1994 (9) TMI 165 - AT - Central Excise

Summary

Issues:
Departmental appeal against Collector's order regarding differential Central Excise duty on Benzene and Toluene received under concessional rate of duty, non-utilization of inputs for intended use specified in Notification No. 75/84, maintainability of appeal by Collector, interpretation of end-use verification under Notifications 35/73 and 75/84, relevance of Tribunal's order in Shalimar Chemical Industries case, consideration of Board's Order 19-R, proper adjudication by Collector, requirement of evidence for intended use, determination of full duty liability and penalty.

Analysis:
The judgment involves a departmental appeal against the Collector's order concerning the demand for differential Central Excise duty on Benzene and Toluene received under a concessional rate of duty. The assessee was alleged to have removed these inputs without using them for the intended purpose specified in Notification No. 75/84. The Collector found the assessee liable to pay differential duty on a specific quantity of Benzene, confiscated the seized goods, and imposed a penalty. However, the Collector refrained from pursuing the charge related to non-use of Benzene/Toluene for intended use due to the withdrawal of similar demands against other parties by the Department.

The issue of non-utilization of inputs for intended use specified in the notification was central to the case. The department contended that the assessee did not actually use the inputs as thinners or solvents as required by Notification No. 75/84. The language of this notification differed from that of Notification 35/73, making end-use verification obligatory under the former. The assessee admitted to not having the necessary machinery for solvent manufacture and not using the chemicals for the intended purpose, raising questions about their eligibility for the concessional rate of duty.

The Tribunal's order in the Shalimar Chemical Industries case was cited, indicating that end-use verification was not mandatory under Notification 75/84. However, the present case involved specific allegations of non-utilization and clandestine removal of the inputs, distinguishing it from the cited case. The Collector's handling of the charges was criticized for not addressing all aspects of the case on their merits. The judgment emphasized the importance of evidence to demonstrate the actual use of goods for the declared purpose, as failure to do so would lead to duty liability.

The judgment highlighted the need for a comprehensive determination of duty liability and penalty based on all aspects of the case. The penalty aspect was deemed dependent on the duty liability, with seriousness judged in relation to the quantum of duty involved. The matter was remanded to the Collector for a reassessment of duty liability and penalty, with the requirement to consider all relevant factors and allow the appellants an opportunity to present their submissions before issuing a new order.