SOUTH INDIA CARBONIC GAS INDUS. Vs. CCE

JUDGEMENT

(1.) BY this appeal, the appellants challenge the order in appeal No. 127/94(M) dated 29.4.1994 passed by the Commissioner (Appeals) by which the Commissioner (Appeals) has rejected the refund claim of the appellants and upheld the order in original passed by the original authority.

(2.) THE brief facts of the case are that the appellants manufacture Carbon dioxide (Co2) from impure carbon -dioxide gas received from M/s. Madras Fertilizers Ltd. They preferred refund claim for Rs. 4,56,141.47 on the ground that duty was paid on Co2 when was available on the same in terms of Notification No. 40/85 -CE dated 17.3.1985 (sic) as amended. They had been receiving impure C02 without payment of duty under Chapter X procedure under Notification No. 235/85 dated 15.11.1985. This Notification was superseded on 15.11.1985 by Notification No. 417/86 and as a result. The facility of getting Co2 gas without payment of duty under Chapter X procedure was restricted to SSI unit only. Accordingly the appellants who are not a SSI Unit were not eligible to receive impure Co2 without payment of duty and had to procure the same from M/s. Madras Fertilizers Ltd. on payment of duty and the appellants at the time of clearing the purified Co2 started availing modvat benefit by making necessary debit entry in the RG 23A. However, they claimed exemption under Notification No. 40/85 dated 17.3.1985 as amended in respect of the duty paid on the purified Co2, and preferred a refund claim for Rs. 4,56,141.47 being the duty paid by them on Co2. Inasmuch as the appellants did not follow the Chapter X procedure, in terms of Notification No. 40/85, in order to avail "NIL" rate of duty during the material period, the department took the view that they were not eligible for any exemption under the said Notification. In the circumstances show cause notice was issued which resulted in the order passed by the original authority whereby he has rejected the claim of the appellants. Their appeal against the order in original was rejected by the Collector (Appeals). Hence this appeal.

(3.) HEARD Shri M. Venkataraman, learned Counsel for the appellants who submitted that the refund claim has been rejected by the authorities below on the ground that the assessee -appellants have not followed the procedure set out in Chapter X in terms of Notification 40/85. He submitted that with the issue of Notification No. 235/85 they had to get impure Co2 on payment of duty availing the Modvat benefit for impure Co2 and cleared the purified Co2 on payment of duty by way of adjustment in RG 23A Part II. He submitted that at the relevant time, they were not permitted to obtain impure Co2 under the provisions of Rule 56A and they were compelled to get the Co2 on payment of duty to avoid shutting down their plant. The learned Counsel in short submitted that procedural lapses in not following the Chapter X procedure cannot be a bar for claiming the exemption and eligibility to refund as they have substantially fulfilled the conditions prescribed by Notification No. 40/85. In the circumstances he prayed for allowing the appeal.