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Judgment
K.L. Manjunath, J.—This appeal is by the revenue. The dispute is in regard to the excise duty payable by the respondent in respect of Naphtha stored in the were-house of Mangalore. The same was in the ware-house in order to supply the same to Tanir Bavi Power Project without paying the Central Excise Duty in terms of the Notification dated 1.3.2002. Naphta to be supplied to M/s Tanir Bavi Power Project was not liable to pay Central Excise Duty as the same was exempted under the said notification. Thereafter, under Circular No. 796/29/2004-CX dated 4.9.2004 Government of India has withdrawn ware-housing facilities w.e.f. 6.9.2004 and in para-1 of the said circular it is held that any stock after 6.9.2004 remain in ware-house are liable to pay Central Excise Duty. Relying upon this provision of law, revenue called upon the respondent M/s Bharath Petroleum Corporation Ltd. to pay Rs. 4,78,08,412/- plus Education Cess of Rs. 9,37,420/- by exercising powers u/s 11-A and interest u/s 11AB of the Central Excise Act, 1944. Aggrieved by the same, respondent assessee filed an appeal before the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Bangalore in Appeal No. (sic)/525 & 526/05, (sic)/1024/05 which appeal has been allowed by the Bench on 25.7.2006. Aggrieved by the said order, present appeal is filed u/s 35(G) of the Central Excise Act, 1944 raising the following substantial question of law:
Whether the tribunal was justified in holding that the goods lying in the bonded ware-house as on the mid-night of 5/6.9.2004 was not liable to Central Excise Duty, if supplied to end users on and use exemptions thereafter, even tough the warehousing facility was withdrawn w.e.f. 6.9.3004 under the notification dated 4.9.2004?
Heard the counsel for the parties.
It is no doubt true that the warehousing facility was withdrawn w.e.f. 6.9.2004 pursuant to the Circular dated 4.9.2004. It is also not in dispute that if any material which attracts excise duty remain the bonded warehouse on or before 6.9.2004 is liable to pay excise duty. But in para-4 of the said circular certain exemptions are granted. Para-4 of the circular reads as here under:
Certain products are allowed to be cleared without payment of duty to specified categories of and-users, subject to the specified conditions. These exemptions continued to be in force. If such clearances to the end-users are effected directly from the refinery, no difficulty should arise in the implementation of such end-use exemptions. If any problem is noticed in the administration of end-use exemption, the same may be examined by the Chief Commissioner immediately and the details promptly reported to the Board with suitable suggestions and recommendations including any refund mechanism.
After careful reading of para-4 of the circular, it is not in dispute that Naptha found in the ware-house was to be supplied by the respondent-assessee to Tanir Bavi Power Project. When there is an exemption for the use of such Naptha for such Power Project, we are unable to accept the arguments advanced by the counsel for the appellant. Therefore, we are of the opinion that the tribunal was justified in allowing the appeal of the assessee relying upon para-4 of the circular dated 4.9.2004.
In view of para-4 of the circular dated 4.9.2004 when respondent-assessee enjoins power to supply Naptha which was in the warehouse on 6.9.2004 to Tanir Bavi Power Project, no substantial question of law arises in this appeal.
Accordingly, this appeal is dismissed.