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Alkali and Chemicals Corporation Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1987)(29)ELT635TriDel
AppellantAlkali and Chemicals Corporation
RespondentCollector of Central Excise
Excerpt:
.....it were an appeal filed before it.2. the dispute in the present appeal in which of the two central excise notifications, namely, 34/73 dated 1-3-1973 or 276/67 dated 21-12-1967 is applicable in the case of the appellants with reference to the 'benzene' obtained by them in accordance with the procedure set out in chapter x of the central excise rule, 1944, for the manufacture of bhc technical. notification no. 34/73 exempts inter alia benzene falling under .item no. 6 of the first schedule to the central excises and salt act from the excise duty leviable thereon as is in excess of rs. 34/- per k.l. provided that an officer not below the rank of an assistant collector is satisfied that the benzene is intended for use as solvent in formulation of pesticidal solutions, sprays and suspensions.....
Judgment:
1. The captioned appeal was originally filed as a revision application before the Central Government which, under the provisions of Section 35-P of the Central Excises and Salt Act, 1944, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.

2. The dispute in the present appeal in which of the two Central Excise Notifications, namely, 34/73 dated 1-3-1973 or 276/67 dated 21-12-1967 is applicable in the case of the appellants with reference to the 'Benzene' obtained by them in accordance with the procedure set out in Chapter X of the Central Excise Rule, 1944, for the manufacture of BHC technical. Notification No. 34/73 exempts inter alia benzene falling under .Item No. 6 of the First Schedule to the Central Excises and Salt Act from the excise duty leviable thereon as is in excess of Rs. 34/- per K.L. provided that an officer not below the rank of an Assistant Collector is satisfied that the Benzene is intended for use as solvent in formulation of pesticidal solutions, sprays and suspensions or for use in the manufacture of D.D.T. technical and B.H.C. technical and the procedure in Chapter X of the Central Excise Rules is followed.

Notification No. 276/67 exempts excisable goods falling under Central Excise Tariff Item Nos. 6 to 11A (Benzene falls under Item No. 6), produced in any premises (other than premises wherein refining of crude petroleum or shade or blending of non-duty paid petroleum product is carried on), declared under Rule 140(2) of the Central Excise Rules to be a refinery and cleared to another factory outside the refinery in accordance with the Chapter X procedure for use in the manufacture inter alia of pesticides, from the whole of the excise duty leviable thereon. Thus, while the first notification confers partial exemption on Benzene used in the manufacture of BHC technical (specifically mentioned), the second notification confers full exemption on Benzene used in the manufacture of pesticides. But the Assistant Collector, in his order-in-original dated 22-9-1980, considered that notification No.34/73 which was specific for BHC technical applied in the case of the appellants and not notification No. 276/67. He noted from the relevant ISI specification that BHC technical is used in large quantities in the preparation of a number of insecticidal formulations used in the control of insects, pests of agriculture and public health importance.

It appeared to the Assistant Collector that "pesticides" referred to in the notification No. 276/67 would not include BHC technical.

3. When the matter went up in appeal, the Appellate Collector, Calcutta took an entirely different line. He said in his order dated 16.3.1981 that the appellants had not established that the Benzene they procured, was from a premise (other than petroleum refineries) declared under Rule 140(2) of the Central Excise Rules to be a refinery.

4. In the hearing before us, Shri S.N. Mathur, learned Consultant for the appellants, contended that both the notifications were applicable depending upon the source of the Benzene. If it was from a petroleum refinery proper, then notification 34/73 applied. If it was a refinery declared as such under Rule 140(2) of the Central Excise Rules, then notification 276/67 applied. The appellants were getting Benzene from both sources. In the appeal before the Appellate Collector, his attention had been drawn to a communication to the Superintendent about their intention to procure a portion of their total requirements of Benzene from such declared refineries. Shri Mathur drew our attention to the communication dated 26th February, 1979 in this connection. The question to be decided was whether BHC technical was a presticide within the meaning of notification No. 276/67, Shri Mathur stated that the appellants sold both BHC technical as such and its formulations.

The literature on the product manufactured by the appellants under the brand name - "Gammexane-BHC" was also produced for our perusal.

5. Shri Raghvan Iyer, learned Departmental Representative, submitted that the literature produced by the party made it clear that BHC technical had insecticidal properties. The question would be in the context of the two notifications in force, which one of the notifications applied to the appellants.

6. We have considered the submissions of both sides. At the outset, we must note that the Appellate Collector recorded in his order that the appellants had not produced any evidence to show that the Benzene in question was procured from a declared refinery other than a petroleum refinery. This was not the basis on which the Assistant Collector proceeded to reject the appellants' claim. We feel, therefore, that the Appellate Collector should not have projected this matter into the proceedings without giving the appellants an opportunity of answering the question or objection.

7. We are not able to understand the objection of the Assistant Collector in recording in his order that the "pesticides" referred to in notification No. 276/67 do not include BHC technical. No reasons are given in support of this finding. It is abundantly clear from the literature produced by the appellants that BHC and its formulations find a variety of applications as insecticides and pesticides. Among the applications are agricultural, livestock, storage foodgrain, sugar industry. In short, the substance finds use in combating a number of agricultural, veterinary, health and household pests. In the circumstances, we fail to see how BHC is not a "pesticide". We hold that the subject Benzene was eligible for the benefit of notification 276/67.

8. In the result, we allow the appeal with consequential relief to the appellants.

9. M/s. Alkali & Chemicals Corporation are the litigants in a dispute with the Central Excise Department in which the contestants should be the manufacturers of the benzene and the Central Excise. The exemption asked for by M/s. Alkali & Chemicals notification No. 276/67-CE is on the benzene and the natural claimants would therefore be the manufacturers and not the buyers of the benzene. Of course, the buyers are an interested party especially if they stand to benefit when the exemption is given to the manufacturers. But the claimant to the exemption can be no one but the manufacturers and it is they alone who can assert a status as an aggrieved party against the Central Excise.

It is they alone who can receive from the Central Excise the concession under the exemption notification. No buyer of the goods can. And no buyer of the goods can arraign the Central Excise on the ground of the latter's refusal of the concession; because such buyer is not the beneficiary under the law. The beneficiary is only the manufacturer.

10. I agree with learned brother Sankaran that the Asstt. Collector was wrong to hold that use of the benzene in the manufacture of BHC would not entitle it to the exemption under notification No. 276/67-CE. But the right claimant should be the manufacturers of the benzene and not M/s. Alkali & Chemicals. The latter have not only claimed the exemption but have also called for refund of the duty collected by the Central Excise on the benzene.

11. I hold that M/s. Alkali & Chemicals are not entitled to the concession under notification No. 276/67-CE. Nor can the Central Excise duty they demand be refunded to them.


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