1998 (7) TMI 295 - AT - Central Excise

Summary

Issues:
- Duty demand on synthesis gas
- Allegations of wilful mis-statement and suppression of facts
- Exemption notification No. 72/77
- Calculation of duty demand and penalty
- Extended period of limitation
- Liability for duty on unaccounted loss
- Applicability of Chapter X procedure
- Duty demand on the recipient of the goods
- Correspondence between GSFC and the Department
- Dispute resolution on the volume of loss
- Duty demand period
- Liability for loss of synthesis gas
- Modification of the impugned order

Detailed Analysis:

Duty Demand on Synthesis Gas:
The appeal challenged the duty demand on synthesis gas imposed by the Collector of Central Excise and Customs, Vadodara. The Department alleged that M/s. GSFC had suppressed facts regarding losses of synthesis gas supplied and recovered substantial amounts for such losses, demanding duty on the claimed losses.

Allegations of Wilful Mis-statement and Suppression of Facts:
The Department accused GSFC of wilful mis-statement and suppression of facts related to the losses of synthesis gas supplied to Heavy Water Plant (HWP). The allegations were based on discrepancies in the records and claims made by GSFC for losses, leading to duty demands.

Exemption Notification No. 72/77:
The appeal highlighted Notification No. 72/77, which provided full exemption to synthesis gas supplied by GSFC to HWP for the manufacture of heavy water. The conditions under the notification exempted synthesis gas used for heavy water production and returned for fertilizer manufacturing, subject to following Chapter X procedure.

Calculation of Duty Demand and Penalty:
The duty demand calculation, penalty imposition, and applicability of Chapter X procedure were contested. The appellant argued that any duty liability for unaccounted loss should fall on the recipient, HWP, not GSFC, citing relevant case law and procedural discrepancies in the duty calculation.

Extended Period of Limitation:
The issue of the extended period of limitation for demanding duty was debated. The Tribunal concluded that the extended period would not apply, restricting the duty demand calculation to a specific period based on the date of the Show Cause Notice (SCN).

Liability for Duty on Unaccounted Loss:
The liability for duty on unaccounted loss of synthesis gas was discussed. The Tribunal examined the responsibilities under Chapter X procedure, emphasizing the need for accurate reporting of losses and the duty liability on the party receiving the goods.

Correspondence Between GSFC and the Department:
The correspondence between GSFC, HWP, and the Department was scrutinized to determine the accuracy of reported losses and the resolution of disputes regarding the volume of loss incurred during the extraction process.

Dispute Resolution on the Volume of Loss:
The Tribunal acknowledged the bona fide dispute between GSFC and HWP regarding the actual volume of loss. It noted the technical complexities involved in determining the losses and the lack of precise data, leading to discrepancies in reported figures.

Duty Demand Period:
The duty demand period was clarified, restricting the duty calculation to a specific timeframe based on the resolution of the dispute and the absence of wilful suppression or misrepresentation of facts regarding the losses of synthesis gas.

Liability for Loss of Synthesis Gas:
The liability for the loss of synthesis gas was deliberated, with the Tribunal holding GSFC accountable for the unaccounted losses beyond the agreed-upon amount, based on the actual volume of loss reported after the dispute resolution.

Modification of the Impugned Order:
The Tribunal modified the impugned order by confirming the duty demand for the specified period, directing further assessment by the Assistant Commissioner in accordance with the observations made during the appeal.

Conclusion:
The appeal was allowed by remand, with the duty demand calculation and liability for unaccounted losses clarified based on the resolution of disputes and adherence to procedural requirements under the exemption notifications and relevant case law.