1998 (3) TMI 395 - AT - Central Excise

Summary

Issues:
1. Duty liability on the intermediate product DCP used in the manufacture of weedicide.
2. Benefit of Notification 175/86 and Modvat credit for duty paid on inputs utilized in the manufacture of DCP.
3. Imposition of penalty for non-payment of duty on DCP.

Analysis:

Issue 1:
The case involved a dispute regarding duty liability on the intermediate product DCP used in the manufacture of weedicide. The appellants, manufacturers of MCP and weedicide, faced duty charges on DCP, an intermediate product classified under the same Tariff sub-heading as MCP. The lower authority imposed duty and a penalty on the appellants, leading to the appeal before the Tribunal.

Issue 2:
The appellant's advocate argued for the benefit of Notification 175/86 and Modvat credit for the duty paid on inputs used in the manufacture of DCP. The advocate contended that the appellants were under a bona fide belief that DCP, being an intermediate product, was not liable for duty. The advocate cited various judgments to support the appellants' claims for exemption and Modvat credit. The Tribunal remanded the matter to the adjudicating authority to reconsider extending the benefits based on the facts and evidence presented.

Issue 3:
Regarding the penalty imposed, the JDR opposed the appellants' claims, stating that the appellants were fully aware of the dutiability of DCP as it was sold and consumed during the relevant period. However, the advocate argued that DCP was mainly produced and consumed captively, indicating a genuine belief in non-liability for duty. The Tribunal set aside the penalty, finding no mala fides in the appellants' actions and citing precedents allowing simultaneous benefits of exemption and Modvat credit for different products manufactured by the same assessee.

In conclusion, the Tribunal set aside the impugned order, remanding the matter for reconsideration of the benefits of Notification 175/86 and Modvat credit for duty paid on inputs used in the manufacture of DCP, while also overturning the penalty imposed on the appellants.