TaxTMI 
TaxTMI 
2026 (8) TMI 726
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....te of duty under Entry 17 of Notification No. 2/2011-CE dated 01.03.2011, which extends the benefit to "Anaesthetics" falling under Chapters 28, 29 or 30. The Department alleged that since Nitrous Oxide has multiple uses and that the assessee has not shown that the said product cleared to traders was used as anaesthetics only they were therefore ineligible for the concession. Accordingly, show cause notices were issued demanding differential duty of Rs.31,22,225/- Rs.10,47,816/- and Rs.2,09,084/- for the periods April 2011-December 2015, January 2016-March 2017, and April 2017-June 2017 respectively, along with interest and penalties. The adjudicating authority confirmed the demands with interest and imposed penalties under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002. The Commissioner (Appeals) upheld the orders, leading to the present appeals. 3. The learned Advocate Shri S. Kothari appeared for the appellant and Ld. Authorized Representative Smt. Anandalakshmi Ganeshram appeared for the respondent. Submissions made by the Appellant 3.1 Shri S. Kothari Ld. Advocate submitted as below, on behalf of the Appellant. A. S....
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....y to the ultimate user. Accordingly, once it is undisputed that the goods cleared were Nitrous Oxide I.P., i.e., "Anaesthetics" covered by Sl. No. 17 of Notification No. 2/2011-CE, the concession cannot be denied merely because the purchaser is a trader. The Department's assumption that traders may divert the goods for other uses is purely speculative and legally irrelevant in the absence of any statutory end-use condition. C. Without prejudice, even if end-use were relevant, the Appellant established medical/anaesthetic use to the extent legally and commercially possible Without prejudice to its submission that Sl. No. 17 of Notification No. 2/2011-CE contains no end-use condition, the Appellant submits that it nevertheless established, to the extent legally and commercially possible, that the Nitrous Oxide I.P. supplied to traders was intended for medical/anaesthetic use. The product was consistently described in purchase orders and invoices as "Nitrous Oxide I.P." or "Medical Nitrous Oxide", manufactured and cleared under the Drugs and Cosmetics Act, 1940 under FDA oversight, and supplied only to hospitals and licensed drug traders, while industrial nitrous....
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....s liable to be set aside. E. Interest Interest under Section 11AA, being consequential to the duty demand, cannot survive once the demand fails. F. The Ld. Counsel that in view of the submissions the Appeal filed by the Appellant may kindly be allowed along with consequential reliefs. G. ADDITIONAL WRITTEN SUBMISSIONS AFTER HEARING The appellant filed an additional written submission as permitted, in response to the Revenue relying on Commissioner of Customs Vs Solgen Energy Pvt. Ltd., 2024 (5) TMI 1063, during the public hearing. The Appellant stated that the said decision is distinguishable as it dealt with a conditional exemption under Notification No. 12/2012CE, whereas Sl. No. 17 of Notification No. 02/2011-CE is a description-based exemption for "Anaesthetics" without any end-use condition or buyer restriction. In the present case, the Department itself accepts that the goods were Nitrous Oxide I.P., an anaesthetic, and has extended the benefit for hospital clearances; denial for trader clearances merely imports an impermissible downstream end-use requirement. Even assuming end-use relevance, the Appellant has demonstrated due dili....
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....ation it was submitted that the nature of the clearances could not be ascertained from the monthly returns and came to light only upon audit verification of invoices. Hence the extended period of limitation has rightly been invoked along with interest and penalty. The Ld. A.R. prayed that the appeal may be rejected. Analysis 4. We have heard the parties to the dispute and carefully perused the appeal memorandum and connected documents and written submissions. We find that three major issues have been raised by the appellant. A. Whether the clearance of Nitrous Oxide made to the traders by the Appellant are eligible for concessional rate of duty as per Sl. No. 17 of Notification No. 02/2011-CE. B. Whether a portion of the demand is time-barred. C. Whether the burden of interest and penalty lies on the appellant. 5. Eligibility for concessional rate of duty. 5.1 The dispute pertains to grant of exemption under entry Sl. No. 17 of Notification No. 02/2011-CE. It would be apposite to reproduce the relevant part of the 'Table' for the same below: S. No Chapter or heading or subheading or tariff item of the First Schedule Description of ....
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.... Nitrous Private Ltd., that they were used for non-medical purposes. Such an inference is unsupported by evidence. As held by the Supreme Court in State of Kerala Vs M.K. Mathew [(1978) 42 STC 348], "it is now well settled that strong suspicion, strange coincidences and grave doubts cannot take the place of legal proof." Moreover, the Appellant has produced an uncontroverted declaration dated 03.03.2016 from M/s Arjun Nitrous Private Ltd. confirming that it held a valid drug licence and that the IP-grade goods purchased from the Appellant were sold only for medical purposes, with relevant records maintained. Revenue has not rebutted this evidence. 8. In Union of India & Others Vs Inter Continental (India) [2008 (4) TMI 23 - Supreme Court / 2008 (226) E.L.T. 16 ( SC)], the Hon'ble Supreme Court held that an end-use certificate or end-use verification cannot be insisted upon unless the exemption notification itself prescribes such a condition. In the case, the Revenue sought to deny the benefit of concessional customs duty under Notification No. 17/2001-Cus. by relying on a subsequent CBEC Circular requiring production of an end-use certificate. Upholding the High Court's judg....