1985 (4) TMI 305 - AT - Central Excise

Issues Involved:

1. Licensing and classification of Raw Petroleum Coke (RPC).
2. Applicability of Central Excise Rules and Notifications.
3. Demand for duty on RPC.
4. Procedural compliance under Central Excise Rules.
5. Assessable value of RPC.

Detailed Analysis:

1. Licensing and Classification of Raw Petroleum Coke (RPC):

The appellants, engaged in refining crude petroleum and manufacturing petrochemicals, produced RPC without obtaining a Central Excise license, filing classification and price lists, or submitting monthly assessment returns. The Assistant Collector held that RPC was not an intermediate product but a distinct excisable commodity, requiring duty payment. The Collector (Appeals) confirmed this, stating that RPC was classifiable under item No. 11-A of the Central Excise Tariff Schedule (CET) and was an end-product, not an intermediate one.

2. Applicability of Central Excise Rules and Notifications:

The appellants argued that their refinery was declared under Rule 140(2) and that Rule 143-A allowed further manufacturing processes within the refinery without paying duty on intermediate products. However, the respondents contended that the delayed coker unit was not part of the licensed refinery premises, and thus, RPC was not produced within the deemed warehouse. The Tribunal found that the appellants had not taken out a license for RPC production, and Rule 143-A did not confer any exemption from duty on new excisable goods resulting from permitted operations.

3. Demand for Duty on RPC:

The Tribunal upheld the demand for duty on RPC, stating that excisable goods coming into existence during manufacturing operations must suffer excise duty even if used within the factory premises for further manufacture. The retrospective amendment of Rules 9 and 49 by Section 51 of the Finance Act, 1982, reinforced this position. Since RPC had not suffered duty before being used to manufacture CPC, the appellants were liable to pay the demanded duty.

4. Procedural Compliance under Central Excise Rules:

The appellants failed to follow the procedure under Rule 56A, which was necessary to avail the exemption under Notification No. 95/79. This notification exempted CPC from duty equivalent to the duty paid on RPC, provided the Rule 56A procedure was followed. The Tribunal suggested that the Collector consider whether any relief was possible in terms of the notification and Rule 56A, given the peculiar features of the case.

5. Assessable Value of RPC:

The appellants contended that the duty was calculated based on an assumed assessable value of Rs. 2,697.86 per metric tonne, whereas the correct value was Rs. 852.43 per metric tonne, as approved by the Assistant Collector. The Tribunal directed the lower authorities to consider the appellants' communication regarding the correct assessable value while giving effect to the order.

Conclusion:

The appeal was rejected, affirming the demand for duty on RPC. The Tribunal suggested the Collector consider possible relief under Notification No. 95/79 and Rule 56A and directed the lower authorities to address the appellants' grievance regarding the assessable value of RPC.

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