Customs, Excise and Gold Tribunal - Delhi
Gujarat Paints And Allied Products Co. vs Collector Of C. Ex. on 29 June, 1993
Equivalent citations: 1993ECR108(TRI.-DELHI), 1993(68)ELT644(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. These appeals have been filed against a common order in appeal dated 14-11-1983 by which the Collector (Appeals) had upheld the orders of Assistant Collector of Central Excise, Bulsar both dated 16-3-1991. The matter relates to refund claim in respect of Zinc Oxide falling under Item 14 CET amounting to Rs. 8,681.31. The brief facts are as follows :-
The appellants are the manufacturers of Zinc Oxide falling under Tariff Item 14. Till September, 1979, they availed exemption from licencing control in terms of Notification No. 111/78 dated 9-5-1978 and also exemption from payment of duty, under Notification No. 71/78, dated 1-3-1978. In October, 1979, they took out Central Excise Licence. During April, 1979 to September, 1979, the clearances of Zinc Oxide were to the tune of Rs. 6,73,626.25, i.e. exceeding exemption limit of Rs. 5 lakhs and hence appellants were asked to pay duty amounting to Rs. 8,681.31 on the excess clearances of Rs. 1,73,626.25, which they paid on 27-3-1980. On 9-11-1979, the appellants requested the Assistant Collector to permit them to clear Zinc Oxide for industrial purpose in the manufacture of rubber goods as per Notification No. 21/55 dated 28-4-1975. Assistant Collector, however, vide his order dated 11-4-1980, turned down the request of the appellants on the ground that Zinc Oxide cannot be cleared without payment of duty under Notification No. 21/55 for sale to Tyre Companies. Against this order, the appellants had filed the appeal with the Collector (Appeals), Bombay, who allowed the appeal holding that the appellants are entitled to clear Zinc Oxide without payment of duty under Notification No. 21/55, provided they satisfy other conditions mentioned in the said Notification.
In terms of the decision of the Collector (Appeals), Bombay, appellants vide their letter dated 10-1-1981 represented to the Assistant Collector to treat the clearances worth Rs. 4,48,612.50 made by M/s. Premier Tyres Co., during the period from April, 1979 to September, 1979, as clearances under Notification No. 21/55 and remaining clearance of the value of Rs. 2,25,013.25 made during the period from April, 1979 to September, 1979, as clearance under Notification No. 71/78 and appellants further requested to refund the duty paid by them amounting to Rs. 8,681.31. The appellants vide their gate-pass No. 27 of 24-7-1980 had cleared Zinc Oxide worth Rs. 1,33,000/- to M/s. Premier Tyres Ltd. In their letter dated 10-1-1981, the appellants requested the Assistant Collector to treat this clearance of Zinc Oxide also as made under Notification No. 21/55. Assistant Collector vide the impugned orders rejected both the requests of the appellants on the ground that they have not followed the proper procedure and have not satisfied the conditions of Notification No. 21/55. Being aggrieved, the appellants have filed two appeals, which we are deciding under a common order, the issues involved in the appeals being identical.
2. Shri B.B. Gujral, learned Counsel for the appellants contended that although the Department holds that the appellants had not followed Chapter X Procedure of Central Excise Rules for their supplies of Zinc Oxide to M/s. Premier Tyres Ltd., the appellants had substantially complied with the requirement. They had produced necessary CT2 Certificate from the Departmental Officer at the user's end, and connected L6 licence for using the exempted material. In such a situation, the learned Counsel urged, the exemption cannot be denied merely on the ground that the details of Chapter X procedure had not been followed. The learned Counsel in this context cited and relied upon Tribunal decision in the case of C.C.E., Pune v. Indian Oxygen reported in 1988 (11) ETR 473, Bajaj Tempo v. C.C.E. 1984 (16) E.L.T. 294 (Tri.) and at P-1533 ibid Hindustan Chemicals v. C.C.E. 1984 (18) E.L.T. 28 (Tri.). Smt. Ananya Ray, learned Senior Departmental Representative contended that it is a condition prescribed for exemption under Notification 21/55 that the procedure in Chapter X should be followed which the appellants in this case had not done. This is not a mere procedural requirement but an essential condition for availing the exemption designed to ensure that the exempted industrial input have in fact been utilised for the prescribed purpose by the user manufacturer. Clearances have to take place in AR 3A Forms prescribed for the purpose and the Senior Departmental Representative further submitted that the CT2 Certificate in this case has to be shown to be relatable to the material in question.
3. The submissions made have been carefully considered. As the learned Counsel has submitted there are precedent decisions of the Tribunal to say that in the case of such exemption notification prescribing the following of Chapter X procedure, the exemption may be extended if substantial compliance is shown regarding the receipt and utilisation of the exempted material by the user manufacturer. See in this context the decision of the Tribunal in the case of Steel Authority of India v. Collector of Central Excise, Indore, reported in 1990 (47) E.L.T. 22 wherein the Tribunal had referred to and followed another decision in the case reported in 1989 (39) E.L.T. 658 to say that unless it is deliberate and mala fide, failure on the part of the assessee to follow certain procedures cannot come in the way of his availing the substantive benefit under statutory provisions as long as he can satisfy the Department even at a later date, that he fulfilled the essential requirements to establish his entitlement to such benefit. In the same Steel Authority of India Limited decision, the Tribunal also observed that AR 3A Form not being statutorily prescribed removal on Gate Passes instead of AR 3A is not an irregularity of a serious nature for which another precedent decision in the case of Indian Oil Corporation v. Collector of Central Excise, Madras -1985 (20) E.L.T. 171 was relied upon. In the present case no mala fides are attributed to the appellants by the Department. Secondly, in the earlier order in appeal dated 28-8-1980 by the Collector (Appeals) while holding that Zinc Oxide was covered by Notification 21/55, the Collector (Appeals) had also observed, "It was wrong on the part of the Assistant Collector to have questioned the correctness of the issue of CT2 Certificate issued by the Collector of Central Excise, Cochin. In case he had any doubts about the correctness and genuineness of the certificate, he could have taken up the matter separately with the concerned authorities in the Cochin Collectorate". Thirdly, it would also appear that when for certain consignments AR 3A Forms were received from Cochin Collectorate on rewarehousing of Zinc Oxide, the Superintendent of Central Excise, Valsad by his letter No. GL 2/Misc./79/1395 dated 28-6-1979, had informed the appellants that since the appellants were exempted from Central Excise licensing requirement, they need not observe Central Excise formalities. Fourthly, the appellants have produced in their present appeal confirmation No. PTF : 3809 dated 4/1984 from Premier Tyres giving particulars of receipt and utilisation of Zinc Oxide from the appellants which the lower authorities had no occasion to go into. In the result, following the ratio of the precedent decisions cited supra, it is held that the exemption under Notification No. 21/55 cannot be denied to the appellants merely for not following the details of Chapter X procedure so long as they are able to establish by evidence substantial compliance therewith and in this light the jurisdictional Assistant Collector may consider the refund claim subject to being satisfied regarding the evidence produced of the receipt and utilisation of the exempted material by the user manufacturer M/s. Premier Tyres in the Cochin Central Excise Collectorate. The appeals are disposed of in the above terms.