2003 PLP (Trib (PTD)

Messrs Shadman Metal Fabricators (Pvt.) Ltd. Manufacturers of metal containers supplied the Excisable goods to Messrs Associated Industries Limited Nowshera during the period 10-7-1996 to 11-11-1996 against AR-I and Central Excise duty @5% has been assessed and paid on the same supplies. These supplies were received and entered in the RG-II Register by Messrs Associated Industries Limited, which were subsequently issued for filling of ghee and vegetable oil. SUPPLY OF METAL CONTAINERS AGAINST AR-2 & AR-1. Messrs Shadman Metal Fabricators (Pvt.) Ltd. Removed its excisable goods against AR-1 as well as Alt-2 with payment of 5% Central Excise Duty w.e.f. 12-11-1996 upto 7-5-1999 but still the recipient of the supply i.e. Messrs Associated Industries Limited did not assess the central excise duty payable @ 5% against AR-1. It is worth-mentioning that the goods were received during the period by Messrs Associated Industries Limited against Form AR-2. Meaning thereby both the forms were used for the removal of excisable goods for industrial process. Messrs Shadman removed its excisable goods against. Form AR-1 during the period 11-7-1996 to 11-11-1996 and against AR-I and AR-11 during the period w.e.f. 12-11-1997 to 7-5-1999. The supplies removed against AR-1 has been entered in RG-11 register only whereas the supplies removed against AR-2 and AR-1 during the period has been entered in bond as well as RG-11 register. The Central Excise Duty should hake been paid by the recipient of the supply duly received against AR-2 without payment of Central Excise Duty. In both the cases entries have been made by AIL in the RG-11 register. (Sd.) Ishtiaq Ahmad Law Officer.

5. Both the parties did not contest this report and consented that the Tribunal may decide the case on merit accordingly.

6. Having heard the parties and on perusal of record of the case, we find that the exemption in excess of 5 % excise duty was available if metal containers were supplied for manufacture of kerosene or vegetable products or vegetable oils or mixture thereof provided that the provisions of Chapter X of the Central Excise Rules, 1944, were followed. The provisions of the said Chapter X envisage as hereunder in relation to despatch/supply of excisable goods under the said provisions:-- (1) The recipient mills should apply on Form AL-1 (Central Excise Series No. 1) for a licence under rules 192 to engage in business in connection with the goods relating estimated annual requirement of receipt of excisable goods; (2) The applicant (recipient mill) mill should possess a licence in Form L-1 (Central Excise Series No.21) issued by the Collector under rule 192 of the Central Excise Rules. This licence should be duly renewed; (3) The recipient mill (licensee) should furnish B-4 Bond (Central Excise Series No.16) with such surety, security, bank or insurance guarantee, in such amount as the Collector may approve; (4) The goods shall be transported to the recipient milt in terms of rules 193 against AR-2 application (Central Excise Series No.5) in case of receipt from other mills/supplier and against R. IC 1 (Central Excise Series No. 39) if received from the same factory i.e. where dispatcher and recipient mills are one and the same legal person: and (5) Goods, so removed/dispatched are stored and accounted for by the recipient mill, in terms of rule 194 of the Central Excise Rules, 1994, in a separate store-room in the recipient's mills in RG-11 register (Central Excise Series No.34)

7. The report submitted by Mr. Ishtiaq Ahmad shows total compliance of all the aforesaid provisions of the notification and the rules except that:

(1) AR-2 application were not made for the supplies (307 clearances) during 10-7-1996. to 11-11-1996 and instead clearances were made against AR-1 only. However, these too were duly entered in the RG-II register of the recipient mill and the recipient mill was holder of valid licence under rule 19 z, had executed B-4 bond to the satisfaction of the Collector and had entered these in. RG-11 register Mr. Ishtiaq reports non-entry in the Bond Register. However, we find that Bond Register is to be maintained by the Central Excise Officer Incharge of the recipient mills and not by the mill itself. Therefore, the default of non-entry in Bond Register cannot be termed as a breach of Chapter X of the Central Excise Rules, 1944, by the appellant or by the recipient mills. (2) Duty 5% should have been paid by AIL (the recipient mill).

8. On perusal of record of the case, we do not agree with Mr. Ishtiaq that the duty at 5 % should have been paid by the recipient mill against AR-2 application. The duty (non-remitted/non-exempted) at 5% is payable, in terms of rule 9 of the Central Excise Rules, 1944, by the manufacturer on the eve of its removal whether under AR-1 or tinder AR-2. The recipient mill takes over the liability of the (remitted/exempted) 10% duty if the goods are not properly received stored and accounted for in the recipient mills. We, therefore, discard this portion of the report submitted by Mr. Ishtiaq Ahmad. The only, breach of law is the removal of metal containers from 10-7-1996 to 11-11-1996 without any prescribed AR-2 application. However, this too is mitigated by the fact that there was an inappropriate direction by the Central ,Excise Circle Officer in his aforesaid Letter C. No.IV-CE-Misc/95/521 dated 2-7-1995. Moreover, the appellant supplied metal containers only and exclusively to a recipient mills who was duly licensed for the purposes of rule 192 of Chapter X of the Central Excise Rules, 1944, had a. valid B-4 bond as required under the said rule 192, had duly' received the metal containers and duly stored and the same in the- store room after entering it in RG-11 register- in terms of rule 194 of Chapter X of the Central Excise Rules, 1944, and there is no report about any shortage or misuse or misappropriation of the conditionally-exempted (in excess of 5 % ad. Val) metal containers in the recipient mills. For the above-specified mitigating circumstances of the case showing compliance of all the provisions of Chapter X of the Central Excise Rules, 1944, by the recipient mills, we are inclined to take a lenient view and condone the non-issuance of AR-2 applications in this case by the appellants during the period from 10-7-199 1 -11-1996. For the period from 12-11-1996 onwards, there is no compliance of the provisions of Chapter X of the Central Excise Rules, 1944, as verified by; Mr. Ishtiaq Ahamd. Law Officer -and accepted by representatives of both the appellants and the Collectorate. As a result, the impugned order is set aside and the appeal stands disposed of as accepted accordingly.

9. Inform all concerned accordingly.

10. Announced. C.M.A./637/Tax (Trib.) Appeal accepted