Judgment:
1. Hindustan Petroleum Corporation Ltd., Bombay has filed an appsal being aggrieved from Order No. V-Adj(M) R-243/80 of 29-10-1985 passed by Collector of Central Excise, Bombay-II.2. Briefly, the facts of the case are that Hindustan Petroleum Corporation Ltd., Bombay manufacture among other products transformer oil base stock (T.O.B.S.) classifiable under item No. 11A(4) of central excise tariff. The tariff rate of duty of this product was Rs. 3,500 per M.T. basic plus 5% of B.E.D. as special duty with effect from 1-3-1978 but effective rate of duty on the same was kept at Rs. 1172.50 per M.T. basic plus 5% of B.E.D. as special duty by virtue of Govt, of India notification No. 43/78, dated 1-3-1978. This notification was rescinded by a notification No. 288/79, dated 17-11-1979 and another notification No. 287/79, dated 17-11-1979 was introduced whereby the effective rate of duty on T.O.B.S. satisfying the specifications mentioned thereunder and intended for use in the manufacture of transformer oil, was maintained at Rs. 1172.50 per M.T. basic and 5% special duty, subject to the condition that where the use of such T.O.B.S. was elsewhere than in the factory of production, the procedure set out in Chapter X of the Central Excise Rules, 1944 was to be followed. The appellants did not themselves manufacture transformer oil. They supplied transformer oil base stock manufactured by them to various manufacturers of transformer oil. The appellants did not follow the procedure set out in Chapter X in relation to the supplies of T.O.B.S. until about the end of third week of January 1980. A show cause notice-cum-demand notice was issued to the appellants on 10-3-1980 for Rs. 1,28,10,978.48 being the differential duty between the tariff rate and the concessional rate on the quantity of 5242.076 M.Ts. of T.O.B.S. supplied by them to different manufacturers of transformer oil during the period from 17-11-1979 to 25-1-1980. The appellants vide their letter dated 17-4-1980 had disputed the liability to pay the amount of differential duty. It was contended by the appellants that the changes brought about vide notification Nos. 287/79 and 288/79, both dated 17-11-1979, were not known to them as well as to the central excise authorities till the third week of January 1980 ; and as such the procedure under Chapter X was not followed as required by notification No. 287/79, dated 17-11-1979. The appellant had further contended that failure to comply with the Chapter X procedure was not deliberate. The appellant started to follow the same as soon as it came to its knowledge. The appellant further stated that there was no loss of revenue since the duty incidence had been retained by the Government; and except for this unavoidable procedural lapse, they complied with all the other requirements under the said notification entitling them to the benefit of concessional rate of duly on transformer oil base stock supplied to the manufacturers of transformer oil. The learned Assistant Collector vide his Order No. V-llA(30)9/80, dated 4-7-1980 observed that the failure to comply with the stipulated procedure in relation to the supplies of T.O.B.S. made up to the end of January 1980 was not deliberate; that it was due to lack of information about the fresh notification issued and from the various notifications issued by the Govt, of India from time to time in relation to T.O.B.S.used by the industry in the manufacture of transformer oil; that the Govt, had continued to maintain the concessional rate of duty on T.O.B.S. used in the manufacture of transformer oil even in the context of fresh notification issued ; that in the present notification No.287/79 the procedure under Chapter X was required to be followed only to avoid the misuse of the concessional rate of duty. The Assistant Collector was convinced that the evidence produced before him regarding payment of duty and other requirements except the lapse regarding procedure prescribed under Chapter X. The Assistant Collector had held that though procedure under Chapter X was not complied with, the object and spirit of the notification was fully complied with. He did no! find any ground to sustain the demand for duty and had ordered the withdrawal of the demand. On perusal of the records of the case the learned Collector had issued a show cause notice under Section 35A (2) of the Central Excises and Salt Act, 1944 to the appellants on 5-12-1980 asking them to show cause as to why the impugned order in original of the Asstt. Collector of Central Excise, Bombay Div. MI should not be set aside and why the amount of Rs. 1,28,10,978.48 being differential central excise duty on T.O.B.S. cleared under concessional rate of duty without fulfilling the conditions of notification No.287/79 dt. 17-11-1979 should not be demanded and recovered from them under Rule 10 of the Central Excise Rules, 1944. In reply to the show cause notice the appellant had sent a reply vide their letter dated 5-1-1981 and had argued as under :- i) that the proposed action to set aside the impugned order of the Assistant Collector dated 4-7-1980 was unjustified; that the proceedings purported to be initiated under Rule 10 were without jurisdiction; (ii) that the Assistant Collector had held that the concessional rate of duty was applicable since there was compliance with the conditions laid down in the notification; that he had not relaxed the conditions; that there was no error of law and as such the provisions of Section 35A(2) cannot be invoked to set aside the impugned order of the Assistant Collector; that the order was correct, legal and proper; (iii) that they admitted the non-compliance of the procedure under Chapter X of the Central Excise Rules, 1944, as required to be followed by notification No. 287/79 dated 17-11-1979 for availing of the concessional rate of duty till 25th January, 1980, because of their ignorance about the changes brought about by the notification No. 287/79 and 288/79, both dated 17-11-1979, and also on part of their purchasers, as well as the central excise authorities; that they started following Chapter X procedure from 25-1-1980 soon after the knowledge about the change; that the failure was not deliberate but wholly unintentional; that the demand for differential duty on supplies of TOBS in question was unjust; (iv) that there was no strict compliance with Chapter X procedure but a substantial compliance with the procedure which would meet the requirements of the law and that the benefit of the concessional rate of duty in respect of the impugned clearances of TOBS could be extended to them; that the knowledge of the conditions of the notification to either excise authorities or the supplier or the manufacturers of transformer oil would have entirely changed the matter and when conditions relating to Chapter X were not known, it was impossible to comply with the conditions; that the Assistant Collector was competent to hold that the conditions of the notification were complied with in the circumstances; v) that Clause 3 of the proviso to notification No. 287/79 dated 17-11-1979 did not impose an independent condition; that the proviso must be considered with relation to the principal matter to which it stands as a proviso; that the proviso could not be construed as to attribute an intention to the legislature to give with one hand and to take away with other; vi) that they had produced necessary evidence such as the end use certificates of the T.O.B.S. duly authenticated by respective excise authorities to satisfy the Assistant Collector as regards meeting the specifications mentioned in Clause (1) of the proviso; that there was substantial compliance of the Chapter X procedure in material particulars, i.e., accountability of quantities of T.O.B.S. supplies to manufacturers of transformer oil; that the Collector would have certainly granted the permission to receive T.O.B.S. at concessional rate if the manufacturers had approached him; that the quantities of T.O.B.S. cleared to the manufacturers had been accounted for by them in the manufacture of transformer oil; that the exemption was clearly admissible to them; that they wished to rely upon the Government of India's decision in the case of M/s.
Patco Industries 1980 ELT 358; that in the order No. 118 dated 14-2-1980 the Govt, of India held that 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 the exemption thereunder should be denied.; that there was no legal infirmity in the impugned order of the Assistant Collector; vii) that the assumption that the condition regarding Chapter X procedure was a mandatory part of the enactment, the non-observance of which disentitles the assessee to the benefit of the concessional rate of duty, was unwarranted; that the provisions of Chapter X procedure are not mandatory but directory; that its substantial compliance was sufficient to achieve the purpose and object of such requirement; that a procedural requirement ordinarily should not be construed as mandatory; that the absence of strict compliance of Chapter X procedure would not make them non-eligible to claim concessional rate of duty; that there was no change in rate of duty by issuance of notification No. 287/79 dated 17-11-1979 ; that there was no loss of revenue; that the Assistant Collector was justified in holding that substantial compliance with the conditon was enough to entitle the assessee to claim the concessional rate of duty; that non-acceptance of the construction as suggested by them would result in injustice to innocent persons; that no consequences of non-compliance with the provision have been prescribed in the notification and as such it was clearly not mandatory; viii) that the present show cause notice was issued on 5-12-1980, i.e., after the 15th amendment omitting Rule 10 and introducing Section 11A and Section 11B with effect from 17-11-1980; that any proceedings for recovery of duty not levied or short-levied had to be instituted in accordance with the provisions of Section 11A of the said Act; that the impugned show cause notice issued under Rule 10 was invalid and illegal; that Rule 10 was deleted with effect from 17-11-1980 without introducing any saving Clause and as such no proceedings could be instituted under Rule 10 even in relation to the period prior to 17-11-1980; that in support they quoted the law laid down by full bench of the Punjab High Court in the case of M/s.
National Plannings v. Contributors AIR 1951 Punj 230 (FB).; that they quoted the Supreme Court's decision in the case of Rayala Corporation (P) Ltd v. Director of Enforcement AIR 1970 SC 494; that the pending cases under Rule 10 were not saved by Section 6 in the General Clauses Act; that no demand or show cause notice can be issued in exercise of the powers under Rule 10 ; ix) That the proceedings for recovery of duty were barred by limitation laid down in Section 11 A- of the said Act; that in this case the relevant dates from which limitation started were the dates on which the monthly returns were filed; that in respect of November, 1979, December, 1979 and January, 1980 the returns were filed within seven days after close of the month; that any action for recovery of duty short-levied or short-paid in any particular month should have been taken within six months from the date on which [the] respective return was filed; that the impugned show cause notice issued on 5-12-1980 covering a period from 17-11-1979 to 25-1-1980 was clearly time barred; that the proceedings instituted under Rule 10 may be dropped ; x) that the R.T. 12 assessments for November, 1979, December, 1979 and January, 1980 were finalised on 7-3-1980, 31-3-1980 and 24-4-1980 respectively; that even if the dates of final assessments were the relevant dates, the proceedings of recovery should have been instituted latest by 24-10-1980; that the impugned notice was invalid; that even apart from legality, there was no justification for raising a demand for the differential duty on supplies of TOBS in question; that they wanted to rely upon the grounds and contention given in their letter dated 17-4-1980 in reply to the show cause notice dated 10-3-1980 issued by the Supreintendent Central Excise, Range II, Division-M, Bombay; that they wanted to reiterate and rely upon those grounds and contentions; that during the proceedings before the Assistant Collector it was established with necessary evidence that the specifications mentioned in Clause (1) of the proviso to the notification were clearly met with; that regarding Clause (3) of the proviso they had submitted the end use certificates from the manufacturers of transformer oil to prove that those quantities cleared from their refinery to the respective factories of transformer oil were duly accounted for by the manufacturers ; that the Assistant Collector was fully convinced except for the technical requirement of obtaining permission from the Collector under Rule 192 by the manufacturer of transformer oil; that it was impossible for them as well as the transformer oil manufacturers to comply fully with the provisions of the notification in absence of the knowledge of the notification; that the order of the Assistant Collector was fully justified.
In addition to the reply to the said show cause notice at the time of personal hearing, the appellants had further pleaded that in the show cause notice the only allegation against the appellants was that they had failed to comply with the third condition of the notification which is related to the observance of the procedure prescribed under Chapter X of the Central Excise Rules. It was further argued that where in substance the procedure under Chapter X was followed by the assessee, the benefit of the notification should be allowed. It was also agitated that the demand was hit by limitation in terms of the provisions of Section 11A of the Central Excises and Salt Act, 1944 as the show cause notice was issued on 5-12-1980, i.e., after more than six months from filing of their return, which as per their contention, should be the relevant date in this case. It was also argued that the show cause notice was time-barred even from the date of assessment because the assessment in this case was completed on 29-4-1980. The learned Collector of Central Excise did not agree with the contentions of the appellant. He had observed that the demand of duty pertains to the period from 17-11-1979 to 25-1-1980 and during this period Rule 10 was in existence and therefore duty has been demanded under that rule. The Assistant Collector's order dated 4-7-1980 was taken for review by the Collector on 5-12-1980, i.e., within a period of 6 months as provided under Section 35A(2) of the Central Excises and Salt Act, 1944 and as such the review proceedings were not barred by limitation and the filing of the RT-12 returns cannot be taken into consideration for reckoning the period for issue of a notice under Section 35A(2) of the Central Excises and Salt Act, 1944. It was also argued that Rule 10 of the Central Excise Rules, 1944 was deleted on 17-11-1980 without any saving Clause and, therefore, no duty could be demanded from them under that rule. The learned Collector of Central Excise had observed that the right to demand duty short-levied under the repealed Rule 10 did not get extinguished after the introduction of Section 11A of the Central Excises and Salt Act, 1944 in its place. There was nothing in either Section 11A or in the notification introducing the said Section indicating any intention to affect any investigation, legal proceedings or remedy in respect of any right, obligation or liability acquired or incurred under the repealed Rule 10. Therefore, any investigation, legal proceedings or remedy in respect of such obligation or liability can be instituted, continued or enforced as if the notification introducing Section 11A and repealing Rule 10 has not been issued. He had relied on a judgment of the Supreme Court in the case of State of Punjab v. Moharsingh AIR 1955 SC where the Hon'ble Supreme Court had observed that the line of enquiry would be not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them.
The Hon'ble Supreme Court had also observed that application of Section 6 of the General Clauses Act is not ruled out when there was a repeal of amendment followed by fresh legislation unless the new legislation manifests an intention incompatible with or contrary to the provisions of the Section. Therefore, in the show cause notice issued under Section 35A(2) of the Central Excises and Salt Act, 1944 as then in existence, duty had been correctly demanded under Rule 10 of the Central Excise Rules, 1944 as in existence during the material period, i.e., 17-11-1979 to 25-1-1980 and was not barred by limitation. The right to review the Assistant Collector's order was very much in existence and available and continued to exist even when Rule 10 was repealed. The learned Collector had proceeded to review the same and observed that the appellant did not follow [the] third proviso of notification No. 287/79 dated 17-11-1979 in respect of the clearance of transformer oil base stock effected by them from 17-11-1979 to 25-1-1980. The appellant had claimed that there was substantial compliance of the third proviso to the notification as they were not aware of the provisions of the notification till 25-1-1980. The learned Collector of Central Excise had taken the view that an exemption notification has to be interpreted strictly. A notification is a composite whole and includes persons, if any. The learned Collector had held that the appellants were not eligible for the exemption claimed and obtained by them under the provisions of notification No. 287/79 dated 17-11-1979 and had held that they were liable to pay the duty which was correctly demanded from them. Accordingly he had held that order in original No. V-llA(30)9/80 dated 4-7-1980 passed by the Assistant Collector was not proper, legal and correct and required to be set aside. He had ordered the payment of central excise duty amounting to Rs. 1,28,10,978.48 by the appellants. Being aggrieved from the aforesaid order the appellants have come in appeal before the Tribunal.
3. Shri G. M. Badkar, Tax Manager with Shri D. P. Bhave, Jt. Tax Manager has appeared on behalf of the appellants. He has reiterated the facts and contentions made in the memorandum of appeal. Shri Badkar has stated that the appellant is having two refineries, namely at Bombay and Madras and besides other items the appellant manufactures transformer oil base stock and supplies the same to various manufacturers of transformer oil. Transformer oil base stock was being assessed to excise duty under tariff item 8 of the central excise tariff. He has referred to notification No. 187/75 dated 30-8-1975 which appears at page 6 of the paper book. He has pleaded that in terms of the said notification the transformer oil base stock or transformer oil feed stock falling under tariff item 8 of the First Schedule to the Central Excises and Salt Act, 1944 and intended for use in the manufacture of transformer oil, the appellant was entitled to concessional rate of duty and it was exempt from so much of the duty leviable thereon as was in excess of Rs. 45 per kilo litre at 15C. In terms of para. 3 of the said notification, the appellant was to follow the procedure set Out in Chapter X of the Central Excise Rules, 1944.
He has stated that the said notification was amended in terms of notification No. 345/77 dated 16-12-1977 which appears on page 5 of the paper book. In terms of the said notification the condition for the following of Chapter X procedure was dispensed with. He has also referred to notification No. 43/78-CE dated 1-3-1978 which appears on page 3 of the paper book and in terms of the said notifiation in the rate of duty was fixed at Rs. 1,172.50 per M.T. and the tariff item was also different, viz., tariff item 11A(4), mineral oil commonly known as T.O.B.S. (transformer oil base stock). He has argued that a simple perusal of the notification No. 43/78-CE reveals that even in this notification the appellant was not to follow the Chapter X procedure.
This notification No. 43/78 dated 1-3-1978 was further amended by notification No. 287/79 dated 17-11-1979 and the concessional rate of duty remained the same, viz., at the rate of Rs. 1172.50 per MT and in terms of this notification a proviso was added to para. 1 of the notification and paras. 2 and 3 were also added. He has argued that in terms of the amended notification No. 287/79 dated 17-11-1979 there was a condition in terms of para. 3 that where the use of such mineral oil for the intended purpose is elsewhere than in the factory of production, the procedure set out in Chapter X of the Central Excise Rules, 1944 was to be followed. Shri Badkar states that this notification did not come to the knowledge of the appellant and as such the appellant was under the honest belief that notification No. 43/78 dated 1-3-1978 was still in operation and he did not follow the Chapter-X procedure. This amended notification No. 287/79 dated 17-11-1979 only came to the knowledge of the appellant after the issue of a trade notice by the Collector of Central Excise, Bombay-II vide F.No. V-lIA(8)l/79-Bom-II dated 28-12-1979. This trade notice came to the knowledge of the appellant in the last week of January, 1980. He has argued that L-6 licences are with the consumers. Had the appellant known he could have very easily filed CT-2 certificates. He has referred to a judgment of the Tribunal in the case of Indian Oil Corporation, Begusarai v. Collector of Central Excise, Patna where the Tribunal had held that non-compliance of Chapter-X procedure is no bar for the concessional rate of duty where the other conditions of the notification are fulfilled. He has referred to another judgment of the Tribunal in the case of Friends Enterprises, Jamshedpur v. Collector of Central Excise, Patna where the Tribunal had held that where the goods were exempt from duty, demand was not justified merely on the ground of procedural lapse. He has pleaded that in the said case the appellant was to follow Chapter-X procedure vide notification No. 75/79-CE dated 1-3-1979. Because of some confusion, even prevailing earlier, the appellants continued to sell all their said goods to motor vehicle manufacturers, as usual, but without payment of duty as aiso without observing Chapter-X procedure till 27-3-1979 though they took the Central Excise Licence on 15-3-1979 and also obtained P.L.A. account on 23-3-1979. Shri Badkar states that the appellants are placed at a better position than the cases cited by him. He has referred to another judgment of the Government of India in the case of Patco Industries reported in 1980 ELT 358 where the Central Government had held that 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 was no reason why the benefit of exemption thereunder should be denied. He has also referred to the judgment of the Tribunal in the case of National Mechanical Works, Calcutta v. Collector of Central Excise, Calcutta reported in 1983 ELT 2370 where the Tribunal had held that Chapter-X procedure was not followed and the goods were cleared and received with the full knowledge of central excise officers at both the ends, demand of duty is not sustainable on the said technical grounds. Shri Badkar has argued that in view of the judgments cited by him the appellant should be given the benefit of notification No. 287/79 dated 17-11-1979 even though the appellant did not follow the Chapter-X procedure as the notification came to the knowledge of the appellant very late. He has argued that in case the appellant's argument for non-compliance of the provisions of Chapter-X procedure are not accepted, his alternative plea is that the proceedings are hit by limitation. In support of his arguments he has referred to a larger Bench decision of the Tribunal in the case of Collector of Central Excise, New Delhi and Ors. v. Fedders Lloyd Corporation Ltd., New Delhi and Ors.
461. He has pleaded that the Tribunal had held that the special period prescribed in Section 11A would apply to review show cause notices issued under the third proviso to Section 36(2) even if Section 11A had not been brought into force. He has referred to another judgment of the Tribunal in the case of Collector of Central Excise, Bangalore v. Mizar Govinda Annappa Pai & Sons reported in 1986 (7) ECR 196. He has pleaded that in the said case the Tribunal had held in para. 9(d)(iv) that the limitation prescribed in the second proviso commences to run from the date of the order proposed to be revised, the limitation in Section 11A, made applicable by reference in the third proviso, for the issue of a notice to show cause, starts from the "relevant date" as denned therein which, in the case, is the date of the order proposed to be revised. He has also referred to another judgment of the Gujarat High Court in the case of Amit Processors Pvt. Ltd., and Ors. v. Union of India reported in [1985] 6 ECC 211 (Guj) where the Hon'ble High Court of Gujarat had held that the action which was initiated under Rule 10(1) was concluded after the rule was omitted by the notification.
Government notification said that Rules 10, 11 and 173-J of the Rules shall be omitted. It did not say anything more than that anywhere in that notification. There was no saving provision in the notification with regard to actions already initiated in pursuance of Rule 10.
Therefore the order of the Assistant Collector was liable to be quashed. It was further held that Section 6 of the General Clauses Act only applied to repeals and not omissions, and applied when the repeal was of a Central Act or Regulation and not of a rule; and that Section 11A of the Act which was introduced simultaneously with effect from 17th November, 1980 would not save the act of the Assistant Collector.
He has pleaded that the Hon'ble Gujarat High Court had relied on the judgment of the Hon'ble Supreme Court in the case of M/s. Rayala Corporation Pvt. Ltd. v. The Director of Enforcement reported in AIR 1970 SC 494 and also of the Hon'ble Allahabad High Court judgment in the case of Ajanta Paper Products, Ratanpura v. Collector of Central Excise, Kanpur reported in 1982 ELT 201. Hon'ble Gujarat High Court had further held that an action under Rule 10 consisted of two parts, one was the initiation of proceedings and second was the conclusion of the proceedings. But before the proceedings came to be concluded, the power to conclude those proceedings disappeared from the scene. Therefore, it could not be contended that once action was initiated it could be said to have been taken under Rule 10 of the Rules. He has referred to the judgment of the Hon'ble Allahabad High Court in the case of Ajanta Paper Products, Ratanpura v. Collector of Central Excise, Kanpur reported in 1982 ELT 201. He had argued that this Allahabad High Court judgment has been followed by the Gujarat High Court. Shri Badkar the learned Authorised Representative has pleaded for the acceptance of the appeal.
4. Mrs. J. K. Chander, the learned JDR, has appeared on behalf of the respondent. She has referred to Chapter-X procedure. She has pleaded that in case the appellant had the intention of availing the benefit of the notification No. 287/79 dated 17-11-1979, the appellant should have followed Chapter-X procedure and in terms of the provisions of Rule 192 of Chapter-X, the appellant should have filed an application for concession which has not been done so far. She has pleaded that in terms of the provisions of Rule 156 of the Central Excise Rales, CT-2 certificate regarding consignee has to be produced. She has pleaded that Rule 156 lays down that. alongwith his application for the removal of goods, the consignor shall produce before the proper officer, a certificate in the proper form stating the particulars of Central Excise licences held by the consignee and the bonds, if any, executed by him. She has pleaded that since the appellant has not complied with the procedure and the formalities as laid down in Chapter X of the Central Excise Rules, 1944, the appellant is not entitled to the benefit of notification No. 287/79 dated 17-11-1979. She has pleaded that the judgment of the Tribunal in cases of Indian Oil Corporation v.C.C.E. Patna , Friends Enterprises v. C.C.E. Patna respondent's case as it is a settled law for the claim of benefit of a particular notification, the terms of the notification have to be strictly complied with. Mrs. J.K. Chander has opposed the point of limitation raised by the appellant. She has pleaded for the dismissal of the appeal.
5. In reply, Shri Badkar, the learned Authorised Representative, has again reiterated his arguments and has referred to page 15 of the supplementary paper book, which L-6 licence of Apar Pvt. Ltd (sic).
Shri Badkar has pleaded for the acceptance of the appeal.
6. We have heard both the sides and have gone through the facts and circumstances of the case. Transformer oil base stock is classifiable under tariff item 11A(4) of the central excise tariff. The tariff duty rate of this product was Rs. 3,500 per M.T. plus 3% of basic excise duty as special duty but effective rate of duty of the same was kept at Rs. 1172.50 per M.T. basic plus 5% of basic excise duty as special duty by virtue of Govt, of India notiftcaton No. 43/78 dated 1-3-1978. This notification was rescinded by notification No. 288/79 dated 17-11-1979 and another notification No. 287/79 dated 17-11-1979 and the effective rate of duty on T.O.B.S. remained the same, viz., Rs. 1172.50 per M.T.basic and 5% special duty subject to the condition that where the use of such T.O.B.S. was elsewhere than in the factory of production, the procedure set out in Chapter X of the Central Excise Rules, 1944, was to be followed. The appellant did not manufacture tranformer oil himself and was selling the same to L-6 licence holders. The amended notification No. 287/79 dated 17-11-1979 came to the knowledge of the appellant only after the issue of a trade notice dated 18-12-1979 and it came to the appellant's knowledge only in the last week of January and as soon as it came to appellant's knowledge, he started to comply with the condition as to the said notification, viz., started to follow Chapter-X procedure. The Assistant Collector of Central Excise in his order has duly accepted the fact that the appellant had made a substantial compliance with the procedure set out in the notification in force. Paras. Nos. 5, 6 & 8 from the order in original No.V-llA(30)9/80/5863 dated 4-7-1980 are reproduced below :- 5. From the various notifications issued by the Govt, of India from time to time in relation to T.O.B.S., it is apparent that all along it was the intention of the Govt, to extend the benefit of concessional rate of duty on T.O.B.S. used by the industry in the manufacture of transformer oil. Government has continued to maintain the concessional rate of'duty on T.O.B.S. used in the manufacture of transformer oil even in the context of the fresh notifications issued. The introduction of the condition of compliance with the procedure under Chapter-X for availing of the concessional rate of duty was ostensibly intended to safeguard the interest of the Revenue and to ward off the possible misuse of the product for purposes other than for the manufacture of transformer oil. In the circumstances it does not appear to me just and proper to deny the intended benefit only because of the unintended failure on the part of the parties concerned to comply with the procedural requirements under the notification in certain details which was beyond their control.
6. I have called for and seen the end use certificates obtained by M/s H.P.C. Ltd., from all the manufacturers of transformer oil to whom T.O.B.S. was supplied during the relevant period under consideration. The certificates which are verified and countersigned by the respective jurisidictional Range Supdt. show that the stocks of T.O.B.S. obtained by the parties were utilised by them exclusively in the manufacture of transformer oil.
8. In view of what is stated hereinabove, I am satisfied that though strict compliance with the procedure under Chapter-X could not be had in the cases under reference, the object and spirit of the notification have been fully met. Compliance with the procedure under Chapter-X was introduced with a view to ensure that T.O.B.S. procured at concessional rate of duty was in fact utilised for the stated purpose of manufacture of transformer oil and no abuse was made. I am satisfied in the light of the 'end use' certificates produced by the party that there has not been any misuse of the product. I am also convinced that the product satisfied the specifications laid down in the relevant notification. In the circumstances I do not consider the unintended non-compliance with certain details of the procedure should be allowed to come in the way of the manufacturers of transformer oil availing of the intended concessional rate of duty.
A simple perusal of the observations of the learned Assistant Collector shows that in substance the appellant had duly complied with the conditions laid down in notification No. 287/79 dated 17-11-1979 and in effect the appellant could not comply with the same earlier as he was not aware of the same. Our views are further fortified by the earlier judgments of the Tribunal particularly in the case of Indian Oil Corporation Ltd., Begusarai v. Collector oj Central Excise, Patna . Paras. Nos. 6, 10 and 12 from the said judgment are reproduced below :- 6. The sole question for determination in this case is whether the appellants had complied with the provisions of notification nos.
162/63-CE and 163/63-CE, both dated 21-9-1963 or not. As per these notifications, the L.D.O. consignments utilised for generation of electricity for public supply in power generating stations were completely exempted from the payment of basic andadditional excise duties.
10. As per the provisions of notification Nos. 162/63-CE and 163/63-CE, both dated 21-9-1933, the L.D.O. consignments utilised for generation of electricity for public supply in power generating stations are completely exempted from the payment of basic and additional excise duties.
12. The genuineness of this certificate given by the Superintendent, Central Excise, Katihar range has not been challenged or doubted by the department. As per this certificate it stands proved that the supply of the L.D.O. was made to Bihar State Electricity Board, Katihar, who utilised the same for generation of electricity for public supply. Both these conditions having been proved satisfy the provisions of notification Nos. 162/63-CE and 163/63-CE both dated 21-9-1963. No doubt, it is true that for this consignment of L.D.O. a GP-2 should have been prepared for its duty-free movement to the said power station under Chapter-X procedure of the Central Excise Rules, 1944. This was an error and everybody accepts it to be so.
But in our opinion this error is not serious enough to invalidate the entitlement of the oil to concessional assessment under the notifications. There is the fact that the consignment in dispute of the L.D.O. was actually delivered to Bihar Electricity Board Power House, Katihar on 10-2-1971 and this was duly entered in their Register and was used in the generation of electricity for public supply.
We do not find any force in the arguments of the learned Departmental Representative.
7. In view of the above discussion, we quash the impugned review order passed by the Collector of Central Excise, Bombay-II and quash the demand of Rs. 1,28,10,978.48 (Rupees one crore twenty eight, lakhs ten thousand nine hundred seventy eight and piise forty eight only) created against the appellant. The revenue authorities are directed to give consequential effect to this order.