Supreme Court set aside demand as Tribunal overlooked procedure in Chapter X

1. Assessees manufactured of excisable goods for preparation containing chewing tobacco.
2. It was made leviable to central excise duty with effect from 1.3.1994.
3. Department came to know that the respondents had been manufacturing the said goods without applying/obtaining the certificate of registration and had been removing the same clandestinely from their factories without payment of central excise duty.
4. Show cause notices were issued to the respondents for levy of duty, and penalty.
5. Commissioner (Excise) determined central excise duty demand and imposed, ordered confiscation of the goods.
6. Tribunal upheld Commissioner’s order on duty liability but ordered re-examination of the limited question of the applicability of Notification 121/94-CE

On appeal, the Supreme Court held as under:

7. We find it difficult to sustain the reasoning of the Tribunal that the procedure laid down in Chapter X, is meant only to establish the receipt of goods by the recipient unit and their utilization.

8. The Tribunal completely overlooked the object and purpose of the procedure laid down in Chapter X.

9. The goods manufactured at the supplier end were excisable goods and if a party wants remission of duty, he has to follow certain pre- requisities, the object of which is to see that the goods be not diverted or utilized for some other purpose, on the guise of the exemption notification.

10. The plea of ""substantial compliance" and "intended use" is, therefore, rejected for the reasons already stated.

Case Reference - Commissioner of Central Excise, New Delhi Versus M/s Hari Chand Shri Gopal & Others

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 1878-1880 OF 2004