1994 (10) TMI 174 - AT - Central Excise

Tribunal rules on Neem oil by-product credit eligibility, affirms fine, reduces penalty

The Tribunal ruled in favor of the appellants regarding the eligibility for money credit under Notification 46/89 for the by-product manufactured using ... Money Credit Scheme Issues:1. Eligibility for money credit relatable to by-product under Notification 46/892. Manufacture of goods without license3. Clearance of goods without approval of classification listAnalysis:Issue 1: Eligibility for money credit relatable to by-product under Notification 46/89The appeal challenged the lower authority's decision on three issues, including the eligibility for money credit under Notification 46/89 for the by-product manufactured by the appellants using Neem oil. The appellants argued that the gummy material in Neem oil, which is removed during the soap manufacturing process, should not affect their eligibility for the money credit scheme. They contended that since Neem oil was used in soap manufacturing, they should be entitled to the benefit of the scheme. The Tribunal analyzed Rule 57K and Rule 57M of the Central Excise Rules, emphasizing that the gummy substance's removal from Neem oil was a technical necessity for soap production. Consequently, the Tribunal held that the appellants were wrongly denied the money credit scheme and ruled in favor of the appellants on this issue.Issue 2: Manufacture of goods without licenseRegarding the manufacture of neem antifeedant without a Central Excise License, the appellants failed to provide evidence of applying for a license before the goods' clearance. The Tribunal noted that the appellants' classification list was provisionally approved, but no evidence was presented regarding the license application date. As a result, the Tribunal upheld the lower authority's decision, stating that the violation of Rule 174 read with Rule 173Q of the Central Excise Rules was maintainable in law.Issue 3: Clearance of goods without approval of classification listThe Tribunal also addressed the clearance of goods without approval of the classification list. The appellants did not substantiate their claim that goods were manufactured after applying for a license and that clearances occurred post-approval of the classification list. As a result, the Tribunal affirmed the lower authority's decision on this issue as well.In conclusion, the Tribunal set aside the denial of money credit to the appellants under Notification 46/89 but upheld the lower authority's decisions on the manufacture of goods without a license and clearance without classification list approval. The redemption fine was confirmed at Rs. 10,000, but the penalty was reduced to Rs. 3,000. The appeal was dismissed with modifications to the penalty amount.