1997 (8) TMI 138 - AT - Central Excise

Summary

Issues:
1. Correct rate of duty payment for oxygen gas clearance.
2. Method of supply - cylinders or pipeline.
3. Interpretation of statutory documents - gate passes.
4. Burden of proof on the assessee.
5. Application of tariff structure for duty calculation.

Analysis:
The appeals were filed by the Revenue against the order of the Collector of Central Excise (Appeals) who accepted the contention of the assessees that oxygen gas was cleared through pipeline, attracting a lower duty rate, rather than in cylinders as claimed by the department. The basis for the department's claim was the details on gate passes indicating cylinders as the mode of supply. The Tribunal held that the gate passes, being statutory records, were sufficient evidence for the department to demand differential duty, overturning the Collector's decision.

The primary issue revolved around the correct duty rate for oxygen gas clearance. The department alleged that the gas was cleared in cylinders but duty was paid at the lower rate applicable to pipeline supplies. The Collector (A) had not duly verified all facts, leading to the benefit of doubt being given to the respondents. The department emphasized that gate passes indicated cylinder clearance, necessitating duty payment at the higher rate. The respondents contended that they supplied gas through pipelines to another party responsible for cylinder filling, justifying the lower duty payment.

The burden of proof was on the assessee to demonstrate the method of supply in line with the tariff structure. Despite the respondents' submissions, the Collector (A) did not remand the matter for further verification, prematurely giving the benefit of doubt. The Tribunal highlighted the importance of ascertaining the manner of supply, as reflected in statutory documents like GP 1, which should specify the mode of clearance and duty rate applicable.

The Tribunal noted discrepancies in the duty rates paid by the respondents compared to the rates applicable for cylinder clearances during the relevant period. Lack of evidence supporting the respondents' contentions regarding pipeline supply led to the acceptance of the department's argument based on statutory documents. Consequently, the Collector's decision to extend the benefit of doubt was deemed erroneous, and the appeals were allowed in favor of the Revenue.