- (1.) The short question of law involved in this matter is-whether irrespective of the assessees having not followed or substantially followed Chapter X procedure under the Central Excise Rules, 1944, they would still be entitled to the benefit of notification no. 121/94-CE dated 11-8-1994 as held in the case of Thermax Private Ltd. v Collector of Customs reported in 1992 (61) ELT 352, which is to the effect that, the benefit of concession should be given when intended use of material can be established by other evidence.
(2.) This case is a sequel to the case of the assessees in civil appeal nos. 5747-5749 of 2000 decided by this court on 30-9-2005 and, therefore, we are not required to restate the facts. Suffice it to state that the assessee-firms were manufacturer of branded chewing tobacco (final product) from "additive mixture" (kimam). The said "kimam" was manufactured by the units of the assessees in Delhi and the said kimam was stock transferred to the assessees' units in UP and HP. We have held in our judgment in civil appeal nos. 5747-5749 of 2000 that this kimam was excisable and classifiable under sub-heading 2404.49/2404.40 of Central Excise tariff Act, 1985. Admittedly, the existence of assessees' units in Delhi, where kimam was manufactured, was not disclosed to the department, these units were not registered and they were unlicensed units, The three assessees however urged that there was no intention to evade duty as the said kimam was captively consumed in the manufacture of branded chewing tobacco and they were entitled to input relief under notification no. 121/94-CE dated 11-8-1994. In this connection, the assessees contended before the tribunal in the present case that they had maintained stock register, transfer challans and form-IV register in their units in UP and HP, where the final product was manufactured and which registers indicated receipt and utilization of kimam in the manufacture of branded chewing tobacco and consequently, there was substantial compliance of exemption notification no. 121/94-CE. This contention of the assessees has been accepted by the tribunal placing reliance on the judgments of this court in the case of Thermax private Ltd. (supra) and Co/jector of Central excise, Jaipur v. J. K. Synthetics reported in 2000 (120) ELT 54. Being aggrieved by the decision of the tribunal, the department has come to this court by way of these civil appeals.
(3.) We quote hereinbelow the exemption notification no. 121/94-CE, which deals with input relief in respect of goods used for special industrial purposes subject to the assessee complying with chapter X procedure. "input RELIEF exemption to specified intermediate goods if captively consumed or used in the manufacture of specified final products consequent to extension of Modvat Scheme to goods earlier covered under proforma Credit Procedure: In exercise of the powers conferred by subsection (1) of section 5a of the Central excises and Salt Act, 1944 (1 to 1944) , read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) (hereinafter referred to as the said Special Importance Act) , the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods falling under heading numbers or sub-heading numbers of the schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the saidtariff Act) , specified in column (4) of the Table hereto annexed (hereinafter referred to as "inputs") manufactured in a factory and used within the factory of production in or in relation to the manufacture of corresponding final products of the description specified in column (2) of the said Table and falling under heading numbers or sub-heading numbers of the schedule to the said Tariff Act, specified in the corresponding entry in column (3) of the said Table, from the whole of the duty of excise and additional duty of excise leviable thereon, which is specified in the respective Schedules to the said Tariff Act and the said Special Importance Act: provided that nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of final products (other than those cleared either to a unit in a Free Trade Zone or to a 100% Export-Oriented Undertaking or to a unit in Electronic Hardware technology Park or Software Technology Parks) , which are exempt from the whole of the duty of excise leviable thereon or are chargeable to 'nil' rate of duty:provided further that where such use of inputs is in a factory of a manufacturer, different from his factory where the goods have been produced, the exemption contained in this notification shall be allowable subject to the observance of the procedure set out in Chapter X of the Central Excise Rules, 1944.;