ORDER
Lajja Ram, Member (T)
1. In this appeal filed by the Revenue Order-in-Appeal No. 43/96 (M) dt 19.2.96 passed by the Commissioner of Central Excise (Appeals) Madras is under challenge.
2. The Commissioner of Central Excise (Appeals) relying upon the tribunal decision in the case of Gujarat Paints And Allied Products Co. v. CCE has allowed the appeal of the assessee M/s. Pentafour Products Ltd., Madras. The matter related to the availment of the benefit under chapter 10 procedure in a case where the goods were cleared on payment of duty and the manufacturer applied for a refund subsequently. The Asst. Commissioner V division had rejected the refund claim on the ground that at the stage of clearance the appellants had not filed CT3 certificate as required and that any CT3 certificate issued subsequently could not cover the goods already cleared. The Commissioner (Appeals) had held that as there was substantial compliance with the provisions of notification No. 57/94-CE, the appellants were entitled for the concession specified under that notification.
3. The departmental representative Shri R. Victor Thiagaraj, SDR for the Revenue referred to the provisions of the notification No. 57/94 CE and submitted that the benefit of exemption was available subject to the specified conditions therein. The respondents had not complied with the terms of conditions and thus the Asst. Commissioner, Central Excise had rightly rejected the refund claim. It was his submission that the benefit was meant to the customer and the refund, if any, had also to be given to the customer. He pleaded for vacation of the order-in-appeal and for upholding the order-in-original.
4. In reply, Shri A.S. Sunderrajan, Ld. advocate for the respondents submitted that the matter was already covered by the tribunal decision in the case of Gujarat Paints And Allied Products Co. v. CCE wherein it had been held that the benefit of chapter 10 procedure could not be denied merely for non-compliance of chapter 10 procedure so long as the substantial compliance thereof was established by evidence.
5. We have carefully considered the mater. M/s. Pentafour Products were engaged in the manufacture of uninterrupted power supply (UPS) components. On 30.3.94 they had informed the Central Excise officers that they had got an order to supply 150 KVA automatic voltage trailer to a 100% Export Oriented Unit (EOU). They informed that their customers, 100% EOU had not been able to get the requisite CT3 certificate in time and as the order was to be executed before 31.3.94, they were clearing the goods on payment of duty. The respondents filed refund application subsequently. When the CT3 certificate was received from their customers, the refund application in proper form was submitted in time and it is also seen that the incident of duty was not passed on to the buyer as is clear from the order passed by the Asst, Commissioner as under:–
Although the refund application was in the proper form submitted in time and the incidence of duty was not passed on to the buyer in view of the reasons stated before, the claim is not tenable.
6. Under notification No. 57/94 CE dt 1.3.94, it was provided that the excisable goods specified in the table annexed to that notification when brought in connection with the manufacture and packaging of articles into a 100% EOC undertaking were eligible for exemption from duty subject to the specified conditions. One of the condition enumerated was that the 100% EOU undertaking was required to follow the procedure contained in chapter 10 of the Central Excise Rules with the modification that a certificate in form CT3 as annexed to that notification was to be used by the Central Excise Officer in charge of the undertaking in place of a certificate in form CT2 prescribed under the rules. It is seen that the 100% EOU to whom the goods were supplied had Central Excise Licence bearing No. 31/92/Permanent. They had executed a bond in form B16 and that a certificate in form CT3 had been issued in their favour by the Central Excise Officer in charge of the unit on 8.4.94. While it is a fact that the goods had been cleared on 31.3.94, the circumstances under which the goods had been cleared without waiting for the CT3 certificate had been explained by the respondents as already men tioned in the show cause notice dt 27.10.94. We have already referred to above that the incidence of duty had not been passed on to the buyer. There is no dispute that the buyers were otherwise eligible for the benefit under notification No. 57/94-CE.
7. The respondents had relied upon the tribunal decision in the case of Gujarat Paints And Allied Products Co. v. CCE 1993 (68) ELT 644 (T). Para 3 from that decision is reproduced below:–
3. The submissions made have been carefully considered. As the learned Counsel has submitted there are precedent decisions of the Tribunal to say that in the case of such exemption notification prescribing the following of Chapter X procedure, the exemption may be extended if substantial compliance is shown regarding the receipt and utilisation of the exempted material by the user manufacturer. See in this context the decision of the Tribunal in the case of Steel Authority of India v. Collector of Central Excise, Indore. wherein the Tribunal had referred to and followed another decision in the case say that unless it is deliberate and mala fide, failure on the part of the assessee to follow certain procedures cannot come in the way of his availing the substantive benefit under statutory provisions as long as he can satisfy the Department even at a later date, that he fulfilled the essential requirements to establish his entitlement to such benefit. In the same Steel Authority of India Limited decision, the Tribunal also observed that AR 3A Form not being statutorily prescribed removal on Gate Passes instead of AR 3A is not an irregularity of a serious nature for which another precedent decision in the case of Indian Oil Corpn. v. Collector of Central Excise, Madras was relied upon. In the present case no mala fides are attributed to the appellants by the Department. Secondly, in the earlier order in appeal dated 28.8.1980 by the Collector (Appeals) while holding that Zinc Oxide was covered by Notification 21/55, the Collector (Appeals) had also observed, “It was wrong on the part of the Assistant Collector to have questioned the correctness of the issue of CT2 Certificate issued by the Collector of Central Excise, Cochin. In case he had any doubts about the correctness and genuineness of the certificate, he could have taken up the matter separately with the concerned Authorities in the Cochin Collectorate”. Thirdly, it would also appear that when for certain consignments AR 3A Forms were received from Cochin Collectorate of rewarehousing of Zinc Oxide, the Superintendent of Central Excise, Valsad by his letter No. GL/Misc/79/1395 dated 28.6.1979, had informed the appellants that since the appellants were exempted from Central Excise licensing requirement, they need not observe Central Excise formalities. Fourthly, the appellants have produced in their present appeal confirmation No. PTF: 3809 dated 4/1984 from Premier Tyres giving particulars of receipt and utilisation of Zinc Oxide from the appellants which the lower authorities had no occasion to go into. In the result, following the ratio of the precedent decisions cited supra, it is held that the exemption under Notification No. 21/55 cannot be denied to the appellants merely for not following the details of Chapter X procedure so long as they are able to establish by evidence substantial compliance therewith and in this light the jurisdictional Assistant Collector may consider the refund claim subject to being satisfied regarding the evidence produced of the receipt and utilisation of the exempted material by the user manufacturer M/s. Premier Tyres in the Cochin Central Excise Collectorate. The appeal are disposed of in the above terms.
8. In view of specific facts and circumstances in this case, we consider that the refund claim should have been examined by the proper Central Excise authority on merits. It is thus seen that the respondents had specifically pleaded that they would be applying for refund and that they were paying Excise Duty under the circumstances as the goods were to be supplied under the 100% EOU before 31.3.94.
9. In view of above discussion, and taking note of the tribunal decision in the case of Gujarat Paints and Allied Products Co., we do not find any infirmity in the view taken by the Commissioner of Central Excise (Appeals). As a result, there is no merits in this appeal filed by the Revenue and the same is rejected. It is however made clear that the refund will be subject to the provisions of unjust enrichment as enunciated by the Supreme Court in the case of Mafatlal Industries Ltd. . Subject to above observations, the appeal filed by the Revenue is rejected.