Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Central Excise And ... vs Welspun Terri Towels on 26 November, 2001
Equivalent citations: 2002(149)ELT593(TRI-MUMBAI)
JUDGMENT
Gowri Shankar, Member (Technical)
1. Welspun Terri Towel, Morai Vapi is the respondent to this appeal filed by the Commissioner. It is a 100% export oriented unit. It had installed in its factory both imported as well as indigenously manufactured machinery. No duty was paid on these goods by virtue of the exemption contained in notification 13/81 (exempting imported material from customs duty) and notification 1/95 exempting indigenously manufactured machinery from excise duty. The machinery consisted in the main blow room and other machinery required for the manufacture of yarn and towels of cotton which the respondent was to manufacture. Early on 17.5.95 a fire broke out in the cotton godown of the concern. The fire raged till 4 O'clock that evening. The fire, which has subsequently been certified by appropriate authorities to be accidental, caused considerable damage to the machinery and other goods.
2. On this coming to be known, the departmental authorities wrote to the concern demanding customs and excise duty foregone on the machinery (customs duty of Rs. 96,09,833 and excise duty of Rs. 1,48,080) on the ground that the benefit of the two notifications in question would not be available, since the machinery had not been utilised for the purpose for which exemption had been granted i.e. manufacture of cotton towels and yarn to be exported. The firm paid the duty under protest. It subsequently claimed remission of the customs and excise duty under Section 23 of the Customs Act and 147 of the Central Excise Rules. The Commissioner, after hearing the concern on the application, found that it was entitled to the remission in this appeal.
3. The appeal filed by the Commissioner is in pursuance of an order dated 19.5.99 passed by the Central Board of Excise and Customs under 129D of the Customs Act, 1962. The Board subsequently issued a "corrigendum" to this order, the effect of which would be to treat that order as having also been issued under provisions of Section 35E of the Central Excise Act, 1944. That order is clearly beyond the period of one year reckoned from the date of the Commissioner's order within which it could have been passed. The representative of the appellant accepts this position, and the consequence is that the appeal will have to be limited to the remission of Customs duty and will not cover the excise duty in question. keeping this in mind, we will proceed to consider the grounds in the appeal.
4. The first ground is that after issue of the Jurisdictional Asst. Commissioner's "order contained in his letter ... dated 12.4.96, the said letter becomes the cause of action and necessary legal remedy as provided in C.Ex. Law was required to be sought" by the respondent. This letter of the Asst. Commissioner is in fact addressed to the Jurisdictional Superintendent. It refers to earlier letters to him and directs him to recover the duty immediately and report to the Asst. Commissioner. By the copy endorsed to it, the respondent was told "they are directed to pay up the Excise/Customs immediately on the machines/materials damaged in fire accident or action will be taken against them." We do not think it possible to consider that this letter is an order of adjudication. It could at most be said to be a demand for duty. It would be absurd to say that a letter addressed to a Superintendent by fact of being a copy addressed to the respondent becomes an order of adjudication against the respondent. Therefore the ground that "the original cause of action has lost its meaning" is without any basis.
5. The ground that the Commissioner should have inquired from the assessee whether it had filed or was intended to file any insurance claim is equally untenable. The thrust of this ground is that the assessee had, in addition to claiming remission from duty, also claimed insurance benefits. We have seen neither the insurance policy nor the claim made in terms of that policy. It is therefore not possible for us to say whether or not the respondent had validly claimed anything under the policy. This has however no bearing upon the issue before us. Grant of remission of custom duty under Section 23 of the Act has nothing to do with claiming insurance benefit. If the departmental authorities were of the view that the respondent had made a fraudulent claim on the insurance company, they were and still are at liberty to inform the concerned authorities. Nevertheless, the Commissioner's order cannot be found fault with on this ground. It was not required of him to look into it.
6. The claim that the assessee had not taken sufficient safeguard against fire is equally untenable. We have already noted that the appropriate authorities had found the fire to be accidental. Whether the accident could or could not have been avoided is a matter of speculation. There is nothing in the department's appeal to show that there was any element of fraud involved in filing the claim. It is not possible for us to agree, as the appeal claims, that if the respondent had taken proper precautions a fire would not have broken out. As we have noted, there is nothing in the report of the police or the fire authorities or any other document to support the view that the fire was caused by the respondent, or occurred because of its negligence. The Commissioner was not required to ascertain the cause of the fire that would be for the appropriate authority, the police or the fire department as the case may be to do.
7. The next ground in the appeal is that the conditions of notification 13/81 not having been complied with duty becomes payable. No doubt, if the conditions of notification granting exemption were not complied with, the duty that is foregone as a result of the exemption contained in the notification would be required to be paid. That would be the situation, if the goods had been cleared for home consumption after the being granted the benefit of the exemption. In the case before us, the goods had not been cleared for home consumption and were in the bonded warehouse. By application of the provisions of Section 23, remission of duty payable would be available. Hence, the goods would have been liable to duty in any event, even without the benefit of notification. The notification 13/81 no doubt was claimed and granted, in order to complete the assessment. But even if the benefit had not been granted, no duty would still be payable. The duty that would be payable as a result of the condition of the notification not having been complied with would be entitled to the provisions in terms of Section 23(1).
8. We therefore find no merit in the department's appeal and dismiss it.