Custom, Excise & Service Tax Tribunal
M/S Ram Gopal & Sons vs Cce, Delhi-Iv on 24 December, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 24.12.2013
Excise Appeal No. 3528 of 2012-SM
[Arising out of Order-in-Original No. 001/2011-12/HQRS(TECH) dated 12.1.2012 passed by the Commissioner of Central Excise, Faridabad]
For Approval & Signature :
Honble Mr. Rakesh Kumar, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s Ram Gopal & Sons Appellants
Vs.
CCE, Delhi-IV Respondent
Appearance:
Shri Vivek S. Agarwal, Advocate - for the appellant Shri R. Puri, D.R. - for the respondent Coram : Honble Mr. Rakesh Kumar, Member (Technical) Final Order No.58694/2013 Per Rakesh Kumar :
The facts leading to this appeal are in brief are as under.
2. The appellant manufacture henna hair dyes and are registered with Central excise duty. Their factory is at Faridabad, Haryana. They cleared one consignment of Henna Hair Dye under ARE I No. 01/2010-2011 dated 7.4.2010 to ICD, Tughlakabad, New Delhi, for export from the ICD, Tughlakabad. The consignment was to be transported to gateway for export to Saudi Arabia. The declared value of the consignment was Rs.66,99,375/- involving Excise duty of Rs.6,90,036/-. However, before the goods could move from ICD, Tughlakabad to gateway port for export out of India, there was fire accident in the warehouse at the ICD in which the goods were totally destroyed. The appellant submitted an application dated 7.5.2010 under Rule 21 of the Central Excise Rules, 2002 for remission of duty in respect of the goods cleared for export which had been destroyed at the ICD before the same could reach the gateway port for export out of India. The Commissioner vide Order-in-Original dated 12.1.2012 rejected the application for remission on the ground that while Rule 21 of the Central Excise Rules 2002 provides for remission of duty in respect of goods lost or destroyed due to natural cause or due to unavoidable cause at any time before removal of goods, in this case the goods were destroyed due to accident after their removal for exports under ARE-I. Against this order of the Commissioner, this appeal has been filed.
3. Heard both sides.
4. Shri Vivek S. Agarwal, ld. Counsel for the appellant, pleaded that in respect of the goods cleared for export, the place of removal is the gateway port/airport from where the goods are exported out of India, that since in this case, the goods were destroyed due to fire accident at the ICD, Tughlakabad, it cannot be said that destruction took place after the removal of the goods, as the removal is complete only when the goods have been exported out of India, that in this regard he relies upon the judgement of the Tribunal in the case of Kuntal Granites Ltd. Vs. CCE 2007 (120) ECC 77 wherein in respect of 51 pieces of granite slabs cleared from the factory for export and destroyed in a road accident in course of transportation by road from the factory to the port, the Tribunal held that loss of the goods due to accident was before the removal of the goods, as the place of removal would be the port from where the goods were to be exported and accordingly the Tribunal set aside the order disallowing remission of duty, that the same view has been taken by the Tribunal in the case of CCE Vs. Adani Pharmachem P. Ltd. (Final Order No. A/1387-1393/2008-WZB/AHD dated 16.7.2008) wherein the Tribunal relied upon the Division Benchs judgment in case of Kuntal Granites Ltd. , that the term place of removal has to be understood in terms of its definition as given in Section 4(3)(c) of the Central Excise Act and that since in respect of the goods exported out of India, the sale is completed only after their export out of India, the place of removal has to be treated as the port from where the goods were exported out of India and that in view of the above, the impugned order is not correct.
5. Shri R.Puri, ld. D.R., defended the impugned order and reiterating the findings of the Commissioner pleaded that it is the factory which is the place of removal and not the ICD, Tughlakabad and that in this regard he relies on order in revision passed by Central Government in the case of Welspring Universal 2012 (285) ELT 135 (GOI) wherein in a case involving similar facts, a contrary view has been taken. He also pleaded that in terms of Rule 21 of Central Excise Rules, for remission of duty, the loss or destruction due to natural causes or unavoidable accident should have taken place at any time before the removal, that the wordings at any time before removal in Rule 21 refer to loss or destruction of the goods at any time, before the time of removal and that time of removal as defined in Section 4(3)(cc), even in respect of goods where the place of removal is depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance, is the time at which such goods are removed from the factory and that in view of this, even if the sale of the goods cleared for export is deemed to have completed after the goods have been physically exported out of India, the time of removal would still remain the factory gate. He, therefore, pleaded that there is no infirmity in the impugned order.
6. I have considered the submissions from both the sides and perused the records. Rule 21 of the Central Excise Rules, 2002 regarding remission of duty is reproduced below :
21 Where it is shown to the satisfaction of the Commissioner that goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal, he may remit the duty payable on such goods, subject to such conditions as may be imposed by him by order in writing:
According to the learned DR, from perusal of this Rule, it is clear that only when the loss or destruction of goods due to natural causes or unavoidable accident has taken place at any time before the removal, the remission of duty on the goods can be considered by the competent authority and the words at any time before removal refer to the time of the loss or destruction of the goods being before the time of removal which, even if the definition of this term as given in section 4(3)(CC) is adopted, would be the time of removal from the factory even if the sale after clearance has taken place from the depot or other premises. However, the Appellant rely upon the judgement of the Division Bench in Kuntal Granite Ltd. (Supra) which accordingly to them is binding on single bench.
7. From perusal of Rule 21 of the Central Excise Rules, 2002, it is seen that application for remission of duty on the goods lost or destroyed by natural causes or due to un-avoidable accident can be considered by the competent authority only if such loss or destruction has taken place at any time before the removal of the goods or in another words the time at which the loss has taken place is before the time of removal as the words at any time before removal means at any time before the time of removal. The Rule does not say that the remission of duty in respect of goods lost due to natural causes or un-avoidable accident would be admissible when such loss has taken place at any place before the place of removal. The Division Bench in the case of Kuntal Granite Ltd. (Supra) has interpreted Rule 21 to mean that loss should have been taken place at any place before the place of removal, which in my view is not correct as it amounts to reading the words in this rule which are not there. When the Rule 21 provides that for remission of duty the loss should have taken place at any time before the time of removal, it is the definition of time of removal as given in Rule 4(3)(cc) which has to be adopted and according to which when the goods are not sold from the factory but are sold after clearance from the factory, from depot or other places, the time of removal would be time at which the goods are cleared from the factory. Thus in such cases, even if the place from where the goods are exported out of India is treated as place of removal, the time of removal in term of definition of this term in section 4(3)(cc) would remain the time at which the goods are cleared from the factory. Moreover it is also doubtful as to whether the definition of place of removal as given in section 4(3)(c) can be adopted for the purpose of Rule 21 of the Central Excise Rules, 2002 as in terms of section 4(3), the definitions of various terms given in this sub-section are for the purpose on this section i.e. section 4 which is applicable for determination of assessable value of the goods in respect of which there is ad-valorem rate of duty and which are not covered by section 3(2) or section 4A of the Act. The natural meaning of the expression at any time before removal is any time before the time of clearance of the goods from the factory. In fact if the logic of Tribunals judgment in case of Kuntal Granite Ltd. (Supra) is adopted, remission of duty would be admissible even in the cases where the goods are destroyed or lost in course of transit from the factory to the depots or to consignment agents premises or to the customers premises in the case of FOR sales or are lost/destroyed or rendered unfit for marketing during storage at the depots or at Consignment Agents premises. I, therefore, have strong reservations about the correctness of this decision.
8. However, since the judgment in the case of Kuntal Granite Ltd. (Supra), is the judgment of a Devision Bench which is binding on a single bench, judicial discipline requires that this judgment must followed. Accordingly following the judgment of the Tribunal in the case of Kuntal Granite Ltd.(Supra), the impugned order is set aside. The appeal is allowed.
(Dictated & pronounced in open Court) (Rakesh Kumar) Member (Technical) RM 1