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TMI Blog1998 (4) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption was also duly approved by the Asstt. Collector. 3. They were called upon by the Department by notice dated 29-9-1989 to show why Basic Excise Duty amounting to Rs. 1,77,473.95 and Special Excise Duty amounting to Rs. 8873.69 for the period 1-3-1989 to 10-8-1989 should not be demanded on the ground that their claim for benefit for exemption under Notification 58/96 was inadmissible. The appellants contended in reply that the tools and dies were removed for use in the appellant s other unit and the items were exempted from duty under Notification No. 58/86. The appellants further submitted that though they had not followed the procedure under Chapter X of the Central Excise Rules, 1944 all movements of such tools and dies were fully documented and were filed with the authority. By order-in-original, the Asstt. Collector found that the appellants had removed dies, tools etc. to their other factories without issue of gate passes and without following Chapter X Procedure. He also found that they had cleared the goods to their R. D. Department without payment of duty. Since the appellants had not followed the procedure under Chapter X, the Asstt. Collector held that the exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Tribunal had held in favour of the assessee by holding that failure to comply with Chapter X Procedure was only a procedural lapse and that would not be sufficient cause to deny the benefit of exemption under Notification 119/86. 5. Defending the impugned order Shri S.N. Ojha, ld. JDR submitted that the appellants have themselves accepted that they had failed to follow one of the conditions laid down in Notification No. 58/86 in as much as they had not observed the procedure laid down in Chapter X of the Central Excise Rules while removing their goods from one factory to another. He submitted that the proviso to Notification No. 58/86 was a mandatory condition for claiming the exemption given under Notification 58/86. He also submitted that if need be, the question may be referred to a Larger Bench of the Tribunal in view of the view taken by the two Member Bench of the Tribunal in the case of Brindavan Chemicals Minerals (P) Ltd. (supra). 6. We have considered the submissions and perused the records. The relevant notification, namely, Notification No. 58/86, reads as follows : In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of the notification. Though the purport of the said notification no doubt is to confer a concession by way of total exemption from duty on the items mentioned in the notification it also talks of two situations where the exemption would operate. The first situation is where the tools are manufactured in a factory and is intended for use in the same factory. The second situation is where the items are used in a different factory, also belonging to the same manufacturer, but in a different location. In such cases, a further condition is that the procedure under Chapter X of the Central Excise Rules, 1944 has to be complied with. Chapter X (Rules 192 to 196BB) relates to remission of duty on the goods used for special industrial purposes. It is no doubt true that in many notifications issued under Rule 8 of the Rules or Section 5A of the Act, the concession in regard to excise duties are given for various social, economic or other grounds. In many cases, exemption notifications are conditional notifications where the eligibility for the concession is linked to procedures to be taken by the person who may not be the manufacturer. However, the Rule requires such person to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, non-observance thereof will be tantamount to non-observance of Chapter X. 8. We now turn to the question whether observance of Chapter X provisions is a mandatory condition of Notification 58/86. On behalf of the appellants, it has been contended that the benefit of Notification No. 58/86 cannot be denied to them just because they had failed to take any of the steps envisaged under the provisions of Chapter X. Reliance has been placed on the Hon ble Supreme Court decision in Mangalore Chemicals Fertilizers Limited (supra). We find that the Apex Court in that case dealt with a situation where an assessee was denied the benefit of adjustment of refund of Sales Tax on the ground that the assessee had not obtained prior permission from the concerned authority within the specified time though the appellants were otherwise eligible for the benefit. The Hon ble Supreme Court allowing assessee s appeal held that the question of mandatory nature of a condition laid down under statute or any piece of subordinate legislation would depend on the purpose which the legislation is intended to serve. The mere fact that the condition is statutory would not matter one way or the other. Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly verification of records. Hence it was held that the appellants were entitled to the benefit of Notification No. 119/86 subject to verification regarding quantum of clinkers returned. We find that the aforesaid two Tribunal decision also do not apply to the facts and issues before us. In the instant case, it is an admitted fact that the appellants had not taken any steps towards complying any of the provisions of Chapter X. They had admittedly removed dyes, tools etc. from their Nasik factory to another factory (factories) without obtaining any registration under Rule 192. They had also not obtained prior permission from the concerned authorities for such removal, storage etc. as envisaged under the other Rules in Chapter X. On a careful reading of the scheme of Notification No. 58/86 it is not possible to hold that the exemption given to tools referred to in the said notification and falling under Chapter 82 when used in a factory other than the factory where they are manufactured are free from the requirement of obtaining the certificate under Rule 192 and the other applicable provisions of Chapter X. In the facts of the present case, we are of the view that it is the ratio of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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