9911796707
TMI Blog2003 (12) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the manufacture of Polyol Glycol etc. falling under Chapter Heading 28 and 29. Appellants were alleged to have (i) cleared samples drawn from the Drumming Plant to the R&D Section within the factory for testing (ii) final products and inputs on which Modvat credit was availed were cleared for test purposes, outside the factory, (iii) Nitrogen was cleared for non-plant and non-manufacturing purposes within the factory premises. Show cause notice was issued proposing to demand duty in terms of the proviso to Section 11A(1) and the show cause notice culminated in the order of adjudication passed by the original authority by his order dated 26-2-2001 by which he has confirmed a duty demand of Rs. 92,464/- towards samples cleared to their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction. The administrative block and R&D place has been approved as part and parcel of the factory premises. Therefore, duty cannot be demanded on the Nitrogen. 3. Shri M. Venkataraman, learned Counsel appearing for the appellants reiterated the grounds of appeal. He has also invited our attention to the following judgments : (1) Gas Authority of India Ltd. v. CCE, Bhopal, reported in 2001 (135) E.L.T. 475, wherein it was held that Nitrogen gas used within the factory for purging the tanker belonging to others, amounts to consumption within the factory of production and eligible for exemption in terms of Notification No. 40/85-C.E. (b) Maruti Udyog Ltd v. CCE, Delhi, reported in 2002 (147) E.L.T. 881. In this case, the Tribunal found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory premises to other agencies and customers for trial and testing without payment of duty? (4) Whether duty is demandable in respect of utilization of Nitrogen for non-plant and non-manufacturing activities within the factory premises? 6. Now we proceed to answer the above questions. As regards the 1st question, we find from the records that the Appellants are Registered with Central Excise. They have filed declaration and price list periodically which have been approved by the Department. This position has not been controverted by the Department. In the circumstances it cannot be held that appellants have held back information from the department so as to warrant invocation of longer period of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. The Hon'ble Supreme Court in the case of ITC Ltd. v. CCE, Patna, reported in 2003 (151) E.L.T. 246 (S.C.) = 2002 (53) RLT 875 (S.C.) has categorically observed that if samples are drawn for in house testing and proper records are maintained, then no duty is payable on the quantity taken for testing within the factory. We, therefore, respectfully following the ratio of the above judgments hold that no duty is demandable in respect of the goods which were taken to R&D department of the appellants within the factory, for the purpose of testing. 8. Coming to the next question whether the final product and Modvat inputs which were taken outside the factory for trial and testing by other agencies including customers is dutiable or not, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at nitrogen is not used for non-manufacturing activities like, Administrative block, Canteen and R&D for the reason that properties of Nitrogen is itself against general usage. They have also contended that Nitrogen is also used for purging purposes when the plant vessels are taken for maintenance for removing hydro carbons. They have also taken the plea that even assuming that Nitrogen is dutiable when used in R&D, Canteen and Administrative Blocks, the consumption is within the factory of production and when that be so, it is fully exempted as per Notification No. 8/96 dated 23-7-96, vide Serial No. 28.9 of the table annexed to the said Notification. We note that the definition of the term "factory" as per Section 2(e) of the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers belonging to other parties would be eligible for the benefit of exemption under Notification No. 40/85-C.E. dated 17-3-85. The appeal filed by the Department against the said decision of the Tribunal has been dismissed by the Hon'ble Supreme court as reported in E.L.T. Vol 140 A-82. Further, as we have noted above, the department itself on verification found that the administrative and R&D place has been approved as part and parcel of the factory premises. In the instant case, Nitrogen is used within approved factory premises and in terms of the Notification cited supra, no duty is payable if the same is used within the factory of production. The original authority also found that Nitrogen is used for manufacture of chilled water and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
