2005 (98) ECC 19 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

East Regional Bench : Kolkata

Shri V.K. Jain, Member (T) and Shri M.P. Bohra, Member (J)

I.O.C. Ltd.

Versus

Commissioner of Central Excise, Cal-II

Appeal No. E/247/96

[Arising out of Order No. 16/Ch. 27/Commissioner/CE/Cal.II/Adjn/96 dated 20.5.96 passed by Commr. of Central Excise, Cal.II]

Order No. A-384/KOL/2004, dt. 17.6.2004, Certified on 28.6.2004

Demand (C. Excise)

Export -- The factum of export has been admitted by the Customs authorities. The Department's grievance is that the Superintendent of Central Excise did not attend the export. It was not required. The appellant was governed by self-removal procedure and to such cases Rule 173-O was applied. The Commissioner is competent to relax the procedural provision under Rule 12/13 of the Central Excise Rules, 1944. Hence it was not desirable to raise the demand towards the Central Excise duty on the ground of procedural irregularities -- Sec. 11A of CEA.

Appeal allowed

PRESENT :

Shri S.K. Bagaria, Sr. Adv. for the appellant.

Shri J.R. Madhiam, JDR for the respondent.

Per : M.P. Bohra

This appeal has been filed against the order of Commissioner of Central Excise, Kolkata II passed on 20.5.1996.

2. Brief facts of the case are that the appellant is manufacturing petroleum products and during production, Straight Run Naptha (in short SRN) arises as a necessary consequence which is stored in large storage tanks at the refinery. It is either sold in the domestic market or it is exported. Export is done by the Government of India who invites Global Tenders. During the year, 1994, the storage tanks were full and there was no buyers of SRN and if SRN was not cleared, then the refinery operations would have come to stoppage. In the above circumstances, SRN was cleared from the refinery for export, though the country of export and export vessels were not known as yet. Subsequently, the goods were exported.

3. The Assistant Commissioner of Central Excise, Midnapore and Superintendent of Central Excise, Haldia, were informed about the loading of SRN to tanker Jagpriya on 14.1.94 and provisionally AR 4A and GP 2 for the quantity to be removed from the storage tanks were prepared. It was informed that the AR 4A will be finalized immediately on finalization of the export market and export vessel and in case, if the export takes place in quicker succession, AR-4A, will be finalized immediately on completion of export. The entire consignment of M.T. Jagpriya, loaded in the export vessel to M.T. Athenian Victory at Visakhapatnam on 25.1.94 and documents were filed with the Excise Authorities. On 27th April, 1994, a show-cause notice was issued. Commissioner of Central Excise, Kolkata II, by its order dated 20th May, 1996, confirmed Central Excise duty demand of Rs. 4,48,54,765.63 and a penalty of Rs. 40,00,000. The appellant preferred this appeal against this Order.

4. We have heard Shri S.K. Bagaria, Ld. Sr. Advocate for the appellants and Shri J.R. Madhiam, Ld. JDR for the Revenue.

5. Ld. Sr. Advocate, Shri Bagaria, submits that the fact of export has been admitted in the show-cause notice as well in the impugned order. In the show-cause notice clearly admits that the appellants had exported the said goods. The Commissioner in his Order has recorded that after the export, the appellant furnished all export documents, i.e. Ship's Indent, Destination of Export, Accountal of SRN Exported, Transhipment and Tanker Ullage Report, Bill of Lading, Shipping Bill etc. duly endorsed by the Customs Authorities. `He submits that when the goods were in fact exported and the fact of export has been admitted by the lower authorities, there was not scope to raise any demand towards Central Excise duty due to any alleged procedural irregularities. He has relied upon the following decisions of the Tribunal and the Government of India :

1. 1998 (99) ELT 387 (Tri.)

2. 1999 (111) ELT 295 (G.O.I.)

3. 2001 (131) ELT 726 (G.O.I.)

4. 2001 (136) ELT 467 (Tri.-Del)

5. 2001 (137) ELT 1106 (Tri.-Chennai)

6. 2001 (137) ELT 1136 (Tri.-Kol)

7. 2002 (147) ELT 626 (Tri.-Del.)

8. 1996 (86) ELT 600 (Tri.)

9. 1994 (74) ELT 468 (G.O.I.)

10. 1999 (106) ELT 124 (Tri.)

11. 2001 (135) ELT 1306 (Tri.-Del.)

12. 1991 (54) ELT 319 (G.O.I.)

13. 2000 (115) ELT 855 (G.O.I.)

He also submits that the procedural irregularities took place due to circumstances beyond the appellant's control. There was a shortage of storage tank and there was not domestic demands. In these circumstances, the goods were cleared without prior approval of the Excise authorities. He further submits that in the instant case, there was no scope to levy any penalty upon the appellants. He, therefore, submits that the appeal may kindly be allowed after setting aside the duty and penalty.

6. Ld. SDR, Shri J.R. Madhiam, reiterates the findings of the Commissioner and submits that it was incumbent upon the appellant to take prior approval of export. In the instant case, the export has been made without prior approval of the Excise authorities and the goods were removed without their permission. Under the circumstances, the Commissioner has rightly imposed the duty and penalty upon the appellants. Accordingly, he prays that the appeal may kindly be rejected.

7. In the present case, the goods which were exported were Naptha. The appellants' export are governed by the Government of India by inviting Global Tenders and all activities were control by Oil Co-ordination Committee functioning under Ministry of Petroleum, Government of India. Under the circumstances, the export was totally control by the Government of India by inviting Global Tenders. There was no domestic demand of SRN and the appellant was under constrain to undertake the loading of SRN to tank Jagpria immediately. Otherwise, the refinery had to stop the production. The fact was conveyed to Excise authorities i.e. Assistant Commissioner of Central Excise, Midnapore Division and Superintendent of Central Excise, Range Hodia on 13th January, 1994. The factum of export had been admitted by the Excise authorities. The appellants had followed the procedure. They have exported SRN under bond clearances on which provisional AR 4A and GP 2 were prepared. They have regularised AR 4A duly signed by the Customs authorities and the goods were shipped under Customs supervision. The Customs authorities signed delivery advances and the Commissioner had admitted that all these documents were filed. In the present case, the factum of export had been admitted by the Excise authorities. Then there was no scope to raise any demand towards Central Excise duty due to any alleged procedural irregularities. Reliance can be placed on the following decisions of the Tribunal:

1. 1998 (99) ELT 387 (Tri.)

2. 2001 (136) ELT 467 (Tri.Del)

3. 2001 (137) ELT 1106 (Tri.Chennai)

4. 2001 (137) ELT 1136 (Tri.Kol)

5. 2002 (147) ELT 626 (Tri.-Del.)

6. 1996 (86) ELT 600 (Tri.)

7. 1999 (106) ELT 124 (Tri.)

8. 2001 (135) ELT 1306 (Tri.Del).

The Government of India in its Revisionary jurisdiction has also held that the procedural lapses are condonable in the interest of export promotion and rebate claim be allowed. Reliance can be placed on the following decisions of the Government of India :

1. 1999 (111) ELT 295 (G.O.I.)

2. 2001 (131) ELT 726 (G.O.I.)

3. 1994 (74) ELT 468 (G.O.I.)

4. 1991 (54) ELT 319 (G.O.I.)

5. 2000 (115) ELT 855 (G.O.I.)

In the present case, the factum of export has been admitted by the Customs authorities. Even in the show-cause notice, it has been admitted. The Commissioner in his order has also admitted that the documents had been filed and the fact of export has been accepted. The Department's grievance is that the Superintendent of Central Excise did not attend the export. It was not required. The appellant was governed by self removal procedure and to such cases Rule 173-O was applied. It was the appellant's option to export under supervision of either the Excise authorities or the Customs authorities. The Commissioner is competent to relax the procedural provision under Rule 12/13 of the Central Excise Rules, 1944. In the instant case, it was incumbent upon the Commissioner to grant relaxation from the procedural provisions. Under these circumstances, it was not desirable to raise the demand towards the Central Excise duty on the ground of procedural irregularities. In view of the above, appeal deserves to be allowed.

8. Consequently, we set aside the impugned order and allow the appeal with consequential relief to the appellants.

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