Customs, Excise and Gold Tribunal - Mumbai
Indofil Chemical Co. vs Commissioner Of C. Ex. on 18 November, 2002
Equivalent citations: 2003(159)ELT443(TRI-MUMBAI)
ORDER C. Satapathy, Member (T)
1. Shri. H.C. Daruwalla, the learned advocate for the appellants stated that the appellants manufacture pesticides and for the purpose of packing the same receive aluminium container under Chapter X procedure at their factory at Thane. Due to inadequate capacity at their Thane unit, the appellants sent insecticides and aluminium containers to their Pune unit for packing the same and clearing from the Pune unit directly. As the Pune unit did not have L6 licence required under Chapter X procedure, the excise authorities directed the appellants to pay Rs. 3,11,181.26 towards excise duty on aluminium containers sent to the Pune unit which is stated to have been paid under protest on 17-1-1992. A refund claim was filed by the appellants on 14-7-1992. The appellants claim that they have co-related the receipt and use of aluminium containers in the Pune unit and they should have been granted the refund even though they had not followed the Chapter X procedure and not obtained L6 licence for their Pune unit. The Assistant Collector rejected the appellant's refund claim under his order dated 22-4-1994 and the Commissioner (Appeals) upheld such rejection under his order dated 30-6-1994.
2. The learned advocate cites the following case laws : -
1. H.S.S.K. Niyamit v. C.C.E - 1989 (39) E.L.T. 658 (Trib.) :
Benefit of exemption under Notification No. 118/75 - C.E. not deniable for not following Chapter X procedure so long as essential requirements to establish entitlement to such benefit is satisfied.
2. Kamal Cold Storage (Pvt.) Ltd. v. C.CE., Bombay - 1987 (31) E.L.T. 754 (Trib.) :
Refund not admissible when basic requirements such as L6 licence and CT2 certificates not obtained observing Chapter X procedure.
3. Grasim Industries Ltd. v. C.C.E. - 1990 (47) E.L.T. 459 (Trib.) :
Failure on the part of the assessee to follow the Chapter X procedure cannot take away the substantive benefit available under the Notification No. 118/75-C.E.
4. Hyderabad Allwyn Industries v. C.C.E. - 1990 (45) E.L.T. 584 (Trib.) :
Exemption not deniable for procedural lapses. When procedural aspects of Chapter X procedure have been substantially complied with, matter deserves to be considered on merits.
5. Government of India in Re : Patco Industries : 1980 (6) E.L.T. 358 (G.O.I.): If the requirements of Chapter X procedure are followed in substance to the satisfaction of the Central Excise Authorities as envisaged by Notification No. 154/70, there is no reason why the benefit of exemption thereunder should be denied.
6. C.C.E. v. TISCO - 1988 (36) E.L.T. 320 (Tribunal) :
Exemption not deniable when provision of Chapter X complied with pending permission and goods used in another factory of same manufacturer.
7. C.C.E. v. D.C.M. - 1990 (50) E.L.T. 271 (Trib.) :
Refund not deniable on the ground of procedural lapse.
8. Raymond Woollen Mills Ltd. v. Union of India - 1992 (57) E.L.T. 396 (Bom) :
Refund not deniable merely on the ground that gate passes for a part period do not bear the endorsement "duty paid under protest".
9. Rotogravurs v. Union of India - 1992 (57) E.L.T. 407 (Bom.) :
Substantive right to get refund not deniable on basis of procedural provision.
10. Formica India Division v. C.C.E. - 1995 (77) E.L.T. 511 (S.C.) :
Benefit of Notification No. 71/71-C.E. cannot be denied on technical ground of non-compliance with Rule 56A procedure.
3. The learned advocate points out that the decision at Sl. No. 2 above is by a two member Bench of C.E.G.A.T. whereas the decision at Sl. No. 1 above is by a Larger Bench of C.E.G.A.T. It is the appellant's case that the lower authorities have not followed the aforesaid case laws. It is also their case that the Commissioner (Appeals) erred in following the Apex Court decisions in Indian Aluminium Co. and Mihir Textiles Ltd.
4. Shri Ishwar Singh, the learned D.R. appearing for Revenue supported the decisions by the lower authorities and stated that the Larger Bench decision of C.E.G.A.T. in H.S.S.K. Niyamit was rendered before the Apex Court decision in the Mihir Textiles Ltd. and therefore, is no longer good law. He cited the following decisions of the Apex Court which have also been relied upon by the learned Commissioner (Appeals) :-
1. Mihir Textiles Ltd. v. C.C., Bombay -1997 (92) E.L.T. 9 (S.C.) :
Exemption dependent upon satisfaction of certain conditions cannot be granted unless such conditions are complied with, even if such conditions are directory.
2. Indian Aluminium Co. Ltd. v. Thane Municipal Corporation - 1991 (55) E.L.T. 454 (S.C.) :
Non-observation of even a procedural condition cannot be condoned if it is likely to facilitate commission of fraud and introduce administrating inconvenience.
5. We have heard both sides and perused the case records. The appellants are finding fault with the lower authorities for following the principles laid down by the Apex Court in preference to decisions of C.E.G.A.T. and High Court. However, they offer no explanation as to why they could not follow the prescribed procedure for obtaining the exemption. The goods in question are subject to excise levy under the law of the land. The Central Government, under delegated legislation, makes rules and issues notifications granting exemption from such levy in suitable cases, and in the public interest, subject to such conditions and procedural safeguards as are deemed appropriate in each case. These need to be followed by tax officials as well as the assessees for ensuring orderly tax collection and grant of exemption. It can not be left to the whims and fancies of individual tax officials to determine in each case which are essential conditions and which are not. Similarly it cannot be left to the choice of the assessees as to which conditions they can ignore and yet get the exemption. Such a state of affairs, if allowed by this Tribunal, would lead to a state of chaos in tax administration. Once the Govt. in its wisdom lays down certain conditions for availing an exemption, the same must be satisfied in toto to get that exemption. The assessee has a choice not to follow the conditions, in which case he must pay the full levy as authorised under the law without claiming the exemption. He may even challenge the vires of the conditions before an appropriate court, but so long as the conditions remain unchallenged, those must be necessarily satisfied before the tax officials can allow such conditional exemption.
6. In the impugned case, since the appellants have not admittedly followed the prescribed Chapter X procedure, we hold that the lower authorities have rightly denied them the exemption which is conditional to following such procedure. Consequently, the appeal is dismissed.