1998 (12) TMI 231 - AT - Central Excise

Summary

Issues Involved:
- Availability of benefit of exemption in respect of site mixed slurry explosives under Notification No. 191/87, dated 4-8-1987.

Analysis:

Issue 1: Availability of Exemption Benefit
The appellant company, M/s. I.B.P. Co. Ltd., appealed regarding the benefit of exemption under Notification No. 191/87 for site mixed slurry explosives. The appellant argued that they acted based on information provided by M/s. Hindustan Zinc Ltd. (HZL), who had the exemption, and they had no reason to doubt the validity of the L-6 license and CT-2 certificate provided by HZL. The appellant contended that the duty liability rests on the consignee, not the manufacturer, citing relevant instructions and legal precedents. The appellant highlighted that they followed the prescribed procedures and should not be penalized for acting in good faith based on the documents provided by HZL.

Issue 2: Obligations and Liability
The Respondent, represented by Shri H.K. Jain, argued that the explosives supplied by the appellant were not used for the intended purpose of manufacturing zinc/lead concentrate, as specified in the CT-2 certificate. The Respondent emphasized that the exemption under Notification No. 191/87 applied only if the explosives were used for the specified industrial process. The Adjudicating Officer's findings supported the Respondent's position, stating that the appellant supplied explosives for blasting mines, not for manufacturing zinc/lead concentrate, which was the condition for exemption.

Issue 3: Legal Provisions and Responsibility
Upon reviewing both parties' submissions, it was noted that Notification No. 191/87 exempted certain goods if used in specific industrial processes, subject to compliance with Chapter X procedures. The responsibility for obtaining excisable goods without duty payment and ensuring their correct use lay with the L-6 license holder, in this case, HZL. The rules mandated the licensee to submit reports on the goods' usage, and failure to account for the goods could lead to duty demand and confiscation. The Tribunal emphasized that the duty liability rested with the licensee, not the manufacturer supplying the goods, especially when acting in good faith based on valid documents provided by the licensee.

Conclusion:
The Tribunal ruled in favor of the appellant, M/s. I.B.P. Co. Ltd., stating that their provisional assessment did not make them liable for duty payment if the supplied explosives were not used for the intended purpose by HZL. The decision highlighted that the responsibility for compliance and duty payment rested with the licensee, as supported by legal provisions and precedents cited during the proceedings. As a result, the Tribunal set aside the previous order and allowed the appeal in favor of the appellant.