Full Judgment
2. We have heard Shri D.S. Negi, learned DR and perused the records. We find that the basis for the claim of the department that oxygen gas was cleared to M/s. Bajaj Gases in cylinders is in the gate passes, the number of cylinders have been indicated in the column (Sl. No. and description of packages). The capacity of cylinders has been shown as 6 cubic metre or 5.8 cubic metre in the Column (Average contents per package) and 'total quantity of the gate passes'. These gate passes are statutory records submitted by the assessees on the basis of which the department had finalised the assessments. There is no finding in the impugned order as to what was the material available before the Collector (Appeals) to come to the conclusion that gas was not supplied through cylinders and for extending the benefit of doubt to the assessees. When the gate passes clearly describe that the oxygen gas was supplied in cylinders, we hold that this is sufficient evidence for the department to raise the differential duty demand and accordingly, set aside the impugned order and allow the appeals.
3. I observe that in this case the basic issue relates to the payment of duty at the correct rate in respect of oxygen manufactured and cleared by the respondents. The department has alleged that they cleared the product in cylinders but paid the duty at the rate applicable to supplies through pipelines only and the difference was payable. The Collector (A) has observed that the full facts had not been duly verified by the A.C. and allowed the respondent's appeal giving the benefit of doubt. Ld. DR has drawn attention to the grounds of appeal mentioned in the department's memo and emphasised that the gate passes show that the gas was cleared in cylinders but the duty has not been paid at the appropriate rate applicable to such supplies but at lower rate applicable to supplies through pipelines.
4. No one has appeared for the respondents. However, a copy of the submissions made by the respondents before the A.C. in reply to the show cause notice is available on record in which it has been mentioned inter alia as follows :- 23/T/H/2815/TAML/R-I/LDH/88 for the manufacture of Oxygen Gas and supplying through pipeline falling under T.I. No. 2804.12. We had supplied the gas through pipeline to M/s. Bajaj Gases who were engaged in filling the gas cylinders and were paying duty @ 0.79 paise during April-May, 1989 whereas M/s. Thapar Agro Mills Ltd. were paying duty @ 0.32 paise for the gas supplied through pipeline, for the material period mentioned above.
From the above, it is evident that we have supplied oxygen gas through pipeline to M/s. Bajaj Gases who were filling the same in cylinders. In order to know as to how much oxygen Gas was filled in cylinders 600 cubic metre was taken into consideration for the payment of duty by M/s. Thapar Agro Mills Ltd. So we have correctly paid the duty on the clearance of gas through pipeline and the gas was not cleared in cylinders as alleged in the show cause notice.
Therefore, the demand of Rs. 16,294.39 is not due at all." These submissions were taken note of by the A.C. but the ld. Collector has observed that the A.C. has not verified the facts which were required to be checked up in view of the assessees above submissions. I consider that if this was the view of the Collector (A) then it would have been more appropriate on her part to have remanded the matter for further verification but she has not done so. Instead she has given benefit of doubt to the appellants which appear to be a premature consideration if further verification of facts was required.
5. The department has mainly based its case on the GP 1, which are statutory documents required to cover the clearances. Once the department had taken this stand and put the respondents on notice the burden in the circumstances shifted on the assessee.
6. The manner and method of supply is important in view of the tariff structure, the relevant portion of which reads as follows :-28.04 Hydrogen, rare gases and other non-metals Oxygen (incl. liquified or solidified gas): 7. The period involved is from January, 1989 to March, 1989 and the rate of basic excise duty on oxygen gas supplied in cylinders was 0.75 paise per cubic metre of the gas at normal temperature of 15C, during January and February, 1989 (tariff rate being the effective rate) and 0.79 paise per cubic metre of the gas at normal temperature of 15C in March, 1989; but the assessee had cleared the gas only @ 0.32 paise per cubic metre of the gas at the normal temperature 15C.8. In view of the above position, it was necessary that facts regarding the method and manner of supply were required to be ascertained as rightly observed by the Collector (A). However, as noted above, the respondents had not discharged the burden either at the original or the appellate stage.
10. Even at this stage no evidence in support of their contentions raised in reply to show cause notice has been filed to show that the gas was actually supplied through pipeline to their customers and it is the customers who had filled the same in cylinders. Further if the gas was actually supplied through pipeline the position was required to be reflected in statutory documents and the GP 1 were required to show the manner of clearance and the appropriate rate of duty keeping in view [of] the tariff structure.
11. In the circumstances, the A.C. could not be faulted if he had taken the GP 1 into account and holding that the duty was payable at the higher rate applicable to clearances in cylinders.
12. In view of the above position the Collector (A) had erred in extending the benefit of doubt. Order-in-appeal is therefore set aside and the appeal accepted as already announced in the open court.