- (1.) The appellants manufacture tyres, among them aero tyres. Occasionally, some aero tyres are found to be unfit for use on aircraft. These are degraded by buffing the description upon them and painting in a prominent and durable fashion the words "adv" thereon. In respect of these degraded tyres the appellants claimed the benefit of exemption provided by a notification dated 15/10/1982 (229 of 1982 issued under Rule 8 of the central Excise Rules. The relevant clause of the notification reads thus:the exemption having been denied to them, the appellants preferred an appeal before the central Excise and Gold (Control) Appellate tribunal and its order thereon is now under challenge. The tribunal took the view that the degraded tyres had not been specifically designed for use on animal-drawn vehicles and, therefore, the said exemption was unavailable to them. The tribunal, therefore, upheld the demand for duty and the confiscation of the seized degraded tyres and it reduced the penalty amount from Rs. 2 lakhs to Rs. 1 lakh "considering that actual misuse of the tyres has not been proved". Having regard to the terms of the said exemption notification, the benefitthereof is available only to tyres which have been specifically designed for the use of animal-drawn vehicles or handcarts. The tyres, in question, were, in fact, specifically designed for aircraft but were found defective and, therefore, not usable as such. Accordingly, the appellants degraded them by buffing what was printed thereon and substituting therefor the marking "adv". In our view, such degraded tyres do not qualify for the exemption given to tyres specifically designed for the use of animal-drawn vehicles. We, therefore, uphold the order of the tribunal insofar as the duty demand and confiscation of the seized degraded tyres is concerned. The tribunal itself has noticed that actual misuse of these tyres has not been proved. We are of the view, therefore, that only a token penalty should be imposed which would be in the sum of Rs. 1,000. 00 (Rupees one thousand).
(2.) The appeal is disposed of accordingly with no order as to costs.;