D.C. Mandal, Member (T)

1. The facts of the case in brief are that the respondents manufacture gases falling under Central Excise Tariff Item 14-H and other goods falling under T.I. 68. They sent Inox expansion engines and Inox molecular sieve battery falling under Tariff Item 68 to their factory at Mandi Govindgarh under G.P. Nos. 64 and 65 dated 22-9-1982 claiming exemption of Central Excise duty under Notification No. 118/75-C.E., dated 30-4-1975, as amended by Notification No. 105/82-C.E., dated 28-2-1982. This exemption was available when the goods were sent to another factory after observing the procedure laid down in Chapter-X of the Central Excise Rules. In this case, the consignee factory at Mandi Govindgarh had not obtained L-6 licence before the goods were sent to them and there was also no CT-2 certificate. On arrival of the goods at the destination, the consignee factory gave an intimation of receipt of the goods to the Central Excise Officer. A show cause notice dated 18-12-1982 was issued to the respondents asking them to show cause as to why Central Excise duty amounting to Rs. 22,800/ should not be recovered from them and why penalty should not be imposed under Rule 9(2) of the Central Excise Rules, 1944 for contravention of Rules 173F, 173G(1) and 9(1) of Central Excise Rules inasmuch as they failed to determine the duty liability of those goods valued at Rs. 2,85,000 and to pay the duty before removing the goods from their Pune factory. They were also charged for contravention of Rule 173G(2) read with Rule 52A of the Central Excise Rules for removing the goods without valid transfer documents and without payment of duty. They were further charged for contravention of Rule 198(2) on the ground that they furnished misleading information regarding the admissibility of the benefit of Notification No. 118/75-C.E., dated 30-4-1975 as amended although the Mandi Govindgarh factory had no L-6 licence when the goods were sent to them. M/s. Industrial Oxygen Co. (P) Ltd., Mandi Govindgarh were asked to show cause as to why penalty should not be imposed on them for contravention of Rule 174 of Central Excise Rules read with Rule 192 and Section 6 of the Central Excises and Salt Act, 1944 by receiving non-duty paid goods without possessing appropriate licence.

2. On adjudication of the case, the Additional Collector accepted the respondents' contention that there was no mala fide intention in sending the goods without payment of duty. He observed that the respondents sent the goods without payment of duty under a bona fide belief that their unit at Mandi Govindgarh had obtained L-6 licence and C.T. 2 certificate and that they would have been eligible for exemption of duty but for want of L-6 licence and CT-2 certificate. He refrained from demanding duty on the goods which would have been cleared under the procedure set out in Chapter-X of the Central Excise Rules. He, however, imposed a penalty of Rs. 500 on the respondents under Rule 173Q of the Central Excise Rules for their failure to take proper care to ensure whether L-6 licence and C.T. -2 certificate were issued to their counterpart Mandi Govindgarh factory prior to despatch of the goods. Additional Collector absolved M/s. Industrial Oxygen Co. (P) Ltd., Mandi Govindgarh from the charge levelled against them.

3. In the appeal filed before us, the Collector of Central Excise, Pune has prayed that the Order-in-Original passed by the Additional Collector be modified, demanding Central Excise duty at the appropriate rate on the goods removed by the respondents to their Mandi Govindgarh factory.

4. Appearing for the Revenue, Shri Shishir Kumar has argued before us that the procedure laid down in Rule 192 of the Central Excise Rules was not followed in this case as there was no L-6 licence and C.T.-2 certificate before sending the goods. The benefit of exemption Notification No. 118/75-CE, as amended is, therefore, not admissible to the respondents. They should pay t