Full Judgment Text
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CASE NO.:
Appeal (civil) 2159 of 1991
PETITIONER:
COLLECTOR OF CENTRAL EXCISE, BOMBAY
RESPONDENT:
SHALIMAR CHEMICAL INDUSTRIES PVT. LTD.
DATE OF JUDGMENT: 11/01/2001
BENCH:
B.N. KIRPAL & RUMA PAL & BRIJESH KUMAR
JUDGMENT:
JUDGMENT
2001 (1) SCR 333
The Judgment of the Court was delivered by
KIRPAL, J. The challenge in this appeal is to the judgment of the Customs,
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.
It is not in dispute that the respondent does not itself manufacture
Benzene, Toluene and Xylene but is products 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 exemption.
By the notification of 1st March, 1984, the effective rate of duty on
various items mentioned in the said notifications 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 intended use, the
exemption in such case shall be subject to the following 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 production, the
procedure set out in Chapter X of the Central Excise Rules, 1944, is
followed." item No. 6.10 makes reference to Benzene, Toluene and Xylene
alongwith 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 materials......."
In the instant case, the respondent did not produce the User Certificate
showing the manufacture of paints, varnishes, lacquers 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 Tribunal 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
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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
decreasing or cleaning."
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 justification to insist oh the end use
certificate in terms of the notification of 1984. It was held that what was
important was that Benzene, Toluene, etc., should be intended for use in
the manufacture of paints, varnishes, etc., and the respondent was entitled
to the benefit thereof.
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 satisfied,
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 intended 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 Benzene, etc.; in
the manufacture of paint, varnish, lacquer, etc., no relief could have been
granted to the respondent under this notification.
For the aforesaid reason, this appeal is allowed and the judgment dated
24th October, 1990 of CEGAT is set aside.
There will be no order as to costs.