9911796707
TMI Blog2000 (11) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... er at Aonla, Bareilly. For the manufacture of urea, the reactants are Ammonia and Carbon dioxide. The ammonia required in the urea plant is generated by a plant which uses natural gas, steam and air as raw-materials. The steam required for the purpose is produced in a boiler by firing furnace oil (fuel). During the period from September 1993 to December 1994, the appellants had procured a total quantity of 38,292.720 KL of furnace oil at nil rate of duty "for the manufacture of urea" by claiming exemption under Notification No. 75/84 dated 1-3-1984 as amended. The Department issued show-cause notice [which was received by the appellants on 30-6-1998] alleging that total exemption from payment of duty on the furnace oil was available only wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilisers; that for the periods subsequent to the period of dispute similar SCNs had been issued to them raising demands of duty on similar grounds; that since such demands were confined to the normal period of six months prescribed under Section 11A of the Act, they paid the entire amount even before adjudication of the SCNs; that the said SCNs were adjudicated by imposing a nominal penalty of Rs. 1,000/- on them under Rule 210 of the Central Excise Rules ; that all such proceedings showed that there was no mis-statement of facts by them at any stage and there was no malafide on their part and that the extended period of limitation was not invocable against them for raising a demand of duty on them for the period September 1993 to December 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, prayed for setting aside the impugned order and allowing the appeal. 4. Ld. JDR Shri Sanjeev Srivastav submitted that the appellants' case attracted the provisions of Rule 196 of the Central Excise Rules, that the demand of duty was rightly raised against the party under the said rule and that there could be no valid plea of time bar inasmuch as there was no time limit prescribed under Rule 196. He, therefore, prayed for rejecting the appeal. 5. In his rejoinder, ld. Consultant submitted that the demand raised against the appellants under the SCN in question was, virtually, one of Central Excise duty short-levied, in which case Rule 196 would not be attracted. On this ground also, he pleaded for setting aside the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o note that the CT 2 certificates authorised the appellants to procure furnace oil at nil rate of duty for the manufacture of fertiliser, which was obviously a purpose covered by Sl. No. 4 of the Table annexed to the Notification. It is thus evident that the Department was at fault in granting permission to the party to procure furnace oil at nil rate of duty for the purpose of using the commodity (as feed stock) for the manufacture of fertiliser. 7. The issue which arises for our consideration is whether the appellants' case attracted Rule 196 or not. We find that this issue requires to be examined with reference to the aforesaid Notification inasmuch as, apparently, the appellants had refrained from paying Central Excise duty on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Rules and the same was confirmed also under the same provision of law. This was not warranted by the facts and circumstances of the case. A demand of duty can be raised under Rule 196 only in any of the following situations :- (a) If any excisable goods obtained under Rule 192 are not duly accounted for as having been used for the purpose and in the manner stated in the application submitted under the said Rule; (b) If any such excisable goods are not shown to the satisfaction of the proper officer to have been lost or destroyed by natural causes or by unavoidable accident during transport from the place of procurement to the applicants' premises or during handling or storage in the premises approved under the said Rule. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot sustainable in law. Even if the Department had raised the same demand under Section 11A of the Central Excise Act, the same would have been hit by limitation in view of the facts and circumstances of the case. 9. We also note that a penalty of equal amount has been imposed on the appellants under Section 11AC of the Act and another penalty of Rs. 1 lakh has also been imposed on them under Rule 173Q of the Central Excise Rules by the adjudicating authority. None of these penalties can be sustained, when the demand of duty itself is unsustainable. Even otherwise, the provisions of Section 11AC is applicable only to a case where the provisions of Section 11A is invoked by the Department for demanding Central Excise duty not-levied, no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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