedings, ensuring compliance with the law. Thus, the Tribunal remanded the case for detailed verification and determination of duty liability, maintaining the possibility of action for Rule 196BB violation alongside granting relief on procedural grounds.