Customs, Excise and Gold Tribunal - Mumbai
Hindustan Aegis Lpg Bottling Co. Ltd., ... vs Cce on 10 August, 2004
Equivalent citations: 2004(174)ELT193(TRI-MUMBAI)
ORDER Jyoti Balasundaram, Member (J)
1. The applications for waiver of pre-deposit of excise duty of Rs. 3,98,20,722/- and penalty of equal amount confirmed against M/s. Hindustan Aegis LPG Bottling Company Ltd. and duty of Rs. 5,05,29,615/- and penalty of equal amount confirmed against M/s. Aegis Chemical Industries Ltd. and penalties of Rs. 3,00,000/- and Rs. 2,00,000/- imposed on Shri S.K. Hazra, Director of M/s. Hindustan Aegis LPG Bottling Company Ltd. and Shri Pradeep N. Das, Authorized Signatory of M/s. Hindustan Aegis LPG Bottling Company Ltd. and General Manager of M/s. Aegis Chemical Industries Ltd. arise out of the order of Commissioner of Central Excise, Mumbai. Duty demands have been confirmed in respect of clearances of LPG Mix made by M/s. Hindustan Aegis LPG Bottling Company Limited during the period 22.12.99 to 7.8.2000 and by M/s. Aegis Chemicals Industries Ltd. during the period 7.8.2000 to 27.2.2002.
2. The demands arise as a result of holding that the above mentioned two companies manufactured LPG Mix in their plants, by mixing commercial propane and commercial LPG mixture imported separately, in their storage tanks, rejecting the contention of the applicants that although propane and LPG mix were imported separately, mixing of the two resulting in production of commercial LPG mixture took place at the discharge manifold of the vessels in which two constituents of the commercial LPG mixture were imported. The basis, inter alia, is the Unloading Operation Statement of the vessel "OSCAR VIKING" showing that the ship first discharged from its manifold, butane and propane, statement of Shri Doraiswamy Lingamoorthy, Manager Operation of M/s. Aegis Chemical Industrties Ltd. confirming the above statement and also admitting that butane and propane so received from "OSKAR VIKING" was mixed in shore tank LPG 101, statement of Shri Sandeep More, Ship Surveyor confirming that cargo in the vessel "Hector -Voy.27" was discharged separately, Cargo reports of M/s. GAC Shipping Ltd. prepared at the unloading port indicating that propane and butane were separately unloaded etc.
3. We have carefully considered the rival submissions. At the outset we note that the show cause notice initially proceeds on the basis that butane and propane which were separately loaded into different tanks of the ship at the port of loading were, mixed at the discharge manifold to produce commercial LPG mixture at New Pir Pau Jetty located in India and received the bulk storage installation through pipeline, although subsequently the notice alleges that butane and propane were mixed either at the discharge manifold or in shore tanks T 101 to produce commercial LPG mixture. We note that the orders were placed on foreign suppliers for LPG Mix and/or Propane; Bills of lading and other documents clearly described the goods as LPG Mix and/or Propane; Foreign suppliers' invoice also describes the goods as above, that the contracts were for LPG Mix on DES basis (Delivered Ex-ship basis), that the contract specifically stated that the mixing of the gases was required to be done by the shipper before discharge of the cargo from the ship's discharge manifold. The admitted position is that prior to 22.12.99 the applicants were manufacturing LPG Mix, stored in LPG Tank T 101 and propane was stored in Tank 102 and mixed in a mixing system with interconnecting pipelines, valves etc. After 21.12.99 the applicants surrendered their manufacturing licence and applied for, and obtained dealers registration for sale of LPG Mix and Propane, after dismantling the mixing system installed for mixing LPG Mix and Propane. They had also filed a certificate from the Chartered Engineer that it was not possible to mix Propane and LPG Mix after removal of the mixing system. The applicants have explained that mixing of the two gases is, not possible in the shore Tank T 101 which is where the department alleges that mixing took place, as the storage tanks which were refrigerated and designed to operate at very low near atmospheric pressure of 175 milibar, cannot withstand very rapid and high pressure due to mixing of gases having two different boiling points in the same tank (Propane and LPG MIX have been stated to have different boiling points). They relied on a letter from Tractebel Gas Engineering who are the Process Liencesors, dated 15.10.97, prohibiting transfer of products of different grades having different boiling points to the same refrigerated tank and clarification from LPG Terminal Operator in USA to the effect that mixing of two different grades of gases in one refrigerated tank was not possible. We note that the above submissions has prima facie not been controverted by the Revenue. Further the fact that LPG was received in the shore tank is prima facie confirmed by the report of the surveyors M/s. S GS and the shipping agents M/s. Admiralty Marine Services. The applicants have also relied on evidence in the form of affidavit of Captain Kowshik Kuchroo having considerable experience in LPG operations, that mixing of the two gases is undertaken in the vessel itself during the course of voyage up to berthing and statement of master of one vessel that mixing of the cargo is done during the course of the voyage in accordance with the instructions of the shipper. The certificate dated 18.11.2002 issued by Naftomar Shipping and Trading Company who are largest supplier of LPG to India also prima facie confirms the above practice. Prima facie, this material which was furnished by the applicants before the adjudicating authority has not been rebutted. Viewed from this angle, the statements of D. Lingamoorthy and Sandeep Moore which are relied on by the department are not prima facie sufficient to hold that commercial LPG mixture was manufactured in the shore tank of the applicants. We also note that the Bills of Entry describing the goods as commercial LPG mixture have been assessed by the Customs authorities. For all the above reasons, we hold that the applicants have made out a strong prima facie case for waiver of pre-deposit of duties and penalties arid accordingly we dispense with the same and stay recovery thereof pending the appeals. Appeals to be posted for regular hearing on 26.10.2004.
Operative part of the order already pronounced in the open Court on 10.8.2004.