1992 (7) TMI 209 - AT - Central Excise

Summary

Issues Involved:
1. Legality of the demand of duty of Rs. 2,42,340.09 on 66.205 M.T. of Jute Batching Oil under Rule 196 of the Central Excise Rules, 1944.
2. Appropriation of the deposit amount of Rs. 37,039.26 towards the value of the goods released to the appellants in terms of B-11 Bond.

Issue-wise Detailed Analysis:

1. Legality of the Demand of Duty on 66.205 M.T. of Jute Batching Oil:
The appellants were found to have a shortage of 2.667 M.T. of Jute Batching Oil (J.B.O.) in their storage tanks compared to the recorded balance in the RG-16 register. The chemical test of the sample drawn from the storage tanks revealed a flash point of 64^0C, which did not conform to the required flash point of 94^0C for J.B.O. as per sub-heading No. 2710.70 of the Central Excise Tariff Act, 1985. Consequently, the stored oil was not considered J.B.O. The appellants failed to account for the J.B.O. as required under Rule 196 of the Central Excise Rules, 1944, which mandates that excisable goods obtained under Rule 192 must be used for the specified purposes or accounted for if lost or destroyed by natural causes or unavoidable accidents. The demand of duty was upheld as the appellants were unable to justify the discrepancy. The differential duty of Rs. 1,92,045.51 was found legally sustainable.

2. Appropriation of the Deposit Amount of Rs. 37,039.26:
The oil seized from the appellants was released on execution of a B-11 (Security) Bond. The chemical test revealed that the oil did not conform to the specification of J.B.O. and was therefore not considered excisable goods. The adjudicating officer had appropriated Rs. 37,039.26 from the security deposit, justifying it as the value of the seized mineral oil. However, the tribunal found that since the seized oil was not J.B.O., it was not liable for confiscation under Rule 196 of the Central Excise Rules, 1944. The appropriation of the security deposit was deemed not in accordance with law, and this portion of the order was set aside. The appeal was allowed partly to this extent, but the demand for duty was upheld.

Conclusion:
The tribunal upheld the demand of duty of Rs. 2,42,340.09 on 66.205 M.T. of J.B.O. under Rule 196 of the Central Excise Rules, 1944, finding the appellants liable for the differential duty due to non-conformity of the stored oil with J.B.O. specifications. However, the appropriation of the security deposit amounting to Rs. 37,039.26 was set aside as the seized oil did not qualify as excisable goods under the relevant rules. The appeal was thus partly allowed, with the duty demand being legally sustained and the appropriation of the security deposit being overturned.