ORDER
Jyoti Balasundaram, Member (J)
1. The above appeal arises out of the order of the Collector of Central Excise (Appeals), Bombay upholding the order of the Assistant Collector who has confirmed the demand of differential duty of Rs. 30,846.50 p on two air conditioners received by the appellants under the provisions of Chapter X of the Central Excise Rules, 1944. Since the appellants sought for a decision on merits, we have heard the learned DR Shri Usman and perused the records.
2… Appellants were granted permission to bring two units of Split System Package Type Air conditioners of 5 tonnes capacity each at concessional rate of duty in terms of Notification No. 56/78 dated 1.3.1978 as amended by Notification No. 25/79 dated 1.3.1979 for use in their Cotton Testing and Research Laboratory. The said two units were cleared under cover of Gate pass dated 13.5.1980 and corresponding AR No. 3 and were received by the appellants on 16.5.1980. Since the appellants failed to install and commission the air conditioners within the period of one month from the date of clearance of the air conditioners by the manufacturers on payment of duty, as stipulated in the Notification, a show cause-cum-demand notice was issued proposing recovery of differential duty and proposing imposition of penalty.
3. The Assistant Collector rejected the plea of the appellants that the air conditioners could not be installed within one month as they were yet to receive some imported equipment for use in the laboratory and held that duty at full rate was chargeable and accordingly confirmed the demand, which was upheld by the lower Appellate authority.
4. It is not disputed that the air conditioners were not installed for over 8 months from the date of receipt by the appellants. Hence the essential requirement of a Notification of installation within a period of one month from the date of clearance has not been fulfilled. The appellants have also not obtained any extension of the period from the Collector of Central Excise. The reason adduced for non-installation within the stipulated period namely that the appellants were awaiting receipt of imported equipment for the purpose of testing work in the laboratory where the air conditioners were to be set up, is also not satisfactory, as the non-receipt of the testing equipment in no way affected the installation of the air conditioners on which the appellants are claiming the benefit of concessional rate of duty. Hence the lower Appellate authority has rightly held that the benefit of concessional rate of duty in terms of Notification No. 56/78 is not available to the appellants. Accordingly, the impugned order is confirmed and the appeal rejected.
Sd/-
(Jyoti Balasundaram)
Member (J)
Per Shri S.K. Bhatnagar, Vice-President–With due respects to Hon’ble Member (J) my views and orders are as follows:
5. In this case there is no doubt or dispute that the air conditioners in question which had been cleared on concessional rate of duty in terms of relevant notifications for use in the appellant’s testing research laboratory were actually so installed and used for the declared purpose.
6. There was however, delay in complying with the conditions of the notification and a question which arises for our consideration is whether such delay was condonable.
7. This Tribunal has held in a series of cases that in case substantive compliance with the provisions is shown the benefit should not be denied merely due to minor procedural infractions and should be allowed, if otherwise due. In the present case, I find that though there has been a relatively long delay of eight months or so in complying with the conditions yet the delay has been satisfactorily explained as having been caused on account of delay in the receipt of imported equipment for the purpose of testing work in the lab.
8. It is true that theoretically speaking the air conditioners could be installed even in empty lab but then that would have been purposeless. It is also true that the appellants should have written to the Collector and got the period extended beforehand if they anticipated delay in the import or receipt of imported equipment. However, what is material from our point of view is that undoubtedly and indisputably the air conditioners have been ultimately utilised for the purpose for which the exemption was granted and the delay has been duly explained. Therefore, following the practice of this Tribunal of taking a liberal view in the case of substantive compliance and allowed the benefit which was otherwise due, I accept the appeal.
dt. 30.6.1997 Sd/-
(S.K. Bhatnagar)
Vice-President
In view of the difference of opinion between Hon’ble Member (J) and the Vice-President, the matter is submitted to the Hon’ble President for reference to a third Member on the following point:
1. Whether in the facts and circumstances of the case the explanation for delay could be considered satisfactory and condonable and therefore the appeal allowed in view of substantive compliance with the notification?
OR
2. Whether the explanation was required to be considered as not satisfactory and therefore the benefit of the exemption notification was required to be denied on account of reasons mentioned by the Hon’ble Member (J)?
Sd/ Sd/
(Jyoti Balasundaram) (S.K. Bhatnagar)
Member (J) Vice-president
S.L. Peeran, Member (J)
9. The difference of opinion between the members was listed today for hearing. The appellants have requested the case to be decided on merits. The case was passed over in the morning as none appeared for the department. The case was called at 2.30 PM and passed over and it was again called at 2.50 PM and none appeared for the department. The Court Master was sent for the DR. He reported that the DR is not present.
10. I have gone through the orders passed by both the members and nave perused the records. The details of the facts are already noted in the orders and by both the members.
11. The short question that arises for consideration is as to whether the concessional rate of benefit is required to be extended to the air conditioners which had not been installed for over 8 months from the date of receipt by the appellants.
12. The Learned Member (J) has held that the essential requirement of a Notification of installation within a period of one month from the date of clearance has not been fulfilled and as such the benefit cannot be extended. The importer had explained the reasons for non-installation ivithin the stipulated period namely that they were awaiting receipt of imported equipment for the purpose of testing work in the laboratory, where the air conditioners were to be set up. This was not favoured by the Member (J).
13. The Learned Vice-President on examination has held that although there is relatively long delay of 8 months or so in complying with the conditions yet the delay has been satisfactorily explained as having been caused on account of delay in the receipt of imported equipment for the purpose of testing work in the lab. The Learned Vice-president has held that the air conditioners could be. installed even in empty lab but then that would have been purposeless.
14. In view of the reasoning given by the Learned Vice-President, I am inclined to accept the same and agree with the said findings. The appeal papers shall be placed before the original bench for passing the final order.
(Dictated and pronounced in the open court).