NEO SACKS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. Neo Sacks Ltd. have filed this Appeal against the confirmation of duty of excise and imposition of penalty by the Commissioner of Central Excise under the impugned order in Original No. 32/97 dated 10.2.97.

(2.) SHRI A. Upadhyay, learned Advocate, submitted that the appellants had sent laminated fabrics under Chapter X Procedure, to M/s. Panam Packers Ltd. who had obtained the requisite CT 2 from the proper Central Excise officer in terms of Notification No. 63/87 CE dated 1.3.87; that the Commissioner has confirmed the demand of duty and imposed penalty on the ground that the goods manufactured by them is classifiable under sub -Heading 3926.90 of the Schedule to the Central Excise Tariff Act and they are not eligible for the exemption under the Notification. Learned Advocate, further, submitted that the Appellants had cleared the goods under exemption Notification No. 63/87 under Chapter 59 of the Central Excise Tariff as per the permission given by the Central Excise Officer, that therefore, the Central Excise department cannot contend against their own orders; that admittedly they had sent the goods under Chapter X procedure and when they had cleared the goods under the exemption notification to an industrial consumer having L -6 licence, under bond, liability for correct accounting of the goods shifts to the consignee and if any duty is chargeable, it is to be demanded from the consignee and not from the consignor, that is the Appellants. Reliance has been placed on the decision in the case of IBP Company Ltd. v. Collector of Customs & Central Excise, Jaipur, 1999 (110) ELT 960. Alternatively, the learned Advocate contended that even if the goods in question are classified under Chapter 39 of the Tariff, they will be eligible for exemption under Notification No. 214/86 -CE dated 25.3.86; that they had received the goods on job work basis from M/s. Panam Packers and after doing the job work sent the goods back to M/s. Panam Packers; that as per the condition of Notification No. 214/86, suppliers of the raw material or semi -finished goods has to give the undertaking to the Asstt. Commissioner having jurisdiction over the factory of the job worker that the goods would be used in or in relation to the manufacture of final product in his factory as per Chapter X Procedure; that, therefore, in sum and substance, they had complied with the procedure prescribed under Notification No. 214/86. He also claimed that goods are exempted from payment of duty under Notification No. 217/86 which provides that where inputs are used in a factory different from the factory of manufacturer, where the goods had been produced, the exemption will be available subject to the observance of the Procedure set out under Chapter X of the Central Excise Rules, 1944; that in the present matter, Chapter X Procedure had been followed and, therefore, they are entitled for the benefit of exemption under the said Notification.

(3.) COUNTERING the argument M/s. Charu Baranwal, learned Senior Departmental Representative, submitted that Notification No. 63/87 exempts the fabrics coated or laminated with preparation of low density polyethylene if such fabric are intended for use in the manufacture of plastic woven sacks and if such use is elsewhere, other than the factory of production of such fabrics, the procedure set out in Chapter X is followed; that this Notification is applicable to the fabrics falling under sub -Heading 5903.21; that as per the judgment of the Hon'ble MP High Court the goods manufactured and cleared by the Appellants are classifiable under sub -Heading 3926.90 of the Tariff and not under Chapter 59; that as such Notification No. 63/87 is not available to the goods manufactured by them which are classified under sub -Heading 3926.90; that the issue of CT 2 was in respect of goods falling under sub -Heading 5903.21 and not in respect of sub -heading 3926.90. She, further, submitted that the benefit of Notification No. 217/87 -CE is also not available to goods in question; that the benefit of this Notification is applicable only to the goods manufactured in a factory and used within the factory of production; that the proviso 2 to Notification further provides that if use of inputs is in a factory of manufacturer different from his factory where the goods have been produced the exemption contained in the Notification shall be eligible subject to the observance of the Procedure set out in Chapter X; that in the present matter, the condition specified in second proviso is not satisfied inasmuch the factory where the goods are used, does not belong to the Appellants. Finally, he submitted that the appellants had never claimed the benefit of Notification No. 214/86 CE before the Adjudicating Authority; that this Notification is a conditional notification available subject to the satisfaction of condition specified thereunder; that as the notification has not been claimed by them earlier, the benefit of the same could not be extended at the Appeal stage. In reply, the learned Advocate submitted that it is a settled law that the benefit of an exemption notification can be claimed if available, at any stage.