1998 (8) TMI 399 - AT - Central Excise

Summary

Issues Involved:
1. Compliance with Notification 162/86-C.E. conditions.
2. Validity of Registration Certificates.
3. Continuing obligation of vehicles to be used solely as taxis.
4. Department's authority to reassess duty liability post-clearance.

Summary:

Compliance with Notification 162/86-C.E. conditions:
The appellants cleared saloon cars at a concessional duty rate of 30% ad valorem u/s 6 of Notification 162/86-C.E., subject to two conditions: (1) satisfaction by an Assistant Collector of Central Excise that the cars are required solely as taxis, and (2) submission of a certificate from the State Transport Authority within three months of clearance. Initially, the appellants cleared cars on normal duty and later claimed refunds upon proving taxi registration. The department directed that the benefit must be claimed at the time of clearance, which the appellants complied with by submitting necessary proofs.

Validity of Registration Certificates:
Show-cause notices were issued alleging violations of condition No. (1) and deficiencies in the Registration Certificates. The adjudicating authority confirmed a demand of Rs. 21,38,97,475.00. The appellants argued that they followed a mutually agreed procedure and submitted valid taxi permits and purchase orders. The Assistant Commissioner's letter confirmed that the procedure satisfied condition No. (1). The Tribunal's previous judgment supported that condition No. (1) is procedural and must be satisfied at the time of clearance.

Continuing obligation of vehicles to be used solely as taxis:
The department argued that the vehicles must continue to be used solely as taxis, citing instances where vehicles were converted to private use shortly after registration as taxis. The appellants contended that their responsibility ended upon submitting the required certificates and that they could not control subsequent use by customers. The Tribunal agreed, stating that the appellants' duty was to produce genuine certificates, not to ensure continued use as taxis.

Department's authority to reassess duty liability post-clearance:
The Tribunal found that once the appellants submitted genuine certificates satisfying condition No. (2), the department could not reassess duty liability based on subsequent use of the vehicles. The Tribunal emphasized that the department could only verify the genuineness of the certificates and any collusion in procuring them. The reliance on the Apex Court's judgment in Mediwell Hospital & Health Care (P) Ltd. was deemed incorrect due to differences in the wording of the relevant notifications.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellants. The department was permitted to examine the certificates for genuineness and collusion but could not impose duty liability based on the vehicles' subsequent use.