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1996 (5) TMI 252 - AT - Central Excise
Issues: Central Excise duty demand, Benefit of Notification No. 119/86, Chapter X procedure compliance, Job work verification
In this judgment by the Appellate Tribunal CEGAT, MADRAS, the appellant contested a Central Excise duty demand of Rs. 6,44,893.48 on Cement Clinker manufactured and removed during specific years. The main contention was the denial of the benefit of Notification No. 119/86 due to non-compliance with the Chapter X procedure. The adjudicating authority ruled against the appellant, stating that duty exemption is only available when clinker is manufactured within the factory of production or if manufactured elsewhere, Chapter X procedure must be followed. The appellant's advocate highlighted a show cause notice indicating that the appellant received raw materials from another entity, converted them into clinkers on labor charges, and returned them to the same entity. The appellant argued that this fact, known to the department, should entitle them to the Notification No. 119/86 benefit. The department's representative contended that the appellant failed to comply with the Chapter X procedure, thus not entitled to the benefit. However, the appellant's advocate cited previous decisions to support the argument that mere procedural lapses should not lead to benefit denial. After considering both sides, the tribunal found that the appellant indeed received raw materials from another entity, converted them into clinkers, and returned them to the same entity. Despite the procedural lapse in not following Chapter X, the tribunal held that the appellant is entitled to the Notification No. 119/86 benefit, as supported by previous decisions referenced by the appellant's advocate. The tribunal emphasized the need for verification regarding the quantity of goods returned and held that the appellant is entitled to the benefit subject to departmental verification. Consequently, the appeal was allowed on these terms, and the penalty imposed on the appellant was set aside.
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