1998 (10) TMI 175 - AT - Central Excise

Summary

Issues:
1. Duty demand on the manufacture of VNE oils without payment of Central Excise duty.
2. Contention regarding the duty demand on the portion of Sal oil used in the production of Covo.
3. Applicability of Trade Notice No. 38/89 and Rule 12 of the Central Excise Rules.
4. Barred by limitation: First 3 show cause notices.
5. Distinction between Sal stearine and Sal oil.
6. Export of Sal stearine under Tariff Item 12 for claiming rebate.

Analysis:

1. The case involved a duty demand on the manufacture of VNE oils without payment of Central Excise duty. The appellants manufactured refined Sal oil for the product called Covo without determining and paying Central Excise duty. Several show cause notices were issued for the duty involved during different periods.

2. The appellants contended that Covo was meant for export after being assessed to duty under Item 12 CET and exported under Rule 12 of Central Excise Rules for rebate of the duty paid. The Commissioner confirmed the demand under Rule 10/Section 11A but refrained from imposing a penalty.

3. The Trade Notice No. 38/89 was cited, stating that no duty should be collected on intermediate goods used in the manufacture of finished goods exported under bond. The appellants argued that the Trade Notice should apply to exports under rebate as per Rule 12 of the Central Excise Rules.

4. The appellants argued that the first 3 show cause notices were barred by limitation as they were based on information disclosed in the RT 12 returns, and there was no suppression of facts. They relied on a Calcutta High Court judgment to support their argument.

5. The Tribunal analyzed the process of manufacturing Sal stearine from raw Sal oil and found that Sal stearine was distinct from Sal oil with different characteristics. However, the entire quantity of Sal stearine was exported under Tariff Item 12, and the appellants were entitled to claim a rebate of duty under Rule 12.

6. The Tribunal held that the demand for duty on Sal stearine was not sustainable as the entire quantity was exported under Tariff Item 12 for claiming rebate. The Commissioner's conclusion that the Trade Notice applied only to exports under bond and not rebate was rejected. The Tribunal found the first 3 show cause notices barred by limitation.

In conclusion, the Tribunal directed a detailed consideration of the duty payable on the product Covo exported by the appellants, with reference to verifiable facts and documents. The demand in the first 3 show cause notices was held to be barred by limitation, and the Commissioner was instructed to allow the appellants a personal hearing to substantiate their claim.