TaxTMI 
TaxTMI 
2024 (10) TMI 450
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....herein a mandatory requirement for the assessee to maintain charge-wise register, failure whereof would render the assessee not eligible to exemption?" [2] The brief facts of the case are that the appellant is engaged in the business of manufacturing vegetable products falling under Chapter 15 of the Schedule to the Central Excise Tariff Act, 1985. [2.1] The appellant follows various procedures under the Central Excises and Salt Act, 1944 (for short, "the Act") and the Central Excise Rules, 1944 (for short, "the Rules"). [2.2] The Government of India, in exercise of its powers, issued a Notification No. 115/86 dated 1st March 1986 as amended wherein it contains the provisions for granting exemption to vegetable product falling under Sub-Heading No.1504 of the Schedule to the Central Excise Tariff Act, 1985 subject to increased use of the specified minor oils and conditions. The said Notification No. 115/86-C.E. dated 1st March 1986 reads as under: "In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. ....
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....e process of hydrogenation for conversion into the said vegetable product; (4) the amount of exemption shall, at the option of the manufacturer, be calculated either on the basis of individual charge or on monthly basis : Provided that where the manufacturer opts for the exemption on monthly basis, the individual charges which are not eligible for exemption under this notification shall be excluded from the eligibility of concession on such monthly basis : Provided further that where a manufacturer exercises such option, he shall be eligible to vary the option only once during the financial year after giving one calender month's notice in writing to the proper officer; (5) where the percentage point increase is in a fraction, the increase in respect of such fraction shall also be taken into account for calculating the amount of such exemption." [2.3] It is the case of the appellant that the appellant was not aware as to how to claim the benefit thereunder. The said exemption was based upon the use of the cotton seed oil. The appellant somehow claimed the benefit under the said Notification based upon the figures of concurrent use of the sa....
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....95 remanding the matter to the Assistant Commissioner of Central Excise, Division-II, Rajkot. [2.10] On remand, the Assistant Commissioner of Central Excise, Rajkot decided the issue ex-parte as the appellant could not remain present. The adjudicating authority confirmed the demand in its entirety vide common Order-in-Original Nos. 21 to 23/Refund/96 dated 16th February 1996. [2.11] Being aggrieved, the appellant preferred an appeal before the Commissioner of Central Excise and Customs (Appeals) who rejected the appeal vide order dated 13th October 1999 on the ground that there being a delay on the part of the appellant in filing the appeal. The Commissioner of Central Excise and Customs (Appeals) also decided the appeal on merits after considering the case record and the submissions made by the appellant in the appeal memorandum and the submissions made during the course of personal hearing by observing as under: "It is observed from the case record that the appellants had not fulfilled the requirement of filing a specific option for claiming exemption on monthly basis or individual charge basis as required in Explanation 4 to Notification No. 11/586-CE dated 1.3.86....
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....planation 3 and 4 of the notification: (3) the percentage of cotton seed oil or specified minor oils used in the manufacture of the vegetable product, shall be calculated with reference to the weight of such oils and the total weight of the mixture of oils immediately before such mixture is subjected to the process of hydrogenation for conversion into the said vegetable product; (4) the amount of exemption shall, at the option of the manufacturer, be calculated either on the basis of individual charge or on monthly basis." 7. As is clear from the reading of the above condition of the notification, the percentage of cotton seed oil or specified oil was to be calculated with reference to the weight of such oils and the total weight of the mixture oils immediately before such mixture is subjected to the process of hydrogenation (emphasis provided). As such, the percentage use of the specified minor oil was required to be ascertained for the purpose of exemption on charge wise basis i.e. the percentage of such oil as compared to the total weight of the mixture immediately before hydrogenation. Admittedly, the appellants had not maintained any charge wise acco....
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....Court and in the case of Flock India, reported in 2000 (120) ELT 285." [3] This Court vide order dated 11th September 2006 admitted these Tax Appeals on the aforesaid common question of law. [4] Learned Senior Advocate Mr. Devan Parikh for the appellant submitted that the Assistant Commissioner of Central Excise, while granting the refund, has scrutinized the record produced by the appellant along with refund claims and thereafter, considering the Notification No. 115/86, allowed the refund to the appellant. It was submitted that the adjudicating authority, appellate authority and the CESTAT have committed a grave error in reversing the order and in granting the refund by misinterpreting the Explanation (3) and Explanation (4) of the said Notification. It was submitted that the Notification clearly demonstrates the intent on the part of the Government to grant partial exemption from duty depending upon the use of cotton seed oil or specified minor oil in excess of 15% or 3% respectively in the manufacture of the vegetable products. [4.1] Referring to the Explanation (4) of the said Notification, it was submitted that nowhere it is provided for any procedure to be followed ....
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....not be taken at all for non-compliance of the essential conditions. It was therefore submitted in the facts of the case that the said decision has no application as the issue involved is about not fulfilling the procedure prescribed in Explanation (4) of the said Notification. It is submitted that it is not the case of the respondent that the appellant is not entitled to any exemption as provided in the said Notification, however, the only allegation from the show cause notice stage as well as the order-in-original is to the effect that the appellant has not maintained any charge-wise account for the cotton seed oil, as required vide Explanation (3) of the said Notification and the appellant did not file any option to maintain the refund claim on monthly basis and due to such alleged default on the part of the appellant, the exemption resulted into refund and was ordered to be recovered by the impugned order. It was therefore submitted that such action on the part of the respondents authorities for recovery of the refund which was already sanctioned after proper scrutiny of the record, is contrary to the intended purport of the Exemption Notification granting exemption to the appel....
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....in excess of more than 15% which entitles the appellant to get the exemption under the said Notification. [4.10] It was further submitted that the records maintained by the appellant under the provisions of the Act as well as under the Essential Commodities Act are more than sufficient to demonstrate the substantial large consumption of cotton seed oil much above the required consumption of 15% as per the said Notification. [4.11] It was submitted that it is not in dispute that the appellant was maintaining Form - IV Register which is a statutory register under the provisions of the Act meant for consumption of raw material which was produced before the Assistant Commissioner of Central Excise along with the refund claim showing the daily consumption of the cotton seed oil for the relevant period of March to June 1986. [4.12] It was submitted that the statutory register clearly demonstrates the usage of the cotton seed oil for the relevant period and accordingly, the respondents authorities could not have revised or recalled the order of refund on the basis of the application applying the provisions of Explanation (3) and (4) of the said Notification. [4.13] Learned Sen....
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....d that Explanation (4) clearly stipulates that the amount of exemption shall be at the option of the manufacturer be calculated either on the basis of the individual charge or on monthly basis. It was therefore submitted that the appellant has neither given any option that the appellant is to claim the refund on the basis of the calculation on the basis of individual charge or on monthly basis. It was pointed out that it is not in dispute that the appellant did not maintain the record on the basis of the individual charge or usage of the cotton seed oil and in absence of any option exercise by the appellant to make the calculation on monthly basis, the adjudicating authority as well as the appellate authority have rightly come to the conclusion that the appellant is not entitled to the benefit of the Exemption Notification in absence of any fulfillment of Explanation (3) and (4) as prescribed the calculation of percentage of the cotton seed oil. [6] It was further submitted that the CESTAT after considering the facts of the case has rightly relied upon the decision of the Hon'ble Supreme Court in the case of Wipro Limited (supra) wherein the Hon'ble Apex Court while examining th....
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.... that such vegetable products for additional percentage point of increase in the use of the cotton seed oil in excess of 15% and in case of specified minor oil being 3% of the total oil used. [9] The Notification also contains the Explanation with regard to what is vegetable products or rice brand oil of edible grade as far as Explanation (1) and (2) are concerned. We are concerned with the interpretation of Explanation (3) and (4) which provides the method of calculation of percentage of the cotton seed oil or specified minor oil used in the manufacture of the vegetable products. As per Explanation (3), percentage of use such cotton seed oil or specified minor oil has to be calculated with reference to the weight of such oil and total weight of the mixture of oil immediately before the mixture is subjected to the process of Hydrogenation for conversion into the vegetable products. Explanation (1) provides that "vegetable product" means any vegetable oil or fat which, whether by itself or in admixture with any other substance, has by Hydrogenation or by any other process been hardened for human consumption. Explanation (4) provides for an option to calculate the percentage of us....