Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri J.C. Patel, ... on 26 August, 2011
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/840 of 1991 Arising out of : OIO No. 17/Demand/91 dated 14.08.1991 Passed by : Commissioner of Central Excise Vadodara For approval and signature : Hon'ble Mr. M.V. Ravindran, Member (Judicial) Honble Dr. P. Babu, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellant (s) : M/s. Enar Chemic Pvt. Limited Represented by : Shri J.C. Patel, Advocate Respondent (s) : Commissioner of Central Excise, Vadodara
Represented by : Shri J.S. Negi, SDR CORAM :
Hon'ble Mr. M.V. Ravindran, Member (Judicial) Honble Dr. P. Babu, Member (Technical) Date of Hearing : 26.08.2011 Date of Decision : 26.08.2011 ORDER No. _____________ /WZB/AHD/2011 Per : Mr. M.V. Ravindran;
This appeal is directed against the order in original No. OIO No. 17/Demand/91 dated 14.08.1991.
2. Heard both sides and perused the records.
3. The facts of the matter under consideration is for the period from 01.03.1986 to 19.11.1987, wherein the appellant were charged to have not discharging of their duty liability on the product Di-calcium Phosphate on the ground that appellant did not produce certificate from the Drug Controller of India as regards the eligibility of the said product for the benefit of Notification No 234/86-CE. Appellant contested the show cause notice. The adjudicating authority did not agree with the contentions raised by the appellant and confirmed demand and also imposed penalties and also demanded interest on the amounts confirmed.
4. Learned counsel drew our attention to the fact that appellants were pursuing with the Drug Controller of India for issuance of certificate from the date they were informed by the lower authorities for producing such certificate, he would draw our attention to a letter dated 14.12.1987 and further followed up by a letter issued by them to Drug Controller of India for issuance of certificate as required under the Notification No 234/86. He would also our attention to the last letter written by the office of the Superintendent of Central Excise on 01.01.1988, issued by the office of Deputy Commissioner of Central Excise, Vadodara directing the appellants to produce the requisite certificate within one month from the date of receipt of such letter. Learned counsel would also drew our attention to the certificate issued by the Drug Controller of India, which was dated 15.02.1988, which was submitted by the assessee to the Revenue authorities on 20.02.1988. It is his submission that the time lag from the date of receipt of letter from the Deputy Collector of Central Excise, Vadodara and time taken by them for submitting the Drug Controllers certificate was due to the fact that the said certificate was to be issued by an outside agency. He submits that the Honble Gujarat High Court in the case of IFFCO vs. UOI 1995 (75) ELT 218 (Guj.), in paragraph -9 has clearly held and settled the law that the condition, fulfilment of which depends partly on the person and partly on the outside agency, cannot be said to be a mandatory condition. It is also his submission that Apex Court in the case of Commissioner of Customs (Imports) vs. Tullow India Operations Limited - 2005 (189) ELT 401 (SC) has clearly held that substantial provisions were stand complied with when once the certificate, which is required is produced before the authorities.
5. Learned DR reiterates the findings given in the adjudication order.
6. On careful considering the submissions made by both the sides, we find that it is not in dispute that appellants product Di-calcium Phosphate is a bulk drug and is eligible for the benefit of Notification No 234/86-CE dated 03.04.1986, subject to the condition that certificate from the Drug Controller of Govt. of India is produced within a period as the said officer may allow. It is undisputed that the appellant was pursuing with the Drug Controller of India for issuance of certificate which was ultimately received by the appellant on 15.02.1988. It is necessary to reproduce the said certificate, which is as under :-
No _____/3/86-Drugs Government of India Directorate Genl. Of Health Services (Drug Section) New Delhi, the To, M/s. Enar Chemic Pvt. Limited N.H. No. 8, Dharagiri, P.O. Kabilpore Navsari (Gujarat) 296424 15 Feb 1987 Certificate as required under Notification No.234/86 dated 03/04/86.
This is to certify that the claims of M/s. Enar Chemic Pvt. Limited, Bombay dated 14.12.1987 for the following bulk drugs
1. DIABASIC CALCIUM PHOSPHATE I.P.
2. --
As imported/ manufactured under valid Drug Licence are eligible for exemption under the Ministry of Finance Notification No. 234/86, dated 03rd April 1986 for Central Exim Policy.
Sd/-
(Dr. PREM K. GUPTA) DRUGS CONTROLLER (INDIA)
7. It can be seen from the above reproduced certificate, the Drug Controller of India indicated in the above said certificate that this certificate is issued by them in furtherance of a letter from the appellant dated 14.12.1987.
8. It is also to be noted that the last letter directing the appellant to produce certificate within a period of one month was issued by the office of the Deputy Collector of Central Excise and Customs on 01.01.1988. It can be seen that the appellant was vigoursly pursuing with the concerned authorities for issuance of certificate. The said certificate having been issued belatedly by the authorities, in our view, cannot be held against the appellant for denying them the benefit, for which otherwise he is eligible.
9. We are fortifying in our above view by the judgment of Honble Gujarat High Court in the case of IFFCO vs. UOI (Supra), the ratio of the same as contained in Para 9, is respectfully reproduced:-
It is thus clear that an exemption Notification has to be construed in the light of the contents thereof. As aforesaid the Notification at Annexure `A postulates three conditions for earning the exemption provided thereunder. The first two conditions have to be complied with in full in order to earn the exemption thereunder. Payment of contribution in the aforesaid fund is a condition precedent for claiming the exemption thereunder. The goods would not be allowed to be cleared unless undertaking to the effect of payment of contribution in the fund is given. The condition of giving undertaking will have also therefore to be treated as a condition precedent. So far as furnishing of proof is concerned, it is not always possible to comply with it fully within the stipulated time-limit for diverse reasons. It may be noted that such proof has to be furnished to the satisfaction of the proper officer. It is possible that the proof of payment furnished by the manufacturer may not be to the satisfaction of the proper officer and in order to furnish such satisfactory proof, the stipulated time-limit may prove short. It is possible that the proper officer might not be available for some reason when the manufacturer goes to him within the stipulated time-limit to furnish the proof of such payment. So far as giving of the undertaking and making of the payment in the aforesaid fund are concerned, they are within the control of the manufacturer. So far as furnishing sufficient proof of payment to the satisfaction of the proper officer is concerned, it is often beyond the control of the manufacturer. It may be that the amount is deposited in the Reserve Bank of India and the receipted challan is not received back within the stipulated time-limit and the sufficient proof cannot be furnished within the stipulated time-limit. It may be that the receipted challan is received within the time-limit and yet it gets destroyed before it is produced before the proper officer and its duplicate may not be received within the stipulated time-limit. A condition, the fulfilment of which depends partly on the person and partly on the outside agency, cannot be said to be a mandatory condition. It has to be treated as a directory condition and its substantial compliance would be sufficient to earn the benefit for which such condition is prescribed. We are therefore of the view that the first two conditions in the Notification at Annexure `A for the purpose of claiming the exemption thereunder are mandatory and the third condition regarding furnishing of the sufficient proof thereof to the satisfaction of the proper officer is directory. As aforesaid, the petitioner has complied with mandatory conditions in full and substantially complied with the directory condition. Even at the cost of repetition, we reiterate that there is no dispute that sufficient proof was furnished, if belatedly, by the petitioner regarding payment of the due money in the aforesaid fund.
10. It is also noted by the Apex Court in the case of Commissioner of Customs (Imports), Mumbai vs. Tullow India Operations Limited 2005 (189) ELT 401 (SC), and specifically held in Para 29 and 30, which, we with respect reproduce :-
29. Both the Customs Department and Ministry of Petroleum and Natural Gas are departments of the Central Government. The substantive provisions which were required to be complied with for the purpose of obtaining the benefits under the said exemption notification have indisputably been complied with. It is not the case of the department that the assessee has anything to do with the grant of certificate except to pursue the matter to the best of its abilities. It is not in dispute that the importers were, but for production of the certificate, otherwise entitled to the grant of benefit in terms of the said notification.
30. The conditions referred to in sub-section (1) of Section 25 as regard time when such certificate is to be produced would, thus, mean those which were within the control and power of the importer. If it is not within the power and control of the importer and depends upon the acts of other public functionaries, non-compliance of such condition, subject to just exception cannot be held to be a condition precedent which would disable it from obtaining the benefit therefrom for all times to come.
11. In view of the foregoing, we find that the impugned order is unsustainable and liable to set-aside. The impugned order is accordingly, set-aside and appeal is allowed.
(Dictated and pronounced in the Court)
(Dr. P. Babu) (M.V. Ravindran)
Member (Technical) Member (Judicial)
.KL
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