1985 (5) TMI 177 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility of propylene for exemption from duty under Notification No. 276/67.
2. Locus standi of the appellants to file the application for refund.

Detailed Analysis:

1. Eligibility of Propylene for Exemption from Duty:

The primary issue was whether the propylene obtained by the appellants to start up their plant was eligible for duty exemption under Notification No. 276/67, dated 21-12-1967, as amended. The Assistant Collector of Central Excise initially rejected the refund claim, stating that the propylene was not used in the manufacture of specified goods eligible for exemption. The appellants argued that the propylene was essential for starting up their plant, which was necessary for the manufacture of petrochemicals. The Tribunal referenced the Supreme Court decision in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur, which interpreted "in the manufacture of goods" to encompass the entire process, including essential preliminary steps like starting up the plant. The Tribunal also cited the decision in M/s. Neyveli Lignite Corpn. Ltd., which held that test and trial runs are integral to the manufacturing process and eligible for exemption. The Tribunal concluded that the propylene used for starting up the plant was indeed used in the manufacture of specified goods and eligible for exemption.

2. Locus Standi of the Appellants to File the Application for Refund:

The second issue was whether the appellants had the locus standi to file the refund application or if it could only be done by the manufacturer, NOCIL. The respondents raised this preliminary objection for the first time before the Tribunal. The appellants countered by presenting a "No Objection Certificate" from NOCIL, allowing them to claim the refund. The Tribunal noted that neither the Assistant Collector nor the Collector (Appeals) had rejected the refund claim on the locus standi ground. The Tribunal also referenced the Supreme Court decision in M/s. Steel Strips Ltd. v. Assistant Collector of Customs, which allowed a refund claim based on a similar no-objection scenario. The Tribunal found that the application for refund, though made by the industrial user, was effectively made on behalf of NOCIL and could not be dismissed on the locus standi ground. The Tribunal also noted that objections regarding locus standi should be raised at the earliest opportunity, referencing decisions like Sri Ram Pasricha v. Jagannath & Ors. and Lakhi Prasad Fogia v. Murlidhar Marwari & Ors., which held that late objections are deemed waived.

Conclusion:

The Tribunal set aside the impugned order, accepted the appellants' claim for refund, and allowed the appeal. The Tribunal held that the propylene used for starting up the plant was eligible for exemption under Notification No. 276/67 and that the appellants had the locus standi to claim the refund, supported by the no-objection certificate from NOCIL. The Tribunal emphasized substantial compliance with procedural requirements and the principle that procedural non-compliance due to the revenue's actions should not vitiate a valid claim.