SAVITA POLYMERS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal was filed by the assessee against the rejection a of refund claim relating to certain goods cleared from warehouse after warehousing period. The facts of the case are as follows: Imported raw materials required for the manufacture of goods to be supplied to M/s. ONGC for its oil exploration/exploitation activities were exempt from payment of duties of customs during the material period. Certain inputs which were imported by the appellants in the month of August 1998 and used in the manufacture of Pour Point Depressant within their private bonded warehouse for supply to ONGC for the latter's oil exploration and exploitation activities were covered by the relevant exemption Notifications [Notifications 11/97 -Cus and 16/2000 -Cus (as amended)]. The manufacturing activity used to be undertaken pursuant to purchase orders of M/s. ONGC. Out of a consignment of raw materials received under into -bond Bill of Entry No. 2504 dt. 27.8.1998, a quantity of 2624kgs of materials warehoused by the appellant could not be consumed in the manufacture of Pour Point Depressant for want of purchase order from ONGC. This quantity of raw material remained in the warehouse after the expiry of the warehousing period in October 1999. The appellants, however, did not apply for extension of the warehousing period. Later on, at the instance of the Central Excise Range Officer having jurisdiction over the factory, they paid duty on the above quantity of raw material. This payment was 'under protest'. The Deputy Commissioner meanwhile assessed ex -bond Bill of Entry dt. 4.1.2001 for total Customs duty of Rs. 1,47,841/ - which was the amount paid under protest by the assessee. Subsequently, the appellants received a purchase order of M/s. ONGC, against which Pour Point Depressant manufactured out of the above raw material was supplied during the period 27.3.2001 to 8.5.2001. Subsequently, they filed a refund claim for Rs. 1.47.841/ - on the ground that, as the final product was supplied to ONGC for their oil exploration and exploitation activities, the imported raw materials consumed in the manufacture of the said product was exempt from payment of Customs duties. This claim was rejected by the Deputy Commissioner mainly on the ground that the party had not preferred appeal to the Commissioner (Appeals) against the assessment of ex -bond Bill of Entry dt. 4.1.2001. The appeal filed by the party against the rejection of refund claim was dismissed on merits by the Commissioner (Appeals). Hence the appeal before us.

(2.) IT is not in dispute that the appellants had not sought extension of the warehousing period and also had not challenged the assessment of the ex -bond Bill of Entry. According to them, in the absence of purchase order from ONGC, there was no justifiable reason for them to apply for extension of warehousing period. It has been further argued that the question of going in appeal against the assessment did not arise at that point of time as there was no valid reason then to dispute the correctness of the duty amount assessed. It is pointed out that, as the material was lying in stock unutilized on the date of final assessment, there was no room for dispute regarding assessment at that time. The Ld. Consultant has argued that, where there was no lis between the assessee and the department and there was a mere assessment of the Bill of Entry, the ratio of the Supreme Court's decision in Collector v. Flock (India) Pvt. Ltd. or of the decision in Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) was not applicable. Contextually, it was also submitted that, during the period of 60 days prescribed for appeal (against the assessment order), there was no ground for filing such appeal inasmuch as the exemption under the relevant notifications was based on end use of the goods and the supply of the goods to ONGC took place after the said period, i.e., during 27.3.2001 to 8.5.2001. In such circumstances, according to the consultant, the apex court's ruling that any refund of duty assessed could be claimed only after the assessment order was set aside in appeal was not applicable. In this connection, reliance was also placed on Dudhari Exports P. Ltd. v. Commissioner of Customs, Kandla, 2007 (210) ELT. 462 (Tri. -Ahmd.).

(3.) WE have considered the submissions 2624 kgs of imported raw materials which were warehoused for consumption in the manufacture of Pour Point Depressant in their bonded warehouse could not be so consumed within the warehousing period for want of purchase order from M/s. ONGC. The warehousing period expired in October 1999 and the raw materials remained in the warehouse without being consumed in the manufacture of Pour Point Depressant. Ex -bond Bill of Entry for home consumption in respect of the goods was filed by the party on 4.1.2001, the same was assessed by the Deputy Commissioner of Customs under Section 68 of the Customs Act, and the duty assessed by the Deputy Commissioner was paid by the assessee 'under protest'. It is the case of the appellants that, as the raw materials cleared for home consumption was actually consumed in the manufacture of final product which was supplied to ONGC, they were eligible for exemption under the Notifications and hence the above duty is refundable. We find that their "protest" was noted in the above Bill of Entry without any exemption from duty having been claimed therein. The protest was without any reason. Therefore, the submission of the appellants to the effect that, as the duty was paid 'under protest', it cannot be said that the assessment was accepted by the assessee is not a valid plea. Admittedly, the assessment of the ex -bond Bill of Entry dated 4.1.2001 was not challenged by the assessee under Section 128 of the Customs Act. In such circumstances, the ruling in Flock (India) case and Priya Blue Industries case as also the Tribunal's decision in Eurotex Industries case are squarely applicable. The case of Dudhari Exports (Supra) is distinguishable on facts. In that case, it was found that there was no wrong assessment of duty on the date of assessment and apparently the payment of duty was not under protest. It was held that the subsequent refund claim filed by the assessee was not hit by the apex court's ruling in Priya Blue Industries (Supra). In the instant case, as we have already noted, the assessee's conduct was altogether different. All their past clearances of raw materials for home consumption were made without payment of duty under ex -bond Bills of Entry within the warehousing period and the materials so cleared were consumed in the manufacture of Pour Point Depressant which was supplied to ONGC. Apparently, M/s. ONGC were the only purchasers of Pour Point Depressant from the assessee. The assessee was anticipating purchase orders for the goods to be manufactured out of the raw materials which remained in warehouse in October 1999. In the circumstances, they ought to have got extension of warehousing period, but they did not choose to do so. The raw materials, which remained in the warehouse beyond the date of expiry of the warehousing period were, undisputedly, chargeable to duties of Customs on the date of assessment of the ex -bond Bill of Entry and the assessee paid this duty. However, on the date of assessment of the ex -bond Bill of Entry, the assessee chose to register their 'protest' in the bill. In our view, they ought to have preferred appeal against the assessment order especially when they were anticipating purchase order for Pour Point Depressant from ONGC. Going by this conduct of the assesses as also by the case law cited by SDR, we hold that the subsequent refund claim was only liable to be rejected on the grounds stated by the original authority and the first appellate authority.