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2005 (12) TMI 199 - AT - Central ExciseDuty demand - EXIM Policy - 100% EOU - DTA clearance - Payment of concessional rate of duty - Notification 23/03-C.E. - manufacture and export of "Phthalic Anhydride" - interest and penalty - HELD THAT:- It is an established practice and extensive instructions issued on mixed tank components of liquids and the principle of first in first out is well established to be applied in such cases. The goods cannot be therefore established to have been manufactured from imported Ortho-xylene only. This exercise should have been done by the Commissioner. Instead of denying the benefit of the exemption based on his own fears and conjectures. The procedure prescribed and the law on the subject of treatment to be offered in case of such mixed raw material is very clear. It is not revenue's case that the appellants have mixed ortho-xylene procured from India and abroad. The Commissioner's order impugned before us therefore on this account is emerging on baseless material & cannot be upheld. DGTD vide letter, have listed Vanadium Pentoxide as a catalystic agent. The Commissioner's reliance on EXIM Policy definition thereof is not called for and be a cause to upset the position of Vanadium Pentoxide to be a catalyst. Catalysts are covered as capital goods of Exim Policy and therefore when use of such capital goods will not impugned eligibility to the benefit of notification as applicable to DTA clearances in this case. It is found that the benefit of notification cannot be denied by the use of Vanadium Pentoxide to the imported catalyst and no material exist to positively conclude that Phthalic Anhydride that was cleared under claim of the said notification was made by use of ortho-xylene which onus is vested on the department and has not been discharged. The duty demands cannot be confirmed. Clearances made under Serial No. 3 to Notification cannot be impugned. Once duty demands cannot be confirmed, and the clearances as effected cannot be impugned, the penalties as imposed on the EOU along with interest demand u/s 11AB penalty under Rule 26 on the other appellant herein cannot be sustained and are therefore required to be set aside. Thus, these appeals are allowed, after setting aside the order on duty demands, interest and penalties.
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