ORDER
S.D. Jha, Vice-President (J)
1. The question for decision in these appeals raising common issues and disposed of by this common order are legality or otherwise of order dated 4-4-1983 passed by the Collector (Appeals) Central Excise, New Delhi, partly confirming demand of Central Excise duty in respect of Extra Hard Oil, which the Collector (Appeals) called processed VNE Oil being used in the manufacture of Extra Hard, Hydrogenated Oil in a continuous integrated process.
2. Four Show Cause Notices demanding duty as detailed below were served on the appellants :-
Date of Show Period covered by Amount of duty Cause Notice the Show Cause Notice demanded 1. 12-08-1975 1-04-1973 to 31-10-1974 Rs. 37,238.00 2. 30-09-1975 1-10-1974 to 31-08-1975 Rs. 30,150.00 3. 21-04-1976 1-09-1975 to 31-03-1976 Rs. 19,465.00 4. 06-10 1980 1-04-1976 to 31-3-1980 Rs. 89,946.55
The first three Show Cause Notices alleged that Extra Hard Oil fell under Item 12 of the Tariff whereas the appellant had cleared this oil under Item 13. The last Show Cause Notice dated 6-10-1980 for the period 1-4-1976 to 31-3-1980 alleged that processed VNE Oil produced in the factory of the appellant and used in the manufacture of Extra Hard Oil fell under Tariff Item 12 and was liable to duty thereunder. The Assistant Collector of Central Excise by orders dated 22-10-1980 and 4-12-1980 confirmed the demands raised in the notice for reasons set out in the orders. The Collector (Appeals) set aside wholly the demand raised by the Show Cause Notice dated 6-10-1980 as time barred. About the Show Cause Notice dated 12-8-1975, he held that it was valid for recovery of duty only after 12-8-1974. The other two Show Cause Notices dated 30-9-1975 and 21-4-1976 were held by him as being within limitation. What therefore now survive for consideration are only the three notices dated 12-8-1975 to the extent upheld by the Collector (Appeals) and notices dated 30-9-1975 and 21-4-1976.
3. At the hearing of the appeals, Shri V. Lakshmikumaran, learned advocate representing the appellants clarified that the appellants do not want the benefit of exemption under Notification No. 33/63, available to processed oil. He submitted that the three Show Cause Notice served on the appellants alleged that Extra Hard Oil cleared by the appellants fell under Item 12 of Central Excise Tariff and not Item 13 under which they had been cleared by the appellants. The demands of duty were, however, confirmed against the appellants for entirely different reasons. This, he submitted was wholly illegal. For this submission, he relied on a decision of the Delhi High Court in Bharat Commerce of Industries Ltd.
1. Union of India and Ors. and Ors. v. Delhi Cloth
and General Mills Co. Ltd.
2. 1978 ELT 355 - J.K. Steel Ltd. v. Union of India and Others. 3. 1986 (24) ELT 169 - Union Carbide India Ltd. v. Union of India and Ors.. 4. 1980 ELT 437 - Vallabh Glass Works Co. Ltd. v. Union of India and Others.
Proceeding further, he submitted that assuming oil at the stage be treated as goods, it would not attract duty liability with the aid of retrospectively amended Rules 9 and 49 of Central Excise Rules. He further submitted that the amendment only created a fiction otherwise at all material times, later the better principle i.e. collecting duty at final stage was being observed and followed and at the final stage, the appellants were availing of exemption in respect of Extra Hard Oil which was treated as falling under Tariff Item 12 of the Central Excise Tariff. In this connection, he referred to a decision of Gujarat High Court in the case of Vallabh Glass Works Co. Ltd. v. Union of India and Ors. – 1980 ELT 437.
4. On these grounds he urged that the demand of duty confirmed against the appellants by the lower authorities was not at all justified and deserved to be set aside. He submitted that the same should be set aside.
5. Smt. J.K. Chander for the respondent Collector of Central Excise, Meerut generally defended the impugned order. She submitted that the Show Cause Notices served on the appellants on the premise that the goods fell under Tariff Item 12 and this was borne out by a series of decision of the Tribunal. In this connection, she referred to a Five Member Bench decision of the Tribunal in the case of Tata Oil Mills Co. Ltd. v. Collector of Central Excise, Madras – 1986.(24) ELT 290 (Tribunal). She requested for upholding the demands.
6. We have carefully considered the submissions made before us. The Show Cause Notices which have been upheld by the Collector (Appeals) raised demand against the appellants on the ground that Extra Hard Oil fell under Tariff Item 12 and not Tariff Item 13 under which the appellants had been clearing the same at ‘nil’ rate of duty based on certain exemption notifications. It is true that the lower authorities shifted the stand which they should not have done and confirmed the same demand against the appellants not with respect of Extra Hard Oil but with respect to processed oil at intermediate stage based on Explanation set out in Notification No. 33/63. It appears that at the material time, Extra Hard Hydrogenated Oil was treated as being classifiable under Tariff Item 13. Legal position, however, has, when the matter is being heard before the Tribunal, become clearer. The Tribunal in a series of decisions has held that such Extra Hard Hydrogenated Oil is classifiable under Item 12, the last decision on the point being a five Member Bench decision in Tata Oil Mills Co. Ltd. case – 1986 (24) ELT 290 (Tribunal). In view of this decision, the premise on which the Show Cause Notices were issued against the appellants stand on sound legal foundation. The lower authorities may have wrongly confirmed the demand relating to these Show Cause Notices using the Show Cause Notices in respect of processed oil at an intermediate stage in an integrated and continuous process. But that would not mean that when the matter comes up before the Tribunal and the legal position has become clearer, it should decide the legality or otherwise of the demand on the same premise as done by the lower authorities. The demand could be confirmed or set aside on the correct legal position as it stands on the date of hearing before the Tribunal and on that test, there is no gainsaying that demand of duty raised against the appellants by the three Show Cause Notices in respect of Extra Hard Hydrogenated Oil on the ground that they fell under Tariff Item 12 of the Tariff stand on a sound legal footing and deserves to be confirmed.
7. Once we take this view, the grounds urged by Shri Lakshmikumaran that Show Cause Notice was on a different ground and demand confirmed on a different ground, demand of duty having been raised under one item which could not be demanded under another item, do not survive for consideration. So also the argument that processed oil at the intermediate stage is not goods or the applicability of Rules 9 and 49 of the Rules at that stage.
8. We, therefore, uphold the demands to the extent confirmed by the lower Appellate authority though for reasons different from those found by him.
9. The appeals are heredy dismissed.