2011 (3) TMI 631 - AT - Central Excise

Denial of Benefit Under Notification No. 202/1988-C.E. Upheld, Penalty Set Aside

The Tribunal upheld the denial of benefit under Notification No. 202/1988-C.E. as the goods received did not match the specified inputs covered by the ... Classification - Benefit of Notification No. 202/1988-C.E., dated 20-5-1988 - The Notification No. 202/88-C.E. allows exemption to the goods, such as Sleeper (Cross-Ties), manufactured from Bars - The Railway Track Materials received, are classified under as under Heading 73.02 and the Railway Track Materials are not specified inputs under the Notification - As the inputs are not specified inputs covered under the Notification, therefore find no infirmity in the impugned Order whereby the benefit of the Notification was denied.In respect of penalty - Find that a penalty is imposed under Section 173Q of the Central Excise Rules - There is no allegation of suppression with intent to evade payment of duty and the issue is in respect of availment of benefit of notification hence, it is not a case of imposition of any penalty - Therefore, the penalty imposed under the impugned Order is set aside - The Appeal is disposed off. Issues:1. Benefit denial under Notification No. 202/1988-C.E.2. Classification of goods under Chapter Heading 73.02.3. Eligibility of Bars as inputs for benefit under the Notification.4. Imposition of penalty under Section 173Q of the Central Excise Rules.Issue 1: Benefit denial under Notification No. 202/1988-C.E.The Appellant appealed against an Order confirming a demand and imposing a penalty by denying the benefit of Notification No. 202/1988-C.E. The Appellant argued that they receive Crossing Sleeper Bars classifiable under Chapter Heading 73.02, and the Sleepers (Cross-Ties) they manufacture are cleared after availing the benefit of the Notification. They contended that Bars under Chapter 72 are eligible inputs for manufacturing Sleepers under the Notification, and thus, the benefit was wrongly denied.Issue 2: Classification of goods under Chapter Heading 73.02The Respondent argued that the Appellant receives goods under Chapter Heading 73.02, which does not cover Bars. They stated that Bars used for manufacturing Sleepers, eligible inputs for the benefit of the Notification, were rightly denied. The Tribunal noted that the Appellant received Crossing Sleeper Bars classified under Sub-Heading 7302.20, which falls under Chapter Heading 73.02 covering railway or tramway track construction material of iron or steel.Issue 3: Eligibility of Bars as inputs for benefit under the NotificationIt was found that the Chapter Heading 73.02 of the Tariff includes various materials related to railway track construction but does not explicitly cover Bars. The Notification allows exemption for goods like Sleeper (Cross-Ties) manufactured from Bars. As the Railway Track Materials received were classified under Heading 73.02, which did not specify Bars as inputs covered by the Notification, the benefit was rightly denied.Issue 4: Imposition of penalty under Section 173Q of the Central Excise RulesRegarding the penalty imposed under Section 173Q of the Central Excise Rules, the Tribunal noted that there was no allegation of suppression with intent to evade duty payment. Since the issue pertained to the availment of the notification benefit and not a case of penalty imposition, the penalty of Rs. 6,42,443.34 was set aside. The Appeal was disposed of accordingly.In conclusion, the Tribunal upheld the denial of the benefit under Notification No. 202/1988-C.E. due to the mismatch between the goods received and the specified inputs covered by the Notification. The penalty imposed under Section 173Q of the Central Excise Rules was set aside as there was no intent to evade duty payment.