2003 (12) TMI 686 - AT - Central Excise

Tribunal Overturns Duty Demand; Exemption Doesn't Require Ownership; No Revenue Loss Found; Commissioner's Reasoning Flawed.

The Tribunal overturned the Commissioner's order, setting aside the duty demand and penalty against the appellants. It concluded that the exemption under ... - Issues:1. Interpretation of exemption notification 67/95 regarding captively consumed goods.2. Ownership requirement for availing exemption under the notification.3. Applicability of extended period of limitation.4. Allegations of duty evasion and penalty imposition.Analysis:Issue 1: Interpretation of exemption notification 67/95The case involved Natraj Ceramics & Chemical Inds. Ltd. receiving raw bauxite for job work without paying duty on the calcined bauxite used in manufacturing excisable goods. The Commissioner imposed duty and penalty, alleging an attempt to evade duty. The appellants argued that the job worker need not own the goods for exemption under notification 67/95, and the Commissioner's reasoning was flawed. They contended that no loss occurred to the department, and the exemption would still apply if the job worker had purchased the raw bauxite.Issue 2: Ownership requirement for exemptionThe Commissioner's view that the absence of ownership by the job worker was not a part of the notification was challenged. The Tribunal found no merit in the Commissioner's case, noting that the supplier of raw bauxite was exempted from duty, and notification 214/86 did not apply. The notification 67/95 provided exemption to the supplier of raw material or intermediate products, and the claim was optional, which the owner of raw material did not exercise. The Tribunal concluded that the method used did not contravene Central Excise law and did not result in revenue loss.Issue 3: Applicability of extended period of limitationThe appellants questioned the applicability of the extended period of limitation, which the departmental representative supported. However, the Tribunal did not address this argument in detail as it found the primary issue of exemption interpretation to be decisive.Issue 4: Allegations of duty evasion and penalty impositionThe Tribunal allowed the appeal and set aside the impugned order, indicating that the arrangement between the parties did not violate Central Excise law and did not lead to revenue loss. The Tribunal emphasized that the peculiar method employed was not contrary to law and did not result in any loss to the department, thus overturning the duty demand and penalty imposition.In conclusion, the Tribunal's decision focused on the interpretation of the exemption notification, emphasizing that the job worker's ownership of goods was not a prerequisite for availing the exemption. The Tribunal found no merit in the Commissioner's reasoning and set aside the duty demand and penalty, highlighting that the arrangement did not violate Central Excise law or cause revenue loss.