1996 (6) TMI 153 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 56/78-C.E. regarding the utilisation of room air conditioners.
2. Application of Rule 196 of the Central Excise Rules and Section 11A in the case.
3. Determination of the correct area for utilisation of goods under the Notification.

Analysis:
1. The case involved a dispute regarding the utilisation of room air conditioners obtained by M/s Voltas Limited under Notification No. 56/78-C.E. The Collector alleged that the air conditioners were used in a Customs bonded warehouse, violating the conditions of the Notification. The Collector's order was challenged in the appeal.

2. The Assistant Collector and the Collector had differing views on the application of Rule 196 and Section 11A. The Assistant Collector held that the demand was not barred by limitation as Rule 196 did not specify any time limit. However, the Collector observed that the demand was time-barred under Section 11A read with Rule 196. The appellate tribunal agreed with the Collector, stating that the demand was indeed barred by limitation due to the delay in issuing the show cause notice.

3. The tribunal analyzed the provisions of Chapter X of the Central Excise Rules, which relate to the remission of duty on goods used for special industrial purposes. It was noted that the Notification in question prescribed concessional duty rates for air conditioners used in specific establishments like computer rooms and hospitals. The tribunal interpreted that not all provisions of Chapter X applied to the Notification, focusing only on aspects related to removal from the factory and utilisation in designated establishments.

4. The tribunal further clarified that Rule 196 was not applicable in this case as it was designed for recovering duty where the manufacturer failed to account for goods received. Since the conditions of Rule 196 were not met, and the demand was made after a significant delay following the initial certification, the tribunal upheld the Collector's decision that the demand was time-barred. The tribunal also highlighted the importance of establishing the correct area for utilisation as per the terms of the Notification, which the Revenue failed to address satisfactorily.

5. Ultimately, the tribunal rejected the Revenue's appeal, affirming the Collector's decision that the demand for duty was barred by limitation. The tribunal emphasized that the conditions of Rule 196 did not apply in this scenario, and there was no justification for interfering with the Collector's order.