1998 (8) TMI 172 - AT - Central Excise

Tribunal grants relief to firm, waives duty demand & penalty under Section 35F aligning with SC decision.

The Tribunal ruled in favor of the applicant/appellant firm, dispensing with the duty demand and penalty imposed under Section 35F. It held that nil duty ... Stay/Dispensation of pre-deposit of penalty Issues:Dispensation of duty and penalty under Section 35F for the applicant/appellant firm regarding imported granules under advance license without duty payment.Analysis:The applicant firm sought dispensation of duty and penalty amounting to Rs. 84,82,481.00 and Rs. 8.00 lakh, respectively, under Section 35F. The firm manufactured plastic blow moulded containers using HDPE granules procured from various sources. The dispute arose regarding imported granules cleared under advance license without duty payment. The firm argued that as their final product was exempted from duty under specific notifications, the condition of payment of duty on inputs was satisfied. They relied on legal precedents to support their claim that nil rate duty on inputs constitutes 'duty paid.' The firm requested unconditional dispensation of pre-deposit and stay of recovery.The Department opposed the firm's contentions, emphasizing that granting double benefits to the firm for importing goods under nil duty and claiming exemption on final products was unjustifiable. The Department highlighted the distinction that the raw materials were imported under advance licenses in this case, unlike the cases cited by the firm.The Tribunal analyzed the Notification No. 14/92 conditions, focusing on the requirement that duty must be paid on inputs used in manufacturing final products. The key issue was whether nil duty on imported inputs fulfills the duty payment condition. Citing the Supreme Court's decision in a similar case, the Tribunal concluded that even nil duty on inputs under an exemption notification constitutes payment of appropriate duty. The Tribunal interpreted the term 'additional duty of Customs leviable' to include cases where nil duty is paid on raw materials. Consequently, the Tribunal favored the applicant/appellant firm, dispensing with the duty demand and penalty imposed, and stayed the recovery during the appeal process.