1995 (7) TMI 158 - AT - Central Excise

Issues Involved:
1. Eligibility for exemption under Notification No. 181/88-C.E.
2. Misdeclaration of goods as SMP instead of partially SMP.
3. Applicability of Rule 196 and Section 11A for duty demand.
4. Provisional assessment and limitation period for duty demand.
5. Liability for duty payment under Chapter X Procedure.

Issue-wise Detailed Analysis:

1. Eligibility for exemption under Notification No. 181/88-C.E.:
M/s. DIL claimed exemption for metal containers used for packing sweetened-vitaminised partially skimmed milk powder (SMP) under Notification No. 181/88-C.E., which exempts metal containers (other than those of aluminum) used for packing SMP from Central Excise duty. However, the exemption does not extend to partially SMP. The Tribunal noted that the appellants declared their product as SMP to avail the exemption, even though their product was partially SMP, which is not covered by the exemption notification. The Tribunal emphasized that exemption notifications must be construed strictly as per the plain language used therein, with no room for intendment.

2. Misdeclaration of goods as SMP instead of partially SMP:
The appellants declared their product as SMP to obtain CT 2 certificates for receiving metal containers without payment of Central Excise duty. However, for the purpose of levying Central Excise duty, they claimed their product was partially SMP, which carried a nil rate of duty. The Tribunal found this to be a case of misdeclaration, as the appellants continued to claim their product as SMP for remission of duty while contesting that it was partially SMP for levying duty. The Tribunal held that the appellants could not claim their product to be non-dutiable partially SMP for one purpose and SMP for another to avail benefits.

3. Applicability of Rule 196 and Section 11A for duty demand:
The Collector of Central Excise, Jaipur, confirmed the duty demand under Rule 196 of the Central Excise Rules, 1944, read with the proviso to Section 11A of the Central Excises and Salt Act, 1944. The Tribunal noted that the non-mentioning of Section 11A in the show cause notice does not vitiate the proceedings and the demand. The Tribunal referred to previous decisions where similar issues were addressed, establishing that the demand for duty under Rule 196 read with B-8 bond was not subject to any time limit.

4. Provisional assessment and limitation period for duty demand:
The assessments in this case were provisional, and the goods were cleared under Rule 9B of the Rules, subject to execution of bond and bank guarantee. The Tribunal held that once the assessment is provisional, it is provisional for all purposes, and the limitation starts from the date of final assessment. The Tribunal cited several decisions supporting this view, including the Supreme Court's decision in Samrat International Pvt. Ltd. v. Collector of Central Excise, Hyderabad.

5. Liability for duty payment under Chapter X Procedure:
Under Chapter X Procedure, the liability in case of misuse of the concession is cast on the user, i.e., the L6 licensee, who uses the goods, and not the manufacturer of the said goods. The Tribunal held that the appellants, as L6 licensees, were liable for the duty as they used the metal containers for packing partially SMP, which was not covered by the exemption notification. The Tribunal cited previous decisions where similar liabilities were upheld, emphasizing that actual use must follow intention to earn the concession.

Conclusion:
The Tribunal rejected the appeal, finding no merit in the appellants' arguments. The appellants were not eligible for the exemption under Notification No. 181/88-C.E. for metal containers used for packing partially SMP. The misdeclaration of goods and the provisional nature of the assessments did not absolve the appellants of their liability to pay the demanded duty.

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