ORDER
S. Kalyanam, Member (J)
1. Since a common issue arises for consideration in both the petitions relating to the same party, we lake up both the applications and dispose them of by a single order.
2. Petition 181/92 has been filed for waiver of pre-deposit of duty of Rs. 87,01,371.52 and penalty or Rs. 5,00,000 and petition 841/92 is for waiver of pre-deposit of duly of Rs. 1,23,17,867.52 and penalty of Rs. 8,00,000 under the respective impugned orders appealed against.
3. Shri Chander Kumar, the learned counsel for the petitioner, submitted that the petitioner manufactured and cleared cement coated steel pipes for Cauvery Water Supply Project 111 in favour of Bangalore Water Supply and Sewage Board and the goods were actually manufactured at the site of the Bangalore Water Supply and Sewage Board and out of the raw materials supplied by them. It was submitted that in respect of the fabrication of the aforesaid goods for the period 19-1-1990 to 7-8-1990 covered by petition No. 181/92 a show cause notice was issued on 6-2-1991 and in respect of petition No. 841/92 for the period 7-8-1990 to 31-12-1990 the show cause notice was issued on 6-9-1991. The learned counsel submitted that the petitioner started the project work on 19-1-1990 and there was an inspection by the Central Excise authorities on 19-4-1990 and a statement was recorded from Shri Ram Mohan, the Project Manager, on 19-4-1990, who stated that the petitioner had undertaken the work on job work basis and, therefore, they had not taken out any licence. Thereafter, on 8-5-1990 the Secretary (Housing), Government of Karnataka, addressed a letter to the Secretary, Urban Development, Government of India, explaining the circumstances under which the fabrication work had been given on job work basis to the petitioner and also recommending exemption from excise duty of the whole project in public interest having regard to the nature of the scheme which was intended to supply Cauvery water for drinking purpose to the residents in Bangalore. Thereafter, on 23-7-1990 there was a joint discussion between the officials of Government of Karnataka, Collector of Central Excise, Bangalore, and also the petitioner and it was agreed that the petitioner need not pay duty till the issue was finally settled by the Government of India. The Collector of Central Excise also sent up a note to the Government of India recommending exemption from excise duty of this project in question in public interest. Thereafter, on 24-9-1990 the Chairman of the Bangalore Water Supply and Sewage Board addressed a letter to the Chairman of the Customs and Excise Board, detailing the circumstances and seeking Governmental intervention for the grant of ad hoc exemption for the project in question. Finally, on 27-8-1990 the Chief Minister of Karnataka sent a communication in this regard to the Finance Minister, Government of India, and thereafter on 22-2-1991 the Government of India, Ministry of Finance issued an order No. 6/91 in exercise of the power under Section 5A(2) of the Central Excises & Salt Act, 194.4 granting exemption from payment of duty of excise for this project. The learned counsel submitted that in the aforesaid factual background and in the teeth of the statutory order No. 6/91 cited supra the question of levy of excise duty does not arise at all. The learned counsel assailed on prima facie grounds the reasoning of the adjudicating authority in construing the scope of order No. 6/91 aforesaid as operative prospectively and not retrospectively. The learned counsel emphasised that the entire exercise borne out by the scries of correspondence between the various Departments of the Central Government and State Government was only for gelling an exemption in public interest from levy of excise duty for the project in question and the Government of India did not merely issue a notification as is normally done under Section 5A(1) of the Act but issued a special order in the special circumstances of this case invoking the power under Section 5A(2) of the Act. Even otherwise in any event, the learned counsel contended, the show cause notice is barred by limitation on the admitted facts under Section 1.1 A of the Act.
4. Shri Gregory, the learned SDR, adopted the reasoning of the adjudicating authority and mainly urged that in the absence of specific and express provision in the Government’s order exempting the project in question with reference to the fabrication that had already taken place, the order may not cover the excisable goods that has already been manufactured.
5. We have carefully considered the submissions made before us. It is an admitted fact that his project has been undertaken by the petitioner on job work basis as is borne out by the various correspondence. There has been correspondence between the Stale Government and the Central Government at the level of various official Departments apart from discussions with a view to gel an ad hoc exemption for the project in the public interest as the purpose of the project was to take drinking water from Cauvery reservoir to the city of Bangalore. We have gone through the order No. 6/91 of the Government of India dated 22-2-1991 issued under Section 5A(2) of the Act. We would like to note at the outset that this is not a notification simpliciter as is normally the case but a special order issued by the Central Government in the public interest for a special purpose under circumstances of an exceptional nature and it would be apposite at this context to extract the order in question as the contents of the order would have a bearing with reference to the question as to whether it would govern the petitioner’s project prima facie in entirety including the fabrication that had already taken place.
“F. No. 139/46/90-Cx. 4
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
New Delhi, dated 22nd Feb. 1991.
Order No. 6/91
Whereas the Bangalore Water Supply and Sewage Board, an autonomous body constituted by an Act of Stale Legislature of the Government of Karnataka, has taken up the execution of the Cauvery Water Supply Scheme-Ill to bring in additional 270 MLD of water to improve the water supply position in Bangalore City. For this water will be drawn through 1950 mm dia gravity main for a length of 9.60 kms and after treatment water is pumped to Bangalore City through 170 mm dia transmission main for a length of about 78 kms. Both the pipes for Gravity Main and Transmission main arc to be fabricated out of M.S. Plates and provided with cement Mortar lining inside and cement mortar outside. Fabrication of these pipes has been entrusted to M/s. Khoday Engineering Works, Bangalore, and M/s. FACT Engineering Works, Cochin who have erected the fabrication shops at Thorekadanahalli and at Jakkasandra, Bangalore respectively. Government of Karnataka has recommended exemption to all excisable goods/cement coated pipes so manufactured/fabricated at the sheds of Contractors.
2. The Central Government having regard to the circumstances of exceptional nature mentioned in para 1 above and in exercise of the powers conferred in Section 5(A)(2) of the Central Excises and Salt Act, 1944, and being of ihe view that it is so required in public interest hereby exempt all excisable goods falling under Chapter 68 or 73, fabricated at the fabrication shops of Khoday Engineering Works and M/s. FACT Engineering Works, Cochin erected at Thorekadanahalli and at Jakkasandra, Bangalore which are required by and supplied to Bangalore Water Supply and Sewage Board in connection with the execution of the Cauvery Water Supply Scheme from the whole of duty of excise leviable thereon.
3. This order is valid upto 31-3-1992.
Sd/…
(A.N. SHARMA)
UNDER SECRETARY TO GOVT. OF
INDIA.
To
1. Collector of Central Excise, Bangalore.
2. Dr. S.M. Pattanaik, Secretary to the Housing & Urban Development Dept. Karnataka Government Secretariat.
Dr. B.R. Ambedkar Veedhi, Bangalore, with ref. to his D.O. letter No. HUD 653/MNI/90 dated 16-1-1991.
3. The Chairman, Bangalore Water Supply and Sewage Board, Bangalore.”
On going through the above order and other facts and circumstances and the various correspondence set out above, prima facie we are inclined to think that the ad hoc exemption order would lake within its ambit the project of the petitioner taken on job work basis so as to exempt the same from the levy of excise duty. We also take note of the fact that even otherwise priina facie there is force in the contention of the learned counsel with reference to the applicability of bar of limitation in the context of the admitted facts and circumstances in the case. We, therefore, for the above reasons on priina facie grounds grant waiver of pre-deposit of duty and penalty pending disposal of the appeals. We also grant stay of recovery of the duty and penalty in question pending disposal of the appeals.
6. The appeals being Special Bench appeals, the papers are directed to be transmitted to CEGAT, New Delhi, for disposal.