1989 (11) TMI 175 - AT - Central Excise

Appellate Tribunal emphasizes notification merits over procedural lapses in exemption eligibility

The Appellate Tribunal ruled in favor of the appellants, stating that denial of exemption solely based on non-inclusion in the classification list was ... Demand - Limitation Issues:1. Interpretation of exemption notification and classification of the product.2. Eligibility for exemption based on non-inclusion in the classification list.3. Application of Rule 173B of the Central Excise Rules for exemption denial.Analysis:The judgment by the Appellate Tribunal CEGAT, BOMBAY involved a case where the issue was primarily whether exemption could be availed due to the absence of specific mention in the classification list, rather than concerning the interpretation of a notification or product classification. The Tribunal noted that the show cause notice did not allege ineligibility for exemption under the exemption notification. The appeal was considered suitable for disposal by the Regional Bench based on this aspect.The Chartered Accountant representing the appellants argued that despite not being listed in the classification list, the goods were clearly identified as physician samples in the RT-12 returns, and the exemption was accepted during assessment. The demand was raised later solely due to the omission in the classification list, not because of any material suppression. The appeal was requested to be decided based on whether exemption could be denied for this reason under Rule 173B of the Central Excise Rules.On the other hand, the learned SDR contended that since the goods were not declared in the classification list, exemption could not be automatically claimed and needed to be established. The SDR supported the order denying the exemption based on this ground.After considering both arguments and examining the show cause notice and the Additional Collector's order, the Tribunal found that the denial of exemption was solely due to the absence of mention in the classification list. It was noted that there was no allegation of violation of the exemption conditions or suppression of facts. The Tribunal emphasized that Rule 173B is a procedural requirement for classification determination and does not automatically disqualify goods from exemption if the notification conditions are met. The Tribunal ruled in favor of the appellants, stating that the denial of exemption based solely on the non-inclusion in the classification list was unjustified, especially when the exemption conditions were fulfilled as per the notification.In conclusion, the Tribunal allowed the appeal, highlighting that the denial of exemption was not substantiated either on procedural grounds or on the merit of the exemption notification. The judgment emphasized that eligibility for exemption should be assessed based on the notification's merits rather than technical procedural lapses like non-declaration in the classification list.