Commissioner of Central Excise Vs. Saboo Cylinders (P) Ltd.

1. The issue involved in this Appeal filed by Revenue is whether the refund of Central Excise duty is payable by M/s. Saboo Cylinders (P) Ltd. 2. Shri D N Choudhary, Senior Departmental Representative submitted that the respondents manufacture LPG Cylinders; that they had cleared the cylinders to M/s. Bharat Petroleum Corpn. Ltd. at the contractual price of Rs.535 and paid duty at the tariff rate of 16%; that they were required to pay concessional rate of duty under Notification No. 9/02-C E dated 1.3.02; that the Assistant Commissioner under Order-in-Original No.11/03 dated 21.10.2003 denied the refund of duty on the ground that benefit of Notification No.9/02 was not available to the respondents as they had not exercised the option in writing for availing the benefit of Notification; that, however, on Appeal filed by the respondents, Commissioner (Appeals) under the impugned order has allowed the refund claim to the respondents holding that substantial benefit can not be disallowed for non-filing of option, Relying upon the decision of the Tribunal in the case of Keshari Wire Products (P) Ltd. vs. CCE Patna [2003 (55) RLT 834 (CEGAT)]. Learned Senior Departmental Representative further submitted that Para 2 of Notification No.9/02 specifically provides that the exemption shall apply only subject to the condition that a manufacturer who intends to avail the exemption under this Notification shall exercise his option in writing for filing the exemption before effecting the first clearance and such option shall be effective from the date of exercise of option and shall not be withdrawn during the remaining part of the financial year; that as this condition has not been complied with by the respondents, the question of extending the benefit of Notification to them does not arise. He relied upon the decision of the Supreme Court in the case of Eagle Flask Industries Ltd. vs. CCE Pune, wherein it has been held that conditions specified in the Notifications are to be strictly complied with for availing its benefit. Reliance. has also been placed in the case of PAM Instruments Pvt. Ltd. vs. CCE, Delhi III [2002 (148) ELT 944 (Tri-Del)] wherein it has been held that "the law enjoins that procedure stipulated in Chapter X had to be followed. Since the procedure was not followed by the Appellant the benefit of Notification No.9/99 was not available to the assessee." He mentioned that the Tribunal in the said decision has followed the ruling of the Apex Court in the case of CCE ahmedabad vs. Cadila Laboratories (P) Ltd. [2002 (142) ELT 279 (SC)].

3. Shri K K Anand, learned Advocate, on the other hand, contended that as per the value of clearance effected by the respondents, they were eligible for the benefit of concessional rate of duty under Notification No.9/02; that mere non-filing of option should not de-bar them from availing the benefit of Notification; that substantial benefit can not be disallowed for mere procedural lacuna.

4. We have considered the submissions of both the sides. Notification No.9/2002 CE provides concessional rate of duty subject to the conditions specified in Para 2 of the said Notification. The benefit of Notification is available only, as per Para 2 (i) of the Notification, on fulfillment of the following conditions: (iii) The option shall be effective from the date of exercising of option; and (iv) Manufacturer can not withdraw the option during remaining part of the financial year.

5. It is not the case of the respondents that they have ever-exercised the option during the relevant period. As they have not exercised the option, they are de-barred from taking the benefit of concessional rate of duty under the Notification as the notification applies only subject to the fulfillment of the conditions specified therein. The highest Court of the land has upheld this view in the case of Cadila Laboratories Ltd. Wherein the Supreme Court has held that even if there is right with the assessee to get exemption, the law enjoins that the procedure stipulated in Rule 56A of the Central Excise Rules, 1944 has to be followed and as the respondents did not follow the procedure, the benefit of Notification is not available to them. Similar views have been expressed by the Supreme Court recently in the case of Eagle Flask Industries Ltd (2004-TIOL-74-SC-CX) wherein the exemption notification require the assessee to make a declaration and give an undertaking as specified in the form annexed while claiming exemption for the first time and thereafter before the 15th day of April of each financial year. In that matter, the declaration and the undertaking were not submitted by the assessee. The Supreme Court has held that the declaration undertaken was not an empty formulation. "It is the foundation for availing the benefit under the Notification, it can not be said that they are mere procedural requirements with no consequences attached for non-observance. The consequences are denial of benefit under Notifications for availing benefit under exemption notification, the conditions are to be strictly complied with." The Supreme Court, therefore, did not find merit in the Appeal and dismissed the same. In view of these judgments of the highest Court of Land, the decision in the case of Keshari Wire Products (P) Ltd. is not applicable. We, therefore, hold that the benefit of Notification No.9/2002 CE was not available to the respondents and accordingly the question of refund of any duty to them does not arise. We, therefore, set aside the impugned order and allow the Appeal filed by the Revenue.