Tribunal dismisses duty demand & penalty, upholds CT2 certificate compliance for Central Excise

The tribunal found that the appellant complied with the prescribed CT2 certificate/Annexure-I procedure for Central Excise duty, despite not mentioning the consignor's name. The appellant's adherence to the relevant notification and lack of evidence of diversion led to the dismissal of the Rs. 31.00 crores duty demand and penalty. The appeal by M/s. IOC, Barauni was allowed as they met the conditions of the exemption notification by utilizing the CT2 certificate/Annexure-I procedure, resulting in the setting aside of the duty, interest, and penalty.

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Issues involved: Central Excise duty demand, penalty, compliance with CT2 certificate/Annexure-I procedure, consignor's name mention in CT2 certificate.

Central Excise duty demand and penalty: The case involved a demand of Central Excise duty amounting to Rs. 31.00 crores and an equal amount of penalty on the appellant M/s. IOC, Barauni. The department alleged that the appellants removed goods used in manufacturing fertilizer/ammonia under Chapter X procedure using CT2 and Annexure-I certificate, while also showing clearances under AR-3A document. It was contended that the CT2 certificate did not mention the consignor's name.

Compliance with CT2 certificate/Annexure-I procedure: The appellant argued that they followed the prescribed CT2 certificate/Annexure-I procedure as per relevant notification, supplying goods based on recipient fertilizers factory certificates. The appellant's representative stated that the CT2 certificate did not require mentioning the consignor's name. They maintained that the goods were cleared following the CT2/Annexure-I procedure alongside the AR 3A procedure.

Decision: Upon review, it was observed that the goods were indeed sent using the CT2 certificate/Annexure-I procedure as prescribed under the 2001 Rule. The tribunal found no evidence of diversion or misuse of the goods. It was noted that the CT2 certificate did not necessitate mentioning the consignor's name. Despite also recording clearances under the AR-3A procedure, the appellant was deemed to have met the conditions of the relevant exemption notification by clearing goods based on the CT2 certificate/Annexure-I certificate. Consequently, the demand for duty, interest, and penalty was set aside, and the appeal was allowed.

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