Concessional-clearance conditions not breached where later valid permission covered the disputed duty-free removals.

A later valid permission for 2005-06 expressly covered the disputed duty-free procurement and clearances of electron guns, so no contravention of Notification No. 43/2001-CE(NT) or the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 was established. Because the show cause notice did not address that later permission, the allegation of unauthorized removal lacked factual foundation and the demand and penalties could not be sustained. The impugned order was set aside and consequential relief followed.

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Issues: Whether the appellants violated the conditions of Notification No. 43/2001-CE(NT) read with the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 by clearing goods without duty after the earlier procurement permission had expired.

Analysis: The disposal certificate for financial year 2004-05 was followed by a further permission for financial year 2005-06, under which procurement of electron guns was specifically allowed. The show cause notice did not advert to this later permission. Since the clearances in dispute fell within the quantity and period covered by the permission granted for 2005-06, no breach of the certificate conditions or the governing notification and rules was established. The demand, penalty, and the allegation of unauthorized duty-free removal therefore lacked foundation.

Conclusion: No violation was made out; the appellants succeeded and the demand and penalties were not sustainable.

Final Conclusion: The impugned order was set aside and the appeals were allowed with consequential relief in accordance with law.

Ratio Decidendi: Where a later valid permission expressly covers the disputed duty-free clearances, no contravention of the concessional-clearance notification or the governing rules can be inferred in the absence of a specific allegation or proof to the contrary.

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