Customs, Excise and Gold Tribunal - Delhi
Rajasthan Navsagar Chemical Works vs Collector Of Central Excise on 5 June, 1987
Equivalent citations: 1987(14)ECC183, 1987(13)ECR38(TRI.-DELHI), 1987(30)ELT969(TRI-DEL)
ORDER D.C. Mandal, Member (T)
1. Question to be decided by us in this appeal is whether the benefit of exemption granted under Notification No. 164/69-CE dated 11.6.69 was available to the appellants in respect of ammonium chloride obtained by them under Chapter X of the Central Excise Rules, 1944 for the manufacture of Navasagar and also whether Central Excise duty demanded in Show Cause Notice dated 25.2.80 read with Show Cause Notice dated 10.4.80 covering the period from 11.11.74 to 2.11.79 was payable by the appellants under Rule 196 of the Central Excise Rules,
2. Arguing for the appellants, Shri Jagesha, Consultant has stated that under Notification No. 164/69-CE dated 11.6.69, ammonium chloride falling under Central Excise Tariff Item 14-HH was exempted from the whole of Central Excise duty if it was intended to be used for the manufacture of (i) Dry Cell batteries, (ii) Yeast food and (iii) Ice or if it was intended to be used as (i) Tinning flux, (ii) Soldering and galvanising materials, (iii) Tanners bate, (iv) Fire proofing agent, (v) Alkaline cleanser, (vi) Casting sealer and (vii) Water purifying agents. In pursuance of the above Notification, in September 1974, the appellants applied to the Assistant Collector of Central Excise, Nasik for issue of L-6 Licence for the use of Ammonium Chloride for industrial purposes. In the said application, the appellants stated that they had got a factory for manufacture of Nava Sagar which is used as Alkaline Cleanser, i.e., for galvanising utensils etc., that their principal raw material was ammonium chloride and that they would bring ammonium chloride at nil rate of duty and use it for the manufacture of navasagar.. L-6 licence was granted by the Department. The appellants executed D-8 bond, maintained accounts in RG-16 and furnished monthly returns in Form RT 11. Intimation on receipt of materials was given to the local officers who visited the factory and satisfy themselves. The Central Excise Officers were fully aware of the activities of the appellants from November, 1974 and also of the fact that Ammonium chloride received by them was used in the manufacture of Navasagar which, in turn, was marketed as a manufactured product. The Department did not raise any objection on the use of the ammonium chloride for the above purpose. The appellants followed the procedure prescribed in Chapter X of the Central Excise Rules and received the materials against CT.2 certificate and used the material as declared in their application under Rule 192 of the Central Excise Rules. The above position continued till 25.2.80 when the Department issued a show cause notice to the appellants asking them to explain as to why duty should not be recovered on the entire quantity of ammonium chloride received by them in the factory under Chapter X of the Central Excise Rules and the L-6 licence granted to them should not be cancelled as they were not eligible to the concession under Notification No. 164/69-CE dated 11.6.69. This was followed by another show cause notice dated 10.4.80 demanding the duty of Rs. 77,585.75 covering the period from 11.11.74 to 2.11.79. Learned consultant has further stated that the ammonium chloride was used by them for the purposes declared by them in the application for L-6 licence and there was no mis-utilization of the goods. The provision of Rule 196 ibid could not be invoked by the Department for the period of more than six months as provided under Rule 10 of the Central Excise Rules. The learned Consultant has further stated that the appellants' case is covered by this Tribunal's decision in the case of Arti Paints & Chemicals Industries, Bombay v. Collector of Central Excise, Bombay, reported in 1984-(15)-ELT-206 (Tribunal), in which it was held by the Tribunal that the demand for short recovery could not be made under Rule 196 of the Central Excise Rules if permission was given by the Department through mistake under Rule 192. He has prayed that in view of the previous decision in the case mentioned above, the Tribunal may allow the appeal filed by the appellants in the present case.
3. Smt. J.K. Chander, learned J.D.R. while confirming that the ratio of the decision reported in 1984-(15)-ELT-206 (Tribunal) is applicable to the present case, reiterated the arguments advanced by the Department in the said case.
4. We have considered the arguments of both sides and have also gone through the records of the case. In the present case, the ammonium chloride brought by the appellants under Rule 192 of the Central Excise Rules was not utilised for any of the purposes mentioned in item 4-A and B of the Notification No. 164/69-CE dated 11.6.69. The benefit of this Notification was, therefore, not admissible to them. The Department, however, wrongly granted the L-6 licence and the permission to avail of the benefit of the Notification. It was clearly declared by the appellants in their application for L-6 licence that ammonium chloride would be used by them for the manufacture of Navasagar. The ammonium chloride brought by them in the factory under Rule 192 was in fact utilised by them for the purpose declare by them. In the circumstances, as already held by this Tribunal in the case of Arti Paints & Chemicals Industries, Bombay (Supra), the provision of Rule 196 of the Central Excise Rules cannot be invoked. In the result, the demand for duty is to be restricted to a period of six months under Rule 10(1) of the Central Excise Rules.
5. In view of the above discussions, we hold that as the concession was wrongly extended by the Department to the appellants, the Department is entitled to recover duty for a period of six months in terms of Rule 10(1) of the Central Excise Rules. The demand for a period beyond the period of six months is held to be barred by limitation. Since L-6 licence was granted through mistake, the Department is at liberty to revoke it according to the provisions of law. The decision of the lower authorities of cancel the L-6 licence is confirmed.
6. In the result, appeal is partially allowed in the above terms.