1998 (4) TMI 378 - AT - Central Excise

Summary

Issues:
1. Dutiability of Hydrogen gas vented/flared into the atmosphere.

Analysis:
The appeals were filed against the orders-in-appeal of the Collector of Central Excise regarding the dutiability of Hydrogen gas vented into the atmosphere. The appellants, engaged in manufacturing Caustic Soda and other products, argued that the excess gas had to be flared/vented due to being unmarketable beyond their requirement. They sought remission of duty under Rule 49 of the Central Excise Rules, 1944, supported by a Board's clarification from 1975. The lower authorities confirmed the duty demand, leading to the present appeal.

The main issue was whether the vented Hydrogen gas was unfit for marketing under Rule 49(1) second proviso. While some gas was used or sold, the excess amount was flared/vented due to lack of market. The Board's 1975 clarification extended the second proviso's benefit to cases of venting/flaring "for any reason whatsoever." The lower authorities' view was challenged, citing precedents holding excise officers bound by Board's orders. The second issue was whether procedural lapses could deny remission under Rule 49. The failure to inform before flaring was argued as a procedural lapse, not a deliberate act. The gas was accounted for, and the lack of storage options necessitated flaring. Hence, the lapse was deemed procedural and not a basis for denying remission.

The Tribunal found in favor of the appellants, setting aside the impugned order and allowing the appeals. The relevant proviso of Rule 49(1) was analyzed, focusing on the excess gas being flared/vented due to being unsellable. The Board's Circular and the department's interpretation were contrasted, with the Circular's liberal construction favored by the appellants. The Tribunal suggested amending the rule if duty exemption was not intended in such cases. It was viewed as a case more aligned with write-off instructions than remission under Rule 49.

In conclusion, the Tribunal agreed that the substantive benefit should not be denied due to minor procedural lapses. Since the gas was duly accounted for and had to be flared due to its nature, the appellants' claim for remission was upheld. The duty was not chargeable as the goods were destroyed before clearance, akin to the destruction of excisable goods before removal, justifying the allowance of the appeals.