1999 (11) TMI 506 - AT - Central Excise

Summary

Issues:
- Appeal against order confirming demand of duty on Diesel Generating Sets
- Interpretation of Notification 1/95-C.E., dated 4-1-1995 for 100% Export Oriented Units (EOUs)

Analysis:
- The appeal was filed against the order confirming the demand of duty amounting to Rs. 2,65,000 on Diesel Generating Sets procured by the appellants, who are manufacturers of cotton yarn falling under Chapter 52 of the Central Excise Tariff and are 100% Export Oriented Unit (EOU). The sets were purchased without prior permission from the Board as required by Notification 1/95-C.E., dated 4-1-1995. The appellants contested the show cause notice by claiming they had obtained CT-3 certificates and were entitled to the exemption under the said notification. However, the Deputy Commissioner upheld the demand, leading to the appeal before the Tribunal.

- The main contention raised by the appellants was that being an EOU and having purchased the D.G. Sets against CT-3 certificates, they were entitled to the benefit of total exemption from excise duty under Notification 1/95-C.E., dated 4-1-1995. However, the Tribunal held that to avail the exemption, the appellants needed to comply with the terms and conditions of the notification before the purchase of the sets. The notification required purchase for captive use only on the recommendation of the Board or Committee, which the appellants failed to fulfill. Although they had obtained a CT-3 certificate, it did not authorize them to purchase the sets without the necessary permission. The Tribunal noted that the permission granted by the Government after the purchase could not validate the earlier purchase made without authorization. Therefore, the appellants were rightly denied the benefit of the notification, and the orders confirming the duty demand were upheld.

- In conclusion, the Tribunal dismissed the appeal, stating that the appellants had not complied with the conditions of Notification 1/95-C.E., dated 4-1-1995 before purchasing the Diesel Generating Sets. The failure to obtain prior permission from the Board or Committee as required by the notification rendered the purchase ineligible for the exemption from excise duty. The Tribunal found no merit in the appeal and upheld the orders of the lower authorities regarding the demand of excise duty on the sets, thereby dismissing the appeal of the appellants.