2000 (11) TMI 733 - AT - Central Excise

Issues:
1. Availability of Notification No. 19/88-C.E. exemption to granulated slag.
2. Denial of exemption leading to demand of duty and penalty.
3. Confirmation of duty demand, penalty, and interest by Commissioner.
4. Interpretation of conditions of Notification No. 19/88 and 217/86.
5. Argument on limitation for invoking longer period.
6. Adjudication on the denial of benefit based on Modvat credit availed.
7. Assessment of the Commissioner's findings and reasoning.
8. Decision on the appeal and consequential relief granted.

Issue 1: Availability of Notification No. 19/88-C.E. exemption to granulated slag
The dispute revolves around whether the exemption under Notification No. 19/88-C.E., as amended, applies to granulated slag, a product classified under Chapter 26 of the Central Excise Tariff Act, 1985. The appellant, engaged in manufacturing iron and steel articles, used blast furnace slag to produce granulated slag, claiming exemption under the said notification.

Issue 2: Denial of exemption leading to demand of duty and penalty
A show cause notice was issued to the appellants, alleging that they had not paid duty on waste and scrap of steel used in manufacturing pig iron, thus violating the conditions of the exemption notification. The Commissioner confirmed a duty demand of Rs. 63,89,703.00, imposed a penalty, and directed payment of interest under the Central Excise Act.

Issue 3: Confirmation of duty demand, penalty, and interest by Commissioner
The Commissioner upheld the duty demand, penalty, and interest, citing the longer period of limitation. The appellant argued that they had not availed Modvat credit on inputs, satisfying the conditions of the exemption notification.

Issue 4: Interpretation of conditions of Notification No. 19/88 and 217/86
The crux of the matter lay in the interpretation of conditions under Notification No. 19/88 and 217/86. The appellant contended that since they had not taken Modvat credit on inputs, the denial of exemption to granulated slag was unjustified.

Issue 5: Argument on limitation for invoking longer period
The appellant challenged the invocation of a longer period of limitation, asserting that their clearance of granulated slag under the exemption was known to the Revenue from the beginning, and thus, mala fide intention could not be attributed.

Issue 6: Adjudication on the denial of benefit based on Modvat credit availed
The appellant argued that the denial of the exemption to granulated slag due to the benefit availed under Notification No. 217/86 for waste and scrap was erroneous. They maintained that the conditions of Notification No. 19/88 were fulfilled as Modvat credit had not been availed.

Issue 7: Assessment of the Commissioner's findings and reasoning
The Tribunal analyzed the Commissioner's reasoning, concluding that the denial of the exemption to granulated slag based on assumptions about Modvat credit availed was unfounded. The Tribunal found that the appellants had met the conditions of the exemption notification.

Issue 8: Decision on the appeal and consequential relief granted
The Tribunal allowed the appeal, setting aside the impugned order. It held that the appellants had satisfied the conditions of Notification No. 19/88 and granted consequential relief. The Tribunal did not address the plea on limitation due to allowing the appeal on merits.

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