Concessional excise duty for captive use cannot be denied for minor procedural lapses; stale demands are time-barred.

Concessional central excise duty under Notification No. 129/65 was available for BENTOL captively consumed in the assessee's own plant where the product was used for the permitted purpose and the department had granted permission with knowledge of the material facts. The absence of a fresh bond and full Chapter X compliance was treated as a procedural lapse that did not justify denial of the substantive concession. The duty demand was also held unenforceable because it was raised beyond the applicable limitation period under Rule 10 read with Rule 173J. The impugned orders were therefore unsustainable and the appeals succeeded with consequential relief.

---

---

Issues: (i) Whether the assessee was entitled to the concessional duty benefit under Notification No. 129/65 for BENTOL used captively in its own plant despite non-execution of a fresh bond and non-compliance with the full Chapter X procedure; (ii) Whether the duty demand was barred by limitation under Rule 10 read with Rule 173J of the Central Excise Rules.

Issue (i): Whether the assessee was entitled to the concessional duty benefit under Notification No. 129/65 for BENTOL used captively in its own plant despite non-execution of a fresh bond and non-compliance with the full Chapter X procedure.

Analysis: The permission granted by the Central Excise authorities allowed use of BENTOL in the assessee's own plant for cleaning purposes on concessional duty, and the record showed that the assessee had applied for and obtained the relevant licence. Chapter X was intended to regulate remission of duty where goods were obtained for specified industrial use and ordinarily contemplated a licence and bond to protect revenue. However, where the product was captively consumed within the same factory for the permitted purpose, the requirement of a fresh bond lost practical significance. Even assuming a procedural lapse, the substantive exemption or concession could not be denied merely because of minor procedural infractions when the assessee had disclosed the facts and acted under departmental permission.

Conclusion: The assessee was entitled to the concessional benefit, and the demand could not be sustained on the alleged bond and licence defects.

Issue (ii): Whether the duty demand was barred by limitation under Rule 10 read with Rule 173J of the Central Excise Rules.

Analysis: The facts had been placed before the authorities and the permission was granted with full departmental knowledge. The demand related to a past period and was issued beyond the prescribed time period under the then applicable limitation provisions. Since the department failed to establish the demand on merits, the limitation objection also supported the assessee's case.

Conclusion: The demand was time-barred.

Final Conclusion: The impugned orders were unsustainable, and the appeals succeeded with consequential relief.

Ratio Decidendi: A substantive exemption or concessional duty benefit cannot be denied for minor procedural non-compliance where the goods are captively consumed for the permitted purpose and the department had knowledge of the material facts; a stale demand raised beyond the prescribed limitation is also unenforceable.

---