Indian Oxygen Limited Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. the appellants submitted a refund claim for rs. 40,035.87 on account of central excise duty paid on the clearances of liquid oxygen gas supplied to indian iron and steel company (in short hsco) limited, kulti from 1.4.1982 to 10.6.1982. m/s. iisco limited used to receive supplies of oxygen gas free of duty from the appellants under notification no. 224/75-c.e., dated 15.11.1975 which provided that oxygen gas falling under t.i. 14h of c.e. tariff was exempted from the payment of the whole of central excise duty provided that the gas was used in the factory of production for the manufacture of products falling under t.i. 25, 26 and 26aa, and if such use was elsewhere than in the factory of production, then the procedure set out in chapter x of the central excise rules was to be observed. the refund claim was submitted on the ground that chapter x procedure was followed in respect of the clearances made during the period from 1.4.1982 to 10.6.1982, and hence no duty was payable thereon in terms of the above notification. the assistant collector of central excise rejected the refund claim on the ground that chapter x procedure was not followed in as much as there were no valid c.t.-2 certificate and b-8 bond, and hence the benefit of the notification was not available. an appeal filed against that order was dismissed by the collector of central excise (appeals) by the impugned order.2. we have heard shri mathur for the appellants and shri sunder rajan for the respondent. shri mathur has argued that under chapter x procedure the requirements were:- he has stated that the appellants observed all the above requirements.permission under rule 192 was obtained and the c.e. l-6 licence was granted. chapter x procedure did not require a c.t.-2 certificate, but still the appellants had a c.t.-2 certificate which was current and a second c.t.-2 certificate was not necessary. b-8 bond was valid and the bank security covered the period in question. the appellants maintained rg-16 and submitted r.t.-11 returns to the central excise authorities.he has, therefore, submitted that the refund claim is admissible. he has relied on the decisions reported in [1985 (21) elt 727 and 1980 elt - p. 358 (g.o.i.)].3. shri sunder rajan has argued that the second proviso to the notification no. 224/75-c.e., required that chapter x procedure should be followed. l-6 licence holder did not comply with the procedure.there is no provision to refund duty paid in this case.4. we have considered the records placed before us and the arguments of both sides. the relevant provisions applicable to the facts of the present case are rules 192, 193 and 194 of the central excise rules.the requirements under rule 192 are that (i) a permission to avail of the procedure under chapter x and a central excise licence are to be obtained and (ii) bond with adequate surety/security is to be furnished. from the copies of the documents filed before us we find that l-6 licence no. l-6 no. 1/oxygen/iisco ii/kulti/78 dated 6.7.1978 issued under rules 174 and 192 in favour of m/s. indian iron and steel co. ltd., kulti for receiving duty free supplies of liquid oxygen gas for the manufacture of iron and steel products was valid for 1981- 1983 by virtue of its renewal on 5.2.1981 and for the period 1984- 1986 because of renewal on 1.12.1983. the bank guarantee no. 490/79 dated 31.8.1979 for rs. 35,000/- was extended by the state bank of india, at the request of iisco ltd. upto 31.3.1983. the extended bank guarantee was submitted by the indian iron & steel co. ltd. to the inspector, central excise, kulti on 6.3.1982 with the request that a fresh c.t.-2 certificate might be issued at the earliest to enable them to obtain supplies of liquid oxygen. we also observe from the copy of the c.t.-2 certificate placed at page 7 (annexure-g) of the documents filed by the appellants that the c.t.-2 certificate issued by the central excise officer was made effective from 1.4.1982 and valid upto 31.3.1983 against the aforesaid bank guarantee no. 490/79. the clearances of liquid oxygen during the period from 1.4.1982 to 10.6.1982 are, therefore, covered by this c.t.-2 certificate. the indian iron & steel co. ltd. applied for the c.t.-2 certificate on 6.3.1982 while submitting the extended bank guarantee to the inspector, central excise, kulti. they applied for the certificate well in time, but the central excise officer abnormally delayed the issue of the certificate.as, however, he made the certificate effective from 1.4.1982, the same covered the disputed period. thus the requirements of rule 192 were fulfilled in this case.5. rule 193 ibid provides that the goods obtained under rule 192 shall be transported immediately from the supplying to the processing factory. the goods are also required to be covered by the transport permit. there is no dispute about the fulfilment of these requirements in this case.6. rule 194 requires that the goods on receipt, should be stored in the store room, a register in proper form should be maintained showing the quantity of excisable goods received in the store room and quantity used in the industrial process, each consignment of goods should be stored separately, distinctly marked, and a monthly return should be submitted within 7 days after the close of the month. shri mathur has stated that necessary accounts in rg-16 was maintained and return in r.t.-11 was filed. it has not been argued before us that the goods were not stored in the manner required under this rule. we, therefore, observe that the requirements of chapter x of the central excise rules were fulfilled and the goods cleared during the period from 1.4.1982 to 10.6.1982 from the appellants' factory and supplied to iisco ltd. were eligible to the exemption under notification no. 224/75-c.e., dated 15.11.1975. shri sunder rajan for the revenue has argued that there is no provision for refund of duty paid in this case. we are unable to accept this argument. the appellants were compelled to clear the goods on payment of duty in view of the superintendent of central excise, asansol's letter no. c.no. ce/oxy-da/20/hpgr/81/247 dated 29.4.1982 to them. as the c.t.-2 certificate was made effective from 1.4.1982, the realisation of duty on the clearances made from 1.4.1982 to 10.6.1982 was erroneous and the appellants were entitled to get refund of the same, the refund claim was filed on 10.8.1982, within the time limit of six months.7. in the light of the above discussions, we set aside the impugned order and allow this appeal with consequential refund of duty to the appellants.

Judgment:
1. The appellants submitted a refund claim for Rs. 40,035.87 on account of central excise duty paid on the clearances of liquid Oxygen gas supplied to Indian Iron and Steel Company (in short HSCO) Limited, Kulti from 1.4.1982 to 10.6.1982. M/s. IISCO Limited used to receive supplies of oxygen gas free of duty from the appellants under Notification No. 224/75-C.E., dated 15.11.1975 which provided that oxygen gas falling under T.I. 14H of C.E. Tariff was exempted from the payment of the whole of central excise duty provided that the gas was used in the factory of production for the manufacture of products falling under T.I. 25, 26 and 26AA, and if such use was elsewhere than in the factory of production, then the procedure set out in Chapter X of the Central Excise Rules was to be observed. The refund claim was submitted on the ground that Chapter X procedure was followed in respect of the clearances made during the period from 1.4.1982 to 10.6.1982, and hence no duty was payable thereon in terms of the above notification. The Assistant Collector of Central Excise rejected the refund claim on the ground that Chapter X Procedure was not followed in as much as there were no valid C.T.-2 certificate and B-8 bond, and hence the benefit of the notification was not available. An appeal filed against that order was dismissed by the Collector of Central Excise (Appeals) by the impugned order.

2. We have heard Shri Mathur for the appellants and Shri Sunder Rajan for the respondent. Shri Mathur has argued that under Chapter X Procedure the requirements were:- He has stated that the appellants observed all the above requirements.

Permission under Rule 192 was obtained and the C.E. L-6 licence was granted. Chapter X Procedure did not require a C.T.-2 certificate, but still the appellants had a C.T.-2 certificate which was current and a second C.T.-2 certificate was not necessary. B-8 bond was valid and the bank security covered the period in question. The appellants maintained RG-16 and submitted R.T.-11 returns to the Central Excise authorities.

He has, therefore, submitted that the refund claim is admissible. He has relied on the decisions reported in [1985 (21) ELT 727 and 1980 ELT - P. 358 (G.O.I.)].

3. Shri Sunder Rajan has argued that the second proviso to the Notification No. 224/75-C.E., required that Chapter X Procedure should be followed. L-6 licence holder did not comply with the procedure.

There is no provision to refund duty paid in this case.

4. We have considered the records placed before us and the arguments of both sides. The relevant provisions applicable to the facts of the present case are Rules 192, 193 and 194 of the Central Excise Rules.

The requirements under Rule 192 are that (i) a permission to avail of the procedure under Chapter X and a central excise licence are to be obtained and (ii) bond with adequate surety/security is to be furnished. From the copies of the documents filed before us we find that L-6 licence No. L-6 No. 1/Oxygen/IISCO II/Kulti/78 dated 6.7.1978 issued under Rules 174 and 192 in favour of M/s. Indian Iron and Steel Co. Ltd., Kulti for receiving duty free supplies of liquid oxygen gas for the manufacture of iron and steel products was valid for 1981- 1983 by virtue of its renewal on 5.2.1981 and for the period 1984- 1986 because of renewal on 1.12.1983. The bank guarantee No. 490/79 dated 31.8.1979 for Rs. 35,000/- was extended by the State Bank of India, at the request of IISCO Ltd. upto 31.3.1983. The extended bank guarantee was submitted by the Indian Iron & Steel Co. Ltd. to the Inspector, Central Excise, Kulti on 6.3.1982 with the request that a fresh C.T.-2 certificate might be issued at the earliest to enable them to obtain supplies of liquid oxygen. We also observe from the copy of the C.T.-2 certificate placed at Page 7 (Annexure-G) of the documents filed by the appellants that the C.T.-2 certificate issued by the Central Excise Officer was made effective from 1.4.1982 and valid upto 31.3.1983 against the aforesaid bank guarantee No. 490/79. The clearances of liquid oxygen during the period from 1.4.1982 to 10.6.1982 are, therefore, covered by this C.T.-2 certificate. The Indian Iron & Steel Co. Ltd. applied for the C.T.-2 certificate on 6.3.1982 while submitting the extended bank guarantee to the Inspector, Central Excise, Kulti. They applied for the certificate well in time, but the Central Excise Officer abnormally delayed the issue of the certificate.

As, however, he made the certificate effective from 1.4.1982, the same covered the disputed period. Thus the requirements of Rule 192 were fulfilled in this case.

5. Rule 193 ibid provides that the goods obtained under Rule 192 shall be transported immediately from the supplying to the processing factory. The goods are also required to be covered by the transport permit. There is no dispute about the fulfilment of these requirements in this case.

6. Rule 194 requires that the goods on receipt, should be stored in the store room, a register in proper form should be maintained showing the quantity of excisable goods received in the store room and quantity used in the industrial process, each consignment of goods should be stored separately, distinctly marked, and a monthly return should be submitted within 7 days after the close of the month. Shri Mathur has stated that necessary accounts in RG-16 was maintained and return in R.T.-11 was filed. It has not been argued before us that the goods were not stored in the manner required under this Rule. We, therefore, observe that the requirements of Chapter X of the Central Excise Rules were fulfilled and the goods cleared during the period from 1.4.1982 to 10.6.1982 from the appellants' factory and supplied to IISCO Ltd. were eligible to the exemption under Notification No. 224/75-C.E., dated 15.11.1975. Shri Sunder Rajan for the Revenue has argued that there is no provision for refund of duty paid in this case. We are unable to accept this argument. The appellants were compelled to clear the goods on payment of duty in view of the Superintendent of Central Excise, Asansol's letter No. C.No. CE/Oxy-DA/20/HPGR/81/247 dated 29.4.1982 to them. As the C.T.-2 certificate was made effective from 1.4.1982, the realisation of duty on the clearances made from 1.4.1982 to 10.6.1982 was erroneous and the appellants were entitled to get refund of the same, the refund claim was filed on 10.8.1982, within the time limit of six months.

7. In the light of the above discussions, we set aside the impugned order and allow this appeal with consequential refund of duty to the appellants.