1985 (2) TMI 259 - AT - Central Excise

Issues Involved:
1. Applicability of Rule 12 vs. Rule 13 for export of Light Diesel Oil (LDO) and Furnace Oil as ship's stores.
2. Validity of duty charges on supplies from bonded stocks.
3. Interpretation of relevant Central Excise Notifications.
4. Reliance on undisclosed legal opinions by the Assistant Collector.
5. Applicability of the Delhi High Court decision in Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise.

Detailed Analysis:

1. Applicability of Rule 12 vs. Rule 13 for export of Light Diesel Oil (LDO) and Furnace Oil as ship's stores:

The appellants contended that the subject supplies should be treated as covered by Central Excise Rule 13 and not Rule 12. They argued that Rule 13 permitted shipment of excisable goods without payment of duty for export outside India. The Appellate Collector, however, held that at the material time, Rule 13 did not permit export of LDO and Furnace Oil as ship's stores without payment of duty, thus confirming the Assistant Collector's order that duty was leviable on the subject supplies.

2. Validity of duty charges on supplies from bonded stocks:

The appellants argued that the supplies were made from bonded stocks and should not bear any duty. The Assistant Collector reasoned that clearance of oil from bonded tanks could not enjoy an unintended benefit over supplies from duty-paid tanks. He concluded that the appellants were liable to pay the concessional rates of duty specified in Notification No. 349/77 even in respect of supplies made from bonded stocks. The Tribunal observed that Rule 12 and the notifications issued thereunder would prima facie have no application to the facts of the present case, as the supplies were from bonded stocks.

3. Interpretation of relevant Central Excise Notifications:

The Tribunal examined several notifications:
- Notification No. 11/49 allowed rebate of duty paid on excisable goods exported as ship's stores.
- Notification No. 232/67 specified additional excise duty rates for diesel oil supplied to bunker ocean-going vessels.
- Notification No. 347/77 exempted mineral oil products from additional excise duty.
- Notification No. 349/77 reduced the rebate of basic excise duty for supplies to bunker ocean-going vessels.
- Notification No. 157/78 restored full rebate of basic excise duty from 23-8-1978.

The Tribunal concluded that during the period of the dispute (16-12-1977 to 22-8-1978), supplies of LDO and Furnace Oil did not bear any additional excise duty but effectively bore basic excise duty at the rates specified.

4. Reliance on undisclosed legal opinions by the Assistant Collector:

The appellants raised a grievance that an opinion of the Law Ministry had been relied upon without making a copy available to them. The Tribunal noted that the Assistant Collector should not have referred to or relied upon any opinion of the Law Ministry without disclosing it to the appellants. However, the appellants did not press this point for a remand of the proceedings.

5. Applicability of the Delhi High Court decision in Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise:

The Tribunal referred to the Delhi High Court decision, which held that even in respect of export of goods under Rule 13 from bond, duty was payable to the extent required to be paid in respect of export of goods under claim for rebate of duty in terms of Rule 12. The Tribunal followed this decision, noting that no contrary decision was cited before them. Consequently, they held that the action of the lower authorities in charging duty was correct.

Conclusion:

The Tribunal concluded that the supplies were from bonded stocks and that Rule 13 provides for export without payment of duty. However, following the Delhi High Court's decision, they held that the action of the lower authorities in charging duty was correct and accordingly rejected the appeals.

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