Remission for vented excisable gas where excess stock is unmarketable and prior intimation lapse is only procedural

Excess excisable hydrogen gas accounted for in RG 1 and becoming unmarketable was held eligible for remission under the second proviso to Rule 49(1) of the Central Excise Rules, 1944. A binding Board clarification covered venting or flaring of such gas, so a narrow contrary reading by lower authorities was not accepted. Failure to give prior intimation before flaring or venting was treated as a procedural irregularity, not a ground to deny substantive remission. The excess gas was therefore covered by the remission provision and the duty demand was set aside.

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Issues: (i) Whether hydrogen gas vented or flared into the atmosphere was entitled to remission under the second proviso to Rule 49(1) of the Central Excise Rules, 1944 despite being surplus to the assessee's requirements and partly marketable; (ii) Whether failure to give prior intimation before flaring or venting the gas was a mere procedural lapse that could not defeat the claim for remission.

Issue (i): Whether hydrogen gas vented or flared into the atmosphere was entitled to remission under the second proviso to Rule 49(1) of the Central Excise Rules, 1944 despite being surplus to the assessee's requirements and partly marketable.

Analysis: The gas in question was the excess quantity that could not be consumed or sold, and the Board's clarification dated 18-12-1975 stated that where gases were accounted in RG 1, venting or flaring for any reason whatsoever could be covered by the second proviso. The lower authorities' narrow construction of the proviso was inconsistent with that clarification, which the excise authorities were bound to follow.

Conclusion: The assessee was entitled to remission under the second proviso to Rule 49(1).

Issue (ii): Whether failure to give prior intimation before flaring or venting the gas was a mere procedural lapse that could not defeat the claim for remission.

Analysis: The goods had been duly accounted for in RG 1, and in the nature of the commodity, gas could neither be stored nor put to any other use once excess and unmarketable. In those circumstances, the omission to give prior intimation was treated as a procedural irregularity and not a ground to deny the substantive relief.

Conclusion: The assessee's claim for remission could not be rejected on the basis of the procedural lapse.

Final Conclusion: The appeals succeeded and the duty demand was set aside, as the excess gas flared or vented was treated as covered by the remission provision and the procedural omission was held not fatal.

Ratio Decidendi: Where excess excisable gas is accounted for and becomes unmarketable, remission cannot be denied merely because it is vented or flared for want of prior intimation, especially when a binding Board clarification extends the benefit and the lapse is only procedural.

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