HINDUSTAN ZINC LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) These two appeals are directed against a common order -in -original i.e. 14/CE/JP -II/2001 dated 10 -9 -2001 passed by the Commissioner of Central Excise, Jaipur -II. Accordingly both the appeals were heard together and are disposed of under this common order.

(2.) The appellant M/s. Hindustan Zinc Ltd. has a plant at Chittorgarh where they manufacture Zinc and lead. Both these metals are liable to Central Excise duty. For the manufacture of zinc and lead the appellants' plant required oxygen gas, nitrogen gas and liquid nitrogen. These are produced in a separate plant located in the premises of the zinc and lead manufacturing plant. The gases produced are fully consumed in the manufacture of zinc and lead. These gases were being consumed by M/s. Hindustan Zinc Ltd. without payment of Central Excise duty on the basis that they were exempt under Notification No. 217/86 -C.E., dated 2 -4 -86 and subsequently under Notification No. 67/95 -C.E., dated 16 -3 -95. In the order impugned in the present appeal, the learned Commissioner of Central Excise held that the gases were actually manufactured by M/s. Industrial Gases Ltd. and were liable to Central Excise duty. It was further held that the exemption under Notification No. 67/95 -C.E. was not applicable to the gases inasmuch as that Notification granted exemption only to goods manufactured and captively consumed by the same manufacturer and not goods manufactured by one manufacturer and consumed by another. Accordingly, a duty demand of about Rs - 1.6 crores was imposed on M/s. Industrial Gases Ltd. for the period 5th October 1995 to July 2000. Simultaneously, a penalty of Rs. 10 Lakhs was imposed on the first appellant M/s. Hindustan Zinc and Rs. 1 Lakh on the second appellant Shri Ramakrishna Rao who is a Senior Manager, Marketing of the first appellant. These penalties have been imposed under Rule 209A of the Central Excise Rules, 1944.

(3.) Rule 209A makes "any person who acquires possession of, or is in any way concerned in transporting.............. selling or purchasing,............ any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or Central Excise rules" liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater. The Commissioner has found the appellants guilty inasmuchas they were purchasing and using non -duty paid goods which are liable to confiscation.