1992 (7) TMI 195 - AT - Central Excise

Summary

Issues:
Classification of steel seats under Tariff Item 68 CET, denial of exemption under Notification No. 167/79 for failure to follow Chapter X Procedure, appeal against the order of the Assistant Collector and the Collector (Appeals).

Analysis:
The appeal challenged the order of the Collector of Central Excise (Appeals) upholding the classification of steel seats under Tariff Item 68 CET and denying the exemption under Notification No. 167/79. The appellants, manufacturers of steel seats for automobiles, argued that the department should have extended the exemption despite non-compliance with Chapter X Procedure. They cited a Tribunal decision emphasizing that failure to follow procedures should not prevent availing statutory benefits if the essential requirements are met later. The appellants explained that delays in approval caused their inability to follow the procedure at the time of clearance. They referenced a Delhi High Court decision to support their stance.

The Department reiterated that compliance with Chapter X Procedure was crucial for claiming the exemption under Notification No. 167/79. The Tribunal noted that during the adjudication, the appellants contended that the car seats fell under Tariff Item 68 CET and should qualify for the exemption. The appellants argued they were not obligated to follow Chapter X Procedure as the department had not initially classified the goods under Item 68 CET. The Tribunal referenced a previous case where failure to follow procedures did not disentitle the assessee from benefits if not deliberate or mala fide.

The Tribunal found that the goods were supplied solely to a specific entity and that the Department did not suggest classification under Item 68 CET, which hindered the appellants from following the Chapter X Procedure. The Tribunal observed that the failure to comply was not deliberate, considering the circumstances. Consequently, the appeal was disposed of in line with the Tribunal's decision, directing the Department to extend the exemption if the appellants could demonstrate post facto compliance with the terms of Notification No. 167/79 by showing the goods were used for further manufacture by the specific entity they supplied to.

In conclusion, the Tribunal's decision highlighted the importance of substantial compliance with statutory provisions to avail benefits, even if procedural lapses occurred due to external factors. The judgment emphasized the need for a practical approach in considering compliance issues and directed the Department to grant the exemption upon satisfying post facto compliance requirements.