2013 (12) TMI 512

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....uty of Rs.6,03,49,647/- interest and penalty of Rs.6,03,49,647/- 4. E/521/11 Oct. 2008 to Aug. 2009 No. 13/2011 dated 18.2.2011 Duty of Rs.4,80,65,754/- interest and penalty of Rs.4,80,65,754/- 2. The facts of the case are the appellant was supplying Naphtha to M/s. Rashtriya Chemicals & Fertilizers Ltd. against the International Competitive Bidding to be used in the manufacture of fertilizer, and was clearing free of excise duty. 3. The Naphtha was supplied by the appellant to M/s. Rashtirya Chemicals & Fertilizers Ltd. clearing the goods duty free under Notification No. 6/2002-CEx. Dated 1.3.2002 as amended (or Notification No.6/2006). The said exemption is available if the Naphtha is used in the manufacture of fertilizers. However, it was found that the Naphtha so supplied was being burnt in the steam generation plant to generate steam. The steam so generated was then consumed by various plants (like Urea Plant, Ammonia Plant, Turbo Generators, Chemical Group Plant and Heavy Water Plant. Steam generated and consumed in Turbo Generators for generating electricity and also used in S.M. Header for further distribution to Organic Chemical Plant and Heavy Water P....

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.... and as per Customs Notfn. No.21/2002 dt. 01.03.2002, Naphtha is exempted. In the circumstances no bond is required to be executed as in the case of the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods)Rules, 2001". After issue of Notification No.6/2006-CE dt. 1.3.2006, M/s. RCF wrote a letter dt. 27.3.2006, informing the department that they shall be following the earlier instructions. After a year, again on 9.4.2007, they again informed the department that they shall be following earlier instructions. Ld.Adovcate argued that in view of the said letters M/s. RCF, the user of the Naphtha as also the appellant did not follow the C.T.-2 Certificate Procedure/Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. Ld. Advocate's main contention was that under no circumstances the liability can be fastened on the appellant as use of the goods is a post-clearance condition and the appellant has no means to enforce the post-clearance condition as the Naphtha is out of his control. If any duty is to be recovered it has to be from M/s. Rashtriya Chemicals & Fertilizers Ltd. as it is....

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....tion No.64 mentioned in Column no.6 is as under:-    "If the goods are exempted from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under Section 3 of the said Customs Tariff Act when imported into India" The relevant entry in Customs Notification No. 21/2002-Cus. dt. 1.3.2002 is as under: Table S. No. Chapter or Heading or sub - heading Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 76. 27.10 or 2714.90 All goods, for the manufacture of fertilisers Nil Nil 5 Condition No.5 in the said Notification reads as under:    "If the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996". 9. As mentioned earlier Notification No.6/2002-CE was superseded by Notification No.6/2006-CE and the corresponding entries are: S. No. Chapter or heading or subheading or tariff item of the First Schedule Description of excisable goods Rate Condition No 91. Any Chapter ....

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....d goods shall be used for the intended purpose. After the goods are imported the Assistant/Deputy Commissioner of Customs at the port of import is required to inform the said Jurisdictional Central Excise Assistant/Deputy Commissioner forwarding copy of the bill of entry. Even the manufacturer is required to give information regarding receipt of imported goods to the Jurisdictional Assistant /Deputy Commissioner of Central Excise and maintain records. Thereafter it is the Jurisdictional Central Excise Assistant/Deputy Commissioner who has to monitor the end use of such imported goods. In case, such imported goods are not used for the intended purpose, Jurisdictional Central Excise Assistant/Deputy Commissioner is required to take action to recover the Customs duty along with interest etc. from the manufacturing unit where the goods were intended to be used. 12. From the above, it is clear that the goods required for the manufacture of fertilizer are not unconditionally exempt from payment of customs duty but are subject to procedure laid down under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods)Rules, 1996. We note that the procedure....