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TMI Blog1994 (5) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... N.G.C. filed an appeal to the CEGAT and sought for stay of pre-deposit in a sum of Rs. 4.27 crores and odd and penalty of Rs. 75 lakhs. The CEGAT passed the order dated 27-9-1993 refusing to stay the deposit of duty, but dispensed with the deposit of the penalty amount. Therefore, the O.N.G.C. filed another petition for stay which was rejected on 31-1-1994. The Writ Petition is then filed. 3.By orders dated 16-3-1994, this Court granted stay of dismissal of appeal by the CEGAT and ordered notice in the Writ Petition. At the stage of issuing Rule, we are disposing of the Writ Petition by consent. Rule D.B. 4.The jurisdiction of this Court under Article 226 is limited to scrutinising the correctness of the order of the CEGAT and is, no doubt, limited. Bearing that factor in mind, we are referring to the facts in brief. 5.The O.N.G.C. is manufacturing lean gas as one of its products. Govt. of India granted exemption from duty by Notification No. 175/85 dated 26-7-1985 under Rule 8(1) of the Central Excise Rules, 1944 falling under Item No. 68 of First Schedule to the Central Excises and Salt Act, 1944 from so much of the duty leviable as is in excess of the amount calculated at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) O.N.G.C. Ankleshwar and (iii) Krishak Bharati Co-operative Ltd., Surat. On examination of one of the officers of O.N.G.C., certain facts relating to the procedure of supply of lean gas were revealed. The O.N.G.C. did not file separate classification list claiming exemption under notification dated 26-7-1985 and did not satisfy the condition as laid down in the notification and therefore, it was not eligible for availing exemption under the said notification. According to them, the lean gas manufactured and clandestinely removed was liable to duty for the period 8-1-1988 to 29-2-1988. The intended use of the goods was elsewhere than in the factory of production. According to the Excise authorities, the concessions were subject to two conditions, namely :- that it was proved to the satisfaction of an officer not(i) below the rank of the Assistant Collector of Central Excise that such goods are used for the intended use. where such use is elsewhere than in the factory of(ii) production, the procedure set out in Chapter X of Central Excise Rules, 1944 is followed. The show cause notice stated that the aforesaid conditions were not fulfilled by the O.N.G.C. and hence they wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1991 that after the expiry of six months period mentioned in Section 11A(1) that the present notice was issued on the basis that the department was entitled to enlarged period of limitation. They also pointed out that the O.N.G.C. was entitled to duty exemption for the O.N.G.C. had filed classification lists under Rule 173B which were approved by the Excise authorities and as such and, therefore, the clearances were in accordance with the exemption. Having regard to the nature of the gas supplied, it is not possible to know the exact quantities of lean gas at the time of despatch and hence the payment of duty was deferred till the quantum of supply was intimated by the receiving parties, namely, Gas Authority of India and Kribhco. The lean gas was only used for fertiliser and electricity generation and for no other purpose and there was no contravention of Rule 173C. The supplies to Kribhco and Gas Authority of India were acknowledged and end-use as certified by them was for fertiliser and generation of electricity. The procedure under Chapter X of the Central Excise Rules, 1944 was followed as soon as details were made available by the receiving agencies. Inasmuch as the gas is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation is to be received from the receiving authorities and on that basis the procedure under Chapter X was complied with. In fact, the moment the Excise authorities raised the issue, the O.N.G.C. had deposited a sum of Rs. 19 lakhs and odd towards duty on the lean gas supplied to Gas Authority of India and Kribhco and filed classification lists. This is clear from the letter dated 17-8-1988 of the O.N.G.C. addressed to the Central Excise authorities and the reply of the Superintendent of Central Excise dated 19-8-1988 and that nothing happened thereafter till the show cause notice was issued on 25-1-1991 invoking the enlarged period of limitation under the proviso to Section 11A(1). Learned counsel contended that when the duty was paid after due notice to the authorities, there was a delay of about 3 years and, therefore, the proviso to Section 11A(1) was not attracted and the conditions therefor were not satisfied. 13.Learned counsel also placed reliance on the decision of the Karnataka High Court in Collector of Central Excise v. Mysore Lamp Works Ltd. [1994 (64) E.L.T. 193] wherein a Division Bench of the Karnataka High Court dismissed the appeal preferred by the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the question whether the extended period of limitation was prima facie applicable to the facts of case or not under the proviso to Section 11A(1). 16.Learned counsel for the petitioner contended that the ONGC is a public authority of the Government of India, which was playing an important role in the developmental activities of the country and it was stated the payment of duty would cause undue financial burden on the ONGC (vide para (f) of the application for dispensing with the deposit of duty). It was also stated that no security was necessary as this was a Public Sector undertaking. In para (g) of the said application it was clearly stated that otherwise it will cause undue hardship to the appellants. The CEGAT did not notice these pleadings. 17.We are inclined to agree with the submissions made by the learned counsel for the appellants. Firstly, CEGAT erred in thinking that the financial hardship was not pleaded by the ONGC in the application or appeal, which is not correct. Further CEGAT has not adverted to the effect of the letter dated 17-8-1988 of the ONGC and has not also given any prima facie finding with regard to the applicability of the proviso to Section 11A(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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