COMMISSIONER OF CENTRAL EXCISE, NEW DELHI versus M/S. HARI CHAND SHRI GOPAL ETC.

Citation: [2005] SUPP. 3 S.C.R. 931 · Decided: 03-10-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Matter referred to larger bench

Judgment (excerpt)

COMMISSIONER OF CENTRAL EXCISE, NEW DELHI 
A 
v. 
MIS. HARi CHAND SHRI GOPAL ETC. 
OCTOBER 3, 2005 
[S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] 
B 
Central Excise Rules, 1944-Chapter X-Jnput relief-Provided under 
Exemption Notification on condition of compliance of procedure under Chapter 
X-Entitlement of relief even on non-compliance of Chapter X-Different views C 
of Tribunal on the point-Held: Matter needs reconsideration-Hence referred 
to larger Bench. 
The question for consideration before this Court was whether an 
assessee was entitled to benefit of input relief under exemption Notification 
in which compliance of Chapter X procedure under Central Excise Rules, D 
1944 was incorporated as a condition for obtaining exemption. 
In Thermax Private ltd. v. Collector of Customs, (1992) (61) ELT 352 
it was held that the benefit of concession should be given when intended 
use of material can be established by other evidence. Decision in Collector 
of Central Excise, Jaipur v. J.K. Synthetics, (2000) (120) ELT 54 also held E 
to the same effect. 
In the present case, the Tribunal relying on Thermax Private Ltd., 
case; held that compliance of Chapter X procedure was not required for 
getting benefit of input exemption under Notification. 
Referring the matter to larger Bench, the Court 
F 
HELD: 1.1. When an assessee seeks exemption under a Notification, 
which prescribes compliance of chapter X of <;:entral Excise Rules, 1944, 
there is a linkage between levy of duty on one hand and the accountability G 
of the goods received/used in the factory where final product is 
manufactured. Therefore, one cannot ignore strict compliance of the 
aforestated rules while claiming exemption under such Notification. This 
is particularly relevant in cases where input relief is claimed on the basis 
of captive consumption. 1947-G-H; 948-A-BI 
931 
H 
932 
SUPREME COURT REPORTS (2005] SUPP. 3 S.C.R. 
A 
1.2. Non-accounting of goods received/used in the factory is distinct 
from short-payment arising from non-levy. However, when chapter X 
procedure is incorporated in the exemption Notification as condition then 
short-payment on account of non-levy and short payment on account of 
the failure of the buyer/user to account gets inter-connected. This aspect 
has not been considered by this Court in the cases of Thermax Private Ltd 
B and J.K. Synthetics. The result is divergence of views in the judgments of 
the tribunal. Exemption Notifications have to be read strictly so far as the 
eligibility is concerned; that conditions mentioned therein ought not to be 
ignored and that the Notification has to be read on its own terms. The 
law laid down by this Court in Thermat Private Ltd. and J.K. Synthetics 
C needs reconsideration. [947-B-C] 
Commissioner of Central Excise, Allahabad v. Ginni Filaments Ltd., 
(2005) 181 ELT 145, relied on. 
Thermax Private Ltd. v. Collector of Customs, (1992) 61 ELT 352; 
D Collector of Central Excise, Jaipur v. J.K. Synthetics, (2000) 120 ELT 54; 
National Aluminium Co. ltd. v. Commissioner of Central Excise. Bhubaneswar, 
(2000) 125 ELT 519 (T); Kirloskar Brothers Ltd. v. Collector of Central 
Excise, Pune, (1997) 94 ELT 176 (T) and Eagle Flask Industries Limited v. 
Commissioner of Central Excise, Pune, (2004) 171ELT296, referred to. 
E 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1878-1880 
of 2004. 
From the Judgment and Order dated 7.7.2003 of the Customs, Excise 
and Service Tax Appellate Tribunal, New Delhi in F.O. Nos. 570-57212003-
F B in A. Nos. E/259512002-D, E/259612002-D and E/2597 of 2002-D. 
G 
A. Subba Rao, Rupesh Kumar and P. Parmeswaran for the Appellant. 
Joseph Vellapally, Vivek Kohli, Subramonium Prasad and Manoj Gupta 
with him for the Respondent. 
The Judgment of the Court was delivered by 
KAPADIA, J. 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 
H would still be entitled to the benefit of notification no.121/94-CE dated 
COMMISSIONER OF CENTRAL EXCISE v. HARi CHAND SHRI GOPAL [KAPADIA, J.] 933 
11.8.1994 as held in the case of Thermax Private Ltd v. Collector of Customs, A 
reported in ( 1992) 61 EL T 352, w~ich is to the effect that, the benefit of 
concession should be given when intended use of material can be established 
by other evidence. 
This case is a sequel to the case of the assessees in civil

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