Collector of Central Excise, Bombay Vs. M/s Shalimar Chemical Industries Pvt. Ltd.
EmailAppeal: Civil Appeal No. 2159 of 1991
(From the Judgment and Order No. 1123/90-C dated 24.10.1990 passed by the Customs, Excise and Gold (Control) Appellate Trib-unal, New Delhi in Appeal No. E/Appeal No. 2063/90-C)
(From the Judgment and Order No. 1123/90-C dated 24.10.1990 passed by the Customs, Excise and Gold (Control) Appellate Trib-unal, New Delhi in Appeal No. E/Appeal No. 2063/90-C)
Petitioner: Collector of Central Excise, Bombay
Respondent: M/s Shalimar Chemical Industries Pvt. Ltd.
Apeal: Civil Appeal No. 2159 of 1991
(From the Judgment and Order No. 1123/90-C dated 24.10.1990 passed by the Customs, Excise and Gold (Control) Appellate Trib-unal, New Delhi in Appeal No. E/Appeal No. 2063/90-C)
(From the Judgment and Order No. 1123/90-C dated 24.10.1990 passed by the Customs, Excise and Gold (Control) Appellate Trib-unal, New Delhi in Appeal No. E/Appeal No. 2063/90-C)
Judges: B.N. KIRPAL, RUMA PAL & BRIJESH KUMAR, JJ.
Date of Judgment: Nov 01, 2001
Appearances:
Mr. Mukul Rohtagi, Additional Solicitor General, Ms. Nisha Bagchi, Ms. Rekha Pandey, Mr. P. Parmeswaran, Advocates for the Appellants.
Mr. Pramod B. Agarwala, Ms. Shelly Kumar, Advocate for M/s Gagrat & Co., Advocates (NP) for the Respondents.
Head Note:
EXCISE
Central Excise Rules, 1944
Chapter X – Duty exemption – Benefit flowing from exemption no-tification – Insistence on production of end-user certificate when justified – Notification reducing duty on various items including Benzene, Toluene and Xylene for use in the manufacture of paints, varnishes, lacquers etc. – Notification providing that for availing the reduced rate of duty, the assessee should prove to the satisfaction of the Department that such goods are used for the intended use specified in the notification – Asses-see claiming exemption under the notification in respect of Benzene, Toluene and Xylene – Assistant Collector insisting on the production of user certificate showing manufacture of paints, varnishes, lacquers etc. – Tribunal holding that there was no justification for insisting on end-user certificate since the assessee was holding L6 licence for manufacturing solvents based on Benzene, Toluene and all types of thinners. Held, on appeal, Tribunal erred in holding so. In terms of the notification it was incumbent upon the assessee to satisfy the Department that there had been actual use of Benzene etc. in the manufacture of paint, varnish etc. In the absence of such proof, duty relief in terms of the exemption notification cannot be granted.
Held:
A bare reading of the notification dated 1st March, 1984 leaves no manner of doubt that the Assistant Collector of Central Excise had to be sastisfied, on proof being adduced, that the goods mentioned in the said notification were such goods that are used for the intended use specified in column (5). The in-tended use specified in column (5) of Benzene, Toluene and Xylene was inter alia for use as solvent or diluent or thinner for the manufacture of paints, varnishes, lacquers and allied materials. It was incumbent upon the respondent to satisfy the officer that there had been actual use of Benzene, etc., in the manufacture of paint, varnish, etc. One mode of satisfying the officer was to produce the end-user certificate which was not done. No other evidence was also led to show that the conditions laid down by the said notification of 1st March, 1984 had been satisfied. In the absence of any proof with regard to the actual user of Ben-zene, etc., in the manufacture of paint, varnish, lacquer, etc., no relief could have been granted to the respondent under this notification. (Para 7)
JUDGEMENT:
KIRPAL, J.
1. The challenge in this appeal is to the judgment of the Cus-toms, Excise and Gold (Control) Appellate Tribunal (CEGAT) which had come to the conclusion that the respondent was entitled to the benefit of an exemption notification dated 1st March, 1984 insofar as it related to manufacture of the goods described therein.
2. It is not in dispute that the respondent does not itself manufacture Benzene, Toluene and Xylene but it produces the same in accordance with the procedure set forth in Chapter X of the Central Excise Rules,1944 which allows the removal of the goods without payment of excise duty by the applicant on the applicant satisfying the conditions which would entitle it to the exemp-tion.
3. By the notification of 1st March, 1984, the effective rate of duty on various items mentioned in the said notification was reduced. The notification provides that such reduction of the rate of duty would be subject to the specified intended use or the conditions laid down in the corresponding entry in column (5) of the notification. The proviso to this notification with which we are concerned in this case reads as follows:-
“Provided that where any such exemption is subject to the intend-ed use, the exemption in such case shall be subject to the fol-lowing conditions, namely:-
(i) that it is proved to the satisfaction of an Officer not below the rank of the Assistant Collector of Central Excise that such goods are used for the intended use specified in column (5) of the said table; and
(ii) where such use is elsewhere than in the factory of produc-tion, the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed.”
4. Item No. 6.10 makes reference to Benzene, Toluene and Xylene along with other items with which we are not concerned and in column (5) against the said items it is provided that these goods should be intended for use “as solvent or diluent or thinner for the manufacture of paints, varnishes, lacquers and allied materi-als…..”
5. In the instant case, the respondent did not produce the user certificate showing the manufacture of paints, varnishes, lacqu-ers etc. from the Benzene which was obtained by it and as such its claim for the benefit of this notification dated 1st March, 1984 was not accepted. The appeal to the Collector having failed, the respondent filed a second appeal before CEGAT and the Tribun-al came to the conclusion that the notification of 1st March, 1984 was similar to the earlier notification of exemption of 1973, relevant portion of which was as under :-
“an officer not below the rank of Assistant Collector of Central Excise is satisfied that the motor spirit is intended for use as solvent or diluent or thinner for the manufacture of paints, varnishes, lacquers and allied materials or for use in painting; for the manufacture of adhesives, rubber solution, water proofing compositions and similar products, in the production of plastics; for degreasing or cleaning.”
6. The Tribunal then proceeded to hold that the respondent had obtained L-6 licence for manufacturing solvent based on Benzene and Toluene and all types of thinners and there was no justifica-tion to insist on the end-user certificate in terms of the no-tification of 1984. It was held that what was important was that Benzene, Toluene, etc. should be intended for use in the manufac-ture of paints, varnishes, etc. and the respondent was entitled to the benefit thereof.
7. We are unable to agree with the aforesaid conclusion of the Tribunal. A bare reading of the notification dated 1st March, 1984 leaves no manner of doubt that the Assistant Collector of Central Excise had to be sastisfied, on proof being adduced, that the goods mentioned in the said notification were such goods that are used for the intended use specified in column (5). The in-tended use specified in column (5) of Benzene, Toluene and Xylene was inter alia for use as solvent or diluent or thinner for the manufacture of paints, varnishes, lacquers and allied materials. It was incumbent upon the respondent to satisfy the officer that there had been actual use of Benzene, etc., in the manufacture of paint, varnish, etc. One mode of satisfying the officer was to produce the end-user certificate which was not done. No other evidence was also led to show that the conditions laid down by the said notification of 1st March, 1984 had been satisfied. In the absence of any proof with regard to the actual user of Ben-zene, etc., in the manufacture of paint, varnish, lacquer, etc., no relief could have been granted to the respondent under this notification.
8. For the aforesaid reason, this appeal is allowed and the judg-ment dated 24th October, 1990 of CEGAT is set aside.
9. There will be no order as to costs.
1. The challenge in this appeal is to the judgment of the Cus-toms, Excise and Gold (Control) Appellate Tribunal (CEGAT) which had come to the conclusion that the respondent was entitled to the benefit of an exemption notification dated 1st March, 1984 insofar as it related to manufacture of the goods described therein.
2. It is not in dispute that the respondent does not itself manufacture Benzene, Toluene and Xylene but it produces the same in accordance with the procedure set forth in Chapter X of the Central Excise Rules,1944 which allows the removal of the goods without payment of excise duty by the applicant on the applicant satisfying the conditions which would entitle it to the exemp-tion.
3. By the notification of 1st March, 1984, the effective rate of duty on various items mentioned in the said notification was reduced. The notification provides that such reduction of the rate of duty would be subject to the specified intended use or the conditions laid down in the corresponding entry in column (5) of the notification. The proviso to this notification with which we are concerned in this case reads as follows:-
“Provided that where any such exemption is subject to the intend-ed use, the exemption in such case shall be subject to the fol-lowing conditions, namely:-
(i) that it is proved to the satisfaction of an Officer not below the rank of the Assistant Collector of Central Excise that such goods are used for the intended use specified in column (5) of the said table; and
(ii) where such use is elsewhere than in the factory of produc-tion, the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed.”
4. Item No. 6.10 makes reference to Benzene, Toluene and Xylene along with other items with which we are not concerned and in column (5) against the said items it is provided that these goods should be intended for use “as solvent or diluent or thinner for the manufacture of paints, varnishes, lacquers and allied materi-als…..”
5. In the instant case, the respondent did not produce the user certificate showing the manufacture of paints, varnishes, lacqu-ers etc. from the Benzene which was obtained by it and as such its claim for the benefit of this notification dated 1st March, 1984 was not accepted. The appeal to the Collector having failed, the respondent filed a second appeal before CEGAT and the Tribun-al came to the conclusion that the notification of 1st March, 1984 was similar to the earlier notification of exemption of 1973, relevant portion of which was as under :-
“an officer not below the rank of Assistant Collector of Central Excise is satisfied that the motor spirit is intended for use as solvent or diluent or thinner for the manufacture of paints, varnishes, lacquers and allied materials or for use in painting; for the manufacture of adhesives, rubber solution, water proofing compositions and similar products, in the production of plastics; for degreasing or cleaning.”
6. The Tribunal then proceeded to hold that the respondent had obtained L-6 licence for manufacturing solvent based on Benzene and Toluene and all types of thinners and there was no justifica-tion to insist on the end-user certificate in terms of the no-tification of 1984. It was held that what was important was that Benzene, Toluene, etc. should be intended for use in the manufac-ture of paints, varnishes, etc. and the respondent was entitled to the benefit thereof.
7. We are unable to agree with the aforesaid conclusion of the Tribunal. A bare reading of the notification dated 1st March, 1984 leaves no manner of doubt that the Assistant Collector of Central Excise had to be sastisfied, on proof being adduced, that the goods mentioned in the said notification were such goods that are used for the intended use specified in column (5). The in-tended use specified in column (5) of Benzene, Toluene and Xylene was inter alia for use as solvent or diluent or thinner for the manufacture of paints, varnishes, lacquers and allied materials. It was incumbent upon the respondent to satisfy the officer that there had been actual use of Benzene, etc., in the manufacture of paint, varnish, etc. One mode of satisfying the officer was to produce the end-user certificate which was not done. No other evidence was also led to show that the conditions laid down by the said notification of 1st March, 1984 had been satisfied. In the absence of any proof with regard to the actual user of Ben-zene, etc., in the manufacture of paint, varnish, lacquer, etc., no relief could have been granted to the respondent under this notification.
8. For the aforesaid reason, this appeal is allowed and the judg-ment dated 24th October, 1990 of CEGAT is set aside.
9. There will be no order as to costs.
