2017 (3) TMI 837 - AT - Central Excise

Exemption subject to conditions - Benefit of N/N. 44/2001-CE(N.T.), dt.26.06.2001 - denial on the ground that the Assessee had not mentioned relevant Central Excise Notification in their E.R.-1s as well as in ARE-3s for availing exemption from Central Excise duty - failure to to comply with the provisions of Rule 3(7) and Rule 4(1) of Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001 - Held that - when the conditions have not been fullfilled, necessary consequences are to be faced by the Respondent-Assessee - in the case of Indofil Chemical Co. 2002 (11) TMI 214 - CEGAT, MUMBAI , the CESTAT holds that the Assessee has no choice but to follow the condition(s) given in the rules and the notification - appeal allowed - decided in favor of Revenue.

Summary

Issues:
- Appeal against Order-in-Appeal setting aside Central Excise duty and penalty
- Compliance with conditions of Notification No.44/2001-CE(NT)
- Responsibility of manufacturer in claiming exemption from duty
- Precedents regarding compliance with notification conditions

Analysis:

The judgment involves an appeal against an Order-in-Appeal setting aside Central Excise duty and penalty imposed on the respondent-assessee. The case revolves around the compliance with the conditions of Notification No.44/2001-CE(NT) for claiming exemption from duty. The Appellate Tribunal analyzed the facts and submissions to determine the responsibility of the manufacturer in adhering to the notification's provisions.

The Tribunal noted that the respondent failed to fulfill the conditions specified in the notification, specifically regarding Rule 3(7) and Rule 4(1) of the Central Excise Rules. It emphasized that the manufacturer claiming exemption must strictly comply with the conditions under which the benefit is sought. The plea of shifting responsibility to the buyers of the goods was deemed incorrect, highlighting the manufacturer's prime responsibility in meeting the notification requirements.

Referring to the case of Indofil Chemical Co. Vs CCE Mumbai, the Tribunal emphasized the necessity of adhering to all conditions laid down for availing exemptions. It underscored that failure to comply with these conditions would lead to consequences for the assessee. Additionally, citing the case of CCE Allahabad Vs Ginni Filaments Ltd, the Tribunal reiterated that the conditions of the notification cannot be disregarded.

Consequently, the Tribunal set aside the Order-in-Appeal, confirming the demand for Central Excise duty along with interest. However, the penalty imposed on the respondent-assessee was reduced to 10% of the confirmed duty amount. The judgment underscores the importance of strict compliance with notification conditions for claiming exemptions and upholds the liability of the manufacturer in fulfilling these requirements.

In conclusion, the appeal was allowed in favor of the Revenue, sustaining the Order-in-Original with a modified penalty. The judgment serves as a reminder of the legal obligations of manufacturers in adhering to notification conditions for availing exemptions from Central Excise duty.