1993 (6) TMI 156 - AT - Central Excise

Summary

Issues:
Refund claim for Zinc Oxide under Notification No. 21/55 and Notification No. 71/78 - Compliance with Chapter X Procedure of Central Excise Rules - Denial of exemption - Substantial compliance with exemption conditions - AR 3A Forms and CT 2 Certificate requirements.

Analysis:
The appeals were filed against a common order in appeal upholding the orders of Assistant Collector of Central Excise, Bulsar regarding a refund claim for Zinc Oxide under Tariff Item 14 CET amounting to Rs. 8,681.31. The appellants sought to clear Zinc Oxide without duty payment under Notification No. 21/55 for industrial purposes. The Assistant Collector rejected their requests for refund, stating non-compliance with proper procedure and conditions of the notification. The issues involved were identical in both appeals.

The appellants argued that they substantially complied with Chapter X Procedure of Central Excise Rules for supplying Zinc Oxide to a specific company, providing necessary CT 2 Certificate and L6 license. They cited Tribunal decisions to support their claim of substantial compliance being sufficient for exemption. The Department contended that compliance with Chapter X procedure was an essential condition for exemption under Notification 21/55 to ensure proper utilization of exempted material by the user manufacturer, requiring clearances in AR 3A Forms and a relatable CT 2 Certificate.

The Tribunal considered precedent decisions emphasizing substantial compliance for exemption under notifications requiring Chapter X procedure. It noted that failure to follow procedures should not hinder substantive benefit entitlement if essential requirements are later fulfilled. The absence of mala fides, observations in previous orders, and communication from the Central Excise authorities supported the appellants' case. The Tribunal held that denial of exemption solely based on procedural lapses was unwarranted, directing the Assistant Collector to consider the refund claim upon satisfaction of substantial compliance evidence for the exempted material's receipt and utilization by the user manufacturer.

In conclusion, the Tribunal allowed the appeals, emphasizing the importance of substantial compliance with exemption conditions over strict procedural adherence, directing the Assistant Collector to review the refund claim based on evidence of proper utilization of the exempted material by the user manufacturer.