TaxTMI 
TaxTMI 
2014 (11) TMI 534
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....to 4, the 5th Respondent sends PBFS through pipeline to the factory of the petitioner. The petitioner extracts Poly Iso Butylene from the input sent by the 5th Respondent and the petitioner sends back the remnants, to the 5th Respondent. The Respondents 1 to 4 themselves, have worked out on the basis of the meter readings and estimate of the process engineering that what is extracted by the petitioner accounts for 17% and what is sent back is 83% of the Feed Stock. 5. In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise and Salt Act, 1944, the Central Government exempted Petroleum Gases and other Gaseous Hydrocarbons falling under Chapter Heading No.27.11 of the schedule to the Central Excise Tariff Act, 1985, intended for use in the manufacture of Poly Iso Butylene, from so much of the Excise Duty, as is in excess of the Duty leviable on the quantity of the gas consumed in the manufacture of Poly Iso Butylene. This exemption was granted first by Notification No.157/89-C.E. dated 17.07.1989. 6. A similar exemption Notification was issued on 01.03.2006 in respect of various items. Under Serial No.29 of the table under the said Notification....
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....ndents 1 to 4 claim that the show cause notice is within the parameters of law. 11. From the pleadings of both sides and the arguments advanced, it is clear that two questions arise for consideration. They are:- (1) Whether the writ petition is maintainable, since what is impugned is only a show cause notice. (2) If the answer to the first question is in the affirmative, whether the case on hand justifies the interference with the show cause notice. Question No.1: Maintainability: 12. Mr.Rajnish Pathiyil, learned Senior Central Government Standing Counsel appearing for the Respondents 1 to 4 has cited a long list of decisions, where the Courts refused to interfere with show cause notice. The decisions cited by the learned Senior Central Government Standing Counsel are as follows:- (1) Medopharam vs. Superintendent of Central Excise, Madras (1995 (77) E.L.T.524) (2)State of Madhya Pradesh vs. M.V.Vyavsaya and Company (MANU/SC/2146/1996). (3)Alembic Glass Industries Ltd., vs. Union of India (1998 (97) E.L.T. 28 (SC). (4) G.K.N.Driveshafts (India) Ltd., vs. Income Tax Officer (MANU/SC/1053/2002). (5)G.K.N.Driveshafts (India) Ltd., vs. Income Tax Officer (....
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.... of self imposed restrictions. 19. In Union of India vs. Vicco Laboratories (2007 (13) SCC 270), the Supreme Court pointed out that normally the writ Court should not interfere at the stage of show cause notice. Abstinence from interference is a normal Rule. But the said Rule is not without exceptions. The exceptions pointed out by the Supreme Court in Vicco Laboratories are two: (1) Where the show cause notice is issued without jurisdiction; and (2) Where it is an abuse of the process of law. Therefore, what is required to be seen in such cases is whether the show cause notice was without jurisdiction or whether the show cause notice was nothing but an abuse of the process of law. Question No.2: 20. Having decided that the writ petition is maintainable on two limited grounds, let me now see whether the case on hand falls within any of the two grounds. 21. As pointed out earlier, the petitioner receives PBFS from 5th Respondent through pipelines and extracts Poly Iso Butylene from the same and sends back the remnants. The Respondents themselves have calculated that what is extracted by the petitioner constitutes 17% of what is sent by the 5th Respon....
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....etroleum gases and other gaseous hydrocarbons consumed in the manufacture of polyisobutylene shall be calculated by subtracting from the quantity of the said gases received by the factory manufacturing polyisobutylene the quantity of the said gases returned by the factory to the refinery, declared as such under Rule 20 of the Central Excise Rules, 2002, which supplied the said gases. " Nil -- 24. Similarly, in the Notification dated 17.03.2012, more than about 300 items were included. Petroleum gases and other gaseous hydrocarbons were included at Serial Number 83 and the entry reads as follows:- S.No. Chapter or heading or subheading or tariff item of the First Schedule Description of excisable goods Rate Condition No. 83 2711 "Petroleum gases and other gaseous hydrocarbons received by the factory from the refinery intended for use in the manufacture of polyisobutylene or Methyl Ethyl Ketone (MEK) and returned by the factory to the refinery from where such petroleum gases and other gaseous hydrocarbons are received. " Explanation:- For the purposes of the exemption the quantity of the petroleum gases and other gaseous hydrocarbons consumed in the m....
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.... of Excise leviable under the Excise Act or the additional Duty leviable under Act 58 of 1957 or Act 40 of 1978. Rule 4 stipulates the conditions for allowing CENVAT Credit. Sub-rule (1) of Rule 4 makes it clear that the CENVAT Credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service. Rule 5 provides for refund of CENVAT Credit. 30. Rule 6 deals with the obligation of the manufacturer of dutiable and exempted goods and provider of taxable and exempted services. Sub-rule (1) of Rule 6 states that CENVAT Credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2) of Rule 6. Sub-Rule (2) of Rule 6 obliges the manufacturer or provider of output service, who avails CENVAT Credit and who manufactures final products which are chargeable to Duty as well as exempted goods to maintain separate accounts. Sub-rule (2) of Rule 6 reads as follows:- "(2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input service....
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....inery and returned after extraction of Polyisobutylene are exempted. There has never been a dispute in the past 24 years that what is received by the petitioner and what is sent back by the petitioner are both petroleum gases. This is why the apportionment of 17% and 83% as between the petitioner and the 5th Respondent has come to be accepted. The second Respondent has also omitted to take note of the fact that what is returned to the 5th Respondent is also exempted at the hands of the 5th Respondent. 35. The impugned show cause notice actually has the effect of destroying the very exemption notification. A careful look at the ad hoc exemption order bearing No.23/3-95-CX dated 24.03.1995 issued by the Under Secretary to the Government of India, Ministry of Finance, Department of Revenue would show that the Government itself was aware of the supply by the 5th Respondent of Polyisobutylene enriched LPG to the petitioner through the pipeline. The petitioner extracts Polyisobutylene and returns the remnant after subjecting it to a process. The exemption Notification as originally issued on 17.07.1989, was actually rescinded by another Notification dated 01.03.1994, when Modvat was e....