2012 Supreme(SC) 38

Supreme Court of India
A.K. PATNAIK, ANIL R. DAVE
M/s Indian Oil Corporation Ltd.
Versus
Commissioner of Central Excise, Vadodara & Another
CIVIL APPEAL NOs. 4530-4532 OF 2005 WITH CIVIL APPEAL NO.8048 OF 2004
Decided on : 13-01-2012

Headnote:CIVIL APPEAL NOs. 4530-4532 OF 2005

       Central Excise Rules, 1944 – Chapter X – Rule 192 – Exemption – RCO produced by appellant was not to be used in the factory of the appellant – But by the Ahmedabad Electricity Company Ltd. at their place – Therefore procedure in Rule 192 was to be followed – Registration certificate of the user sine qua non for availing exemption – Ahmedabad Electricity Company not having certificate between 31.12.1995 and on cannot 26.06.1996 – Exemption cannot be claimed for that period – Appeal dismissed. (Para 7, 8)

       2010 (260) ELT 3 (SC) : (2011) 1 SCC 236 – Relied upon

       (1986) 2 SCC 501; (2005) (189) ELT 401 (SC); 2010 (260) ELT 3 (SC); House, 1992 (61) ELT 352 (SC) : (1990) 4 SCC 440; 1996 (87) ELT 582 (SC) : (1997) 10 SCC 224; 2000 (120) ELT 54 (SC) : (2000) 10 SCC 393 – Referred

       Facts of the case:

       The Ahmedabad Electricity Company Ltd. had obtained a registration certificate in Form CT-2 under Rule 192 of Chapter X of the Central Excise Rules, 1944 and on the strength of such registration certificate, purchased RCO from the appellant availing the exemption from excise duty under Notification No. 75/84 dated 01.03.1984 (for short `the exemption notification’). The registration certificate obtained by the Ahmedabad Electricity Company Ltd. expired on 31.12.1995 and a fresh registration was granted in its favour on 26.06.1996. After issuing two show-cause notices, the Assistant Commissioner of Central Excise passed two orders demanding excise duty of Rs. 32,35,485/- from the appellant for RCO supplied to the Ahmedabad Electricity Company Ltd. during the period 01.01.1996 to 25.06.1996 on the ground that the said company did not have a registration certificate in Form CT-2 under Rule 192 of Chapter X of the Central Excise Rules, 1944 during this period and, therefore, the RCO supplied by the appellant to the Ahmedabad Electricity Company Ltd. during this period was not exempt from excise duty. The appellant paid the excise duty and subsequently applied for refund contending that the registration certificate in Form CT-2 had been obtained by the Ahmedabad Electricity Company Ltd. on 26.06.1996. The refund claims were rejected by the Assistant Commissioner. Thereafter, the appellant filed appeals before the Commissioner of Central Excise (Appeals) who confirmed the demands of excise duty for the period from 01.01.1996 to 25.06.1996. The appellant then filed three appeals before the Tribunal against the orders of Commissioner of Central Excise (Appeals) confirming demand and the order rejecting the refund claim. By the impugned order, the Tribunal dismissed the appeals saying that as the statutory requirement of conditional exemption notification had not been complied with by the appellant it was not entitled to the exemption benefit.

       Finding of the Court:

       Appellant is not entitled to exemption for the period the user did not have the registration certificate.

       Result: Appeal dismissed.

       CIVIL APPEAL NO.8048 OF 2004

       (a) Exemption Notification – Naphtha produced by appellant in its factory was to be used for manufacture of fertilizer elsewhere – Exemption could be allowed only if procedure under Rule 3(1) of Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 was followed. (Para 6)

       (b) Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 – Rule 3(1) – Indo Gulf Fertilizer the manufacturer, in order to avail exemption, had to make application in form in Annexure -1 – Not done – Not entitled to exemption. (Para 7)

       Facts of the case:

       The appellant produces Naphtha. By the exemption notification the Central Government exempted Naphtha cleared for the use in the manufacture of fertilizers from excise duty subject to relevant conditions. One of the conditions was that where such use is elsewhere than in the factory of production, the exemption shall be allowed if the procedure set out in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 is followed. Rule 3(1) of the 2001 Rules required that a manufacturer, for receiving subject goods for specified use at concessional rate of duty, should make an application to the jurisdictional Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be.

       Indo Gulf Corporation Limited placed an order on 16.07.2001 on the appellant for supply of Naphtha for the purpose of manufacture of fertilizers and furnished a letter to the appellant saying it has made an application to the Commissioner of Excise for authorization for dispatch of one rake of Naphtha. The appellant supplied 2241.908 MT of Naphtha to Indo Gulf Corporation Limited.

       While clearing the aforesaid Naphtha from its factory did not make any payment of Central Excise duty.

       The Commissioner of Central Excise passed the order demanding duty amounting to Rs. 44,71,902/- on the Naphtha cleared on 16.07.2001 and also imposed a penalty equivalent to the duty amount.

       The appellant filed an appeal against the order of the Commissioner before the Tribunal. The Tribunal held that as the condition of the exemption notification has not been complied with, the appellant was not entitled to clear naphtha without payment of excise duty and accordingly sustained the demand of excise duty. The Tribunal also held that penalty was also imposable on the appellant, but on the facts and circumstances of the case the penalty was excessive. The Tribunal accordingly reduced the penalty to Rs.1,00,000/- only.

       Finding of the Court:

       Rule 3(1) not followed. Petitioner not entitled for exemption.