1996 (3) TMI 317 - AT - Central Excise

Summary

Issues:
Appeal against Order-in-Original confirming demand for duty free clearances under Rule 173H of Central Excise Rules for testing LPG gas cylinders brought from outside.

Detailed Analysis:

Issue 1: Duty Free Clearances Under Rule 173H
The appeal concerns the demand for a substantial sum covered by three show cause notices related to the duty free clearances under Rule 173H of the Central Excise Rules for testing LPG gas cylinders brought from outside. The old cylinders were sent by oil companies for testing, repairing, and reconditioning as per statutory requirements.

Issue 2: Compliance with Statutory Provisions
The appellants, engaged in manufacturing LPG cylinders, received old cylinders from oil companies for testing and repairs after 5 years of circulation. They filed D-3 declarations and maintained separate records for these old cylinders. While initially no objections were raised by the Department, show cause notices were issued later alleging non-accompaniment of duty payment documents with the cylinders.

Issue 3: Grant of Relaxation by Collector
The Collector had granted relaxation of conditions regarding duty payment documents and receipt timelines for the old cylinders. The demands were confirmed based on the absence of relaxation during the disputed period. The appellant argued that since relaxation was granted subsequently in similar circumstances, it should have been considered during the adjudication of the show cause notices.

Issue 4: Validity of Demand
The appellant contended that the demand was unsustainable as the cylinders were duty paid old cylinders received for testing, not new cylinders. Referring to Board instructions, the appellant argued that relaxation should have been granted as per the circumstances. The respondent, however, argued that without compliance with conditions, duty free clearances were not permissible under Rule 173H.

Issue 5: Presumption of Duty Paid Nature
The Tribunal noted that the duty nature of the cylinders was not in question in the show cause notices. Rule 173H aims to prevent non-duty paid goods from being cleared as duty paid, with the main requirement being the filing of D-3 declaration for verification. The Tribunal emphasized that the duty paid nature of goods brought from outside should be presumed, especially in the case of LPG cylinders subject to testing after 5 years.

Issue 6: Grant of Relaxation
Considering that relaxation had been granted by the Collector for the subsequent period, the Tribunal held that in the absence of evidence proving non-duty paid status of the cylinders, the relaxation should apply even for the disputed period. As no allegations were made regarding non-duty paid cylinders, the relaxation granted by the Collector was deemed valid, leading to the allowance of the appeal and setting aside of the impugned order.