2000 (9) TMI 827 - AT - Central Excise

Summary

Issues:
1. Demand of duty on furnace oil used during the shutdown period.
2. Imposition of penalty under Rule 173Q (1)(d) of the Rules.
3. Interpretation of Notification No. 75/84-C.E. regarding duty rates for furnace oil.
4. Applicability of Trade Notice No. 15/C.E./91 in determining concessional duty rates.
5. Legal parameters for determining concessional rate of duty on furnace oil used for steam and electricity production.
6. Application of rule 9(2) and proviso to Section 11A(1) in the case.
7. Consequences of non-accountability of goods received under Chapter X.

Analysis:
1. The case involved a demand for duty on furnace oil used during a shutdown period. The appellants received furnace oil at a nil rate of duty under Chapter X procedure but used a portion for producing steam and electricity during the shutdown period, for which they paid duty at a concessional rate. The demand was made under Section 11A of the Central Excise Act, invoking a five-year limitation period.

2. The Commissioner confirmed the duty demand but did not impose a penalty, citing no intentional suppression of facts to evade duty payment. The Commissioner's decision was based on the interpretation of Notification No. 75/84-C.E., which prescribed duty rates for furnace oil based on its intended use in fertilizer manufacturing.

3. The Commissioner found that the furnace oil used for steam and electricity production during the shutdown period did not qualify for the concessional rate of duty as per Trade Notice No. 15/C.E./91, which excluded furnace oil from the ambit of the notification. The Commissioner relied on various court judgments but noted that they did not specifically cover furnace oil used in this manner.

4. The Tribunal analyzed the case and concluded that the demand under rule 9(2) could not be sustained as it did not establish contravention of rule 9(1) related to removal of excisable goods without proper payment of duty. Additionally, the demand was found unsustainable under rule 196 due to lack of time limits for raising such demands.

5. Ultimately, the Tribunal set aside the duty demand under rule 9(2) and proviso to Section 11A(1), allowing the appeal. The decision highlighted the importance of proper application of rules and notifications in determining duty liabilities and emphasized the need for clear evidence of contraventions for duty demands to be upheld.