Delayed re-warehousing certificate did not automatically defeat exemption where the rules allowed later proof and extension of time.

Duty demand on alleged hospital clearances could not be sustained without clear factual verification, because the record did not conclusively establish that the goods were in fact supplied to hospitals; that portion was remanded for fresh determination. Exemption under Notification No. 1/95-C.E. was not forfeited merely because the re-warehousing certificate was produced after 90 days, since Rule 156B allowed extension of time and recognised later production of the certificate where re-warehousing was otherwise established; the corresponding demand was set aside.

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Issues: (i) whether duty demand relating to goods stated to have been supplied to hospitals could be sustained without clear factual verification; (ii) whether exemption under the notification was lost merely because the re-warehousing certificate was produced after the prescribed period of 90 days.

Issue (i): whether duty demand relating to goods stated to have been supplied to hospitals could be sustained without clear factual verification.

Analysis: The demand in respect of the hospital clearances turned on whether the goods were in fact supplied to hospitals, since the requirement of producing re-warehousing particulars did not apply to such supplies. The record before the Tribunal did not clearly establish that the goods covered by that portion of the demand were hospital supplies, and the factual position required fresh determination by the adjudicating authority.

Conclusion: The matter relating to duty of Rs. 38,432/- was remanded for reconsideration and factual verification.

Issue (ii): whether exemption under the notification was lost merely because the re-warehousing certificate was produced after the prescribed period of 90 days.

Analysis: The exemption was governed by Notification No. 1/95-C.E. and the procedure under Rules 156A and 156B of the Central Excise Rules, 1944. Rule 156B contemplated extension of time by the Commissioner and also recognized subsequent production of the re-warehousing certificate, with consequential refund where duty had been paid. On that scheme, the 90-day period was not treated as rigid so as to defeat the benefit once re-warehousing was otherwise established and the certificate was ultimately produced to the satisfaction of the proper officer.

Conclusion: Duty of Rs. 1,69,356/- was set aside and exemption was held available.

Final Conclusion: The appeal succeeded in part, with one portion of the demand upheld, one portion remanded for fresh factual determination, and the balance demand deleted on the basis that delayed production of the re-warehousing certificate did not by itself forfeit the exemption.

Ratio Decidendi: Where the governing procedural rule expressly permits extension of the time for re-warehousing proof and recognizes subsequent production of the certificate, delayed submission does not automatically extinguish exemption once re-warehousing is otherwise established.

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