2010 (1) TMI 538 - AT - Central Excise

Tribunal sets aside duty demand, stresses verification & fairness in certificate issuance

The Tribunal allowed the appeal, setting aside the duty demand on the appellant for procuring packing materials for export under Notification No. ... Withdrawal of CT-2 certificate - Subsequently, a show cause notice proposing demand of duty - holding that the conditions of a Notification No. 49/94 -C.E. (N.T.) has not been fulfilled inasmuch as the supplier was not having the Advance Intermediate License for supply of the materials in terms of Notification No. 49 of 94-C.E - export is not in dispute - entitled to receive inputs for export production duty free – if duty paid eligible for rebate – Held that: - The demand of duty is based on the cancellation of the CT-2 certificates and the cancellation itself has been done without revealing the basis - procured the materials on payment of duty, they were eligible for rebate of duty paid on such material - There is no allegation that the appellants have used the materials for a purpose other than for production of goods meant for export and that the goods were exported - appeal is allowed with consequential relief as per law. Issues:- Appeal against withdrawal of CT-2 certificates for procuring packing materials for export under Notification No. 49/94-C.E. (N.T.)- Demand of duty due to alleged non-fulfillment of conditions under the notificationAnalysis:1. The appellant, a manufacturer of pickles, exported goods under bond after procuring packing materials. The Superintendent issued CT-2 certificates for duty-free procurement, later withdrawing them and issuing a duty demand notice. The Original Authority and Commissioner upheld the demand.2. The appellant contended they were entitled to duty-free inputs for export under Notification No. 49/94-C.E. (N.T.). They argued the supplying unit's eligibility should have been verified, and any procedural errors didn't affect their duty rebate eligibility, citing a Tribunal case.3. The Respondent argued the CT-2 certificates were rightly withdrawn due to non-compliance with notification conditions. They justified the duty demand based on the procurement without fulfilling the notification requirements.4. The Tribunal found the issuance and withdrawal of CT-2 certificates lacking clarity and proper verification. The cancellation lacked procedural fairness and justification, as the supplying unit's status wasn't verified. The Tribunal noted the duty rebate eligibility if materials were procured with duty payment.5. Referring to a Tribunal case, the Tribunal emphasized that duty exemption should be demanded from the party availing it incorrectly. The Tribunal concluded that as the appellant used the materials for the intended purpose, duty demand from them wasn't warranted.6. Given the similarities with the Tribunal case, the Tribunal set aside the lower authorities' orders, allowing the appeal with consequential relief. The decision highlighted the importance of proper verification and procedural fairness in such matters.This judgment emphasizes the significance of verifying eligibility under notifications for duty-free procurement and ensuring procedural fairness in certificate issuance and cancellation. It clarifies the liability for duty payment based on incorrect availing of exemptions and underscores the importance of using materials for their intended purpose to avoid duty demands.