1987 (11) TMI 282 - AT - Central Excise

Summary

Issues:
1. Whether the absence of L-6 licence and C.T.-2 certificate would make the goods ineligible for the benefit of exemption under Notification No. 118/75-C.E.
2. Whether the omission to follow Chapter-X procedure disentitles the respondents to the benefit of exemption.
3. Whether penalty imposed on the respondents for failure to ensure the counterpart factory had the necessary licenses was justified.

Detailed Analysis:
1. The case involved the respondents sending goods to their factory without the required licenses, leading to a show cause notice for contravention of Central Excise Rules. The Additional Collector accepted that there was no mala fide intention but imposed a penalty for failing to ensure the counterpart factory had the necessary licenses. The Collector of Central Excise, Pune appealed to demand Central Excise duty on the goods.
2. The Revenue argued that the absence of licenses rendered the goods ineligible for exemption, citing Rule 192 of the Central Excise Rules. The respondents contended that the omission to follow Chapter-X procedure should not disentitle them from the benefit of exemption, referencing various case laws supporting their stance.
3. The Tribunal considered whether the absence of licenses invalidated the exemption benefit and if the penalty imposed was justified. It was established that the goods were received at the destination factory, fulfilling the purpose of the exemption. The Tribunal upheld the decision of the Additional Collector in not demanding duty and dismissed the appeal filed by the Revenue. The penalty imposed on the respondents was also upheld as justified.

In conclusion, the Tribunal ruled in favor of the respondents, emphasizing that the absence of licenses should not hinder the benefit of exemption if the goods were received at the destination factory. The penalty imposed for the failure to ensure the counterpart factory had the necessary licenses was upheld.