Exemption under Chapter X denied, duty recovery limited by normal limitation, and mistaken L-6 licence cancellation sustained.

Ammonium chloride received under Chapter X was not eligible for exemption under Notification No. 164/69-CE because it was used to manufacture Navasagar, a use not covered by the notified end-uses, so the concession was wrongly extended. Although the goods were used as declared and the licence had been granted by mistake, recovery of duty could not be made under Rule 196 of the Central Excise Rules, 1944; the demand was confined to the normal six-month limitation under Rule 10(1). Cancellation of the L-6 licence was sustained because the licence and concession had been issued erroneously and could be revoked in accordance with law.

---

---

Issues: (i) Whether ammonium chloride received under Chapter X was entitled to exemption under Notification No. 164/69-CE dated 11-6-1969; (ii) Whether duty could be demanded under Rule 196 of the Central Excise Rules, 1944, or was confined by limitation under Rule 10(1); (iii) Whether cancellation of the L-6 licence was justified.

Issue (i): Whether ammonium chloride received under Chapter X was entitled to exemption under Notification No. 164/69-CE dated 11-6-1969.

Analysis: The ammonium chloride was not used for any of the purposes specified in the notification. The goods were admittedly used for manufacture of Navasagar, which did not fall within the notified end-uses. The concession under the notification was therefore wrongly extended.

Conclusion: The exemption was not admissible, and this issue is decided against the assessee.

Issue (ii): Whether duty could be demanded under Rule 196 of the Central Excise Rules, 1944, or was confined by limitation under Rule 10(1).

Analysis: Although the Department had wrongly granted the licence and permission, the goods were used exactly for the purpose declared in the application. On that footing, Rule 196 could not be invoked for recovery. The demand was therefore restricted to the ordinary limitation period prescribed by Rule 10(1).

Conclusion: Duty recovery under Rule 196 was impermissible, and the demand beyond six months was barred by limitation, in favour of the assessee.

Issue (iii): Whether cancellation of the L-6 licence was justified.

Analysis: Since the licence and concession had been granted by mistake, the Department was entitled to revoke the licence in accordance with law. The cancellation made by the lower authorities was sustained.

Conclusion: Cancellation of the L-6 licence is upheld, against the assessee.

Final Conclusion: The appeal succeeds only to the extent that recovery of duty is confined to six months, while the rejection of the exemption claim and the cancellation of the licence are sustained.

Ratio Decidendi: Where goods are used as declared under Chapter X, but the exemption concession was wrongly granted because the goods were not covered by the notification, recovery cannot be made under Rule 196 and is limited to the normal limitation period.

---