Customs, Excise and Gold Tribunal - Delhi
Indian Farmers Fertilizers Co-Op. Ltd. vs Collector Of C. Ex. on 14 December, 1988
Equivalent citations: 1989(22)ECR353(TRI.-DELHI), 1989(41)ELT474(TRI-DEL)
ORDER V.P. Gulati, Member (T)
1. This is an appeal against the order of Collector of Central Excise, Allahabad demanding duty from the appellants in respect of 26.940 K.L. of raw-naphtha consigned to them by M/s. Indian Oil Corporation, Gujarat Refinery, Jawahar Nagar on payment on concessional rate of duty in terms of Notification 187/61-C.E., dated 23-12-1961 as amend from time to time for not satisfactorily accounting for the same in terms of Rule 196 of the Central Excises and Salt Act and rules. The appellants hold a L-6 licence under Rule 192 of the Central Excise Rules and the concessional rate of duty under the said notification was contingent upon their following the Chapter X Procedure.
The proceedings were initiated by issue of a show-cause notice dated 23.7.81 stated to have been received by the appellants on 14.10.81. Paras 1 & 2 of the show-cause notice, for convenience of reference, are reproduced below:
"Whereas, it appears, on consideration that there is no evidence to prove that loss of 26.940 Kl. of Raw Naptha was due to leakage in railway tank wagon.
M/s. Indian Farmers Fertilizer Corporation is therefore required to show cause to the undersigned as to why duty may not be charged on 26.940 Kl. of Raw Naphtha amounting duty to Rs. 60599.91 reported to have been lost in transit."
2. It is seen from the record of the proceedings that the shortage occurred, as one wagon stated to have been loaded at the consignors' end with Raw Naphtha, was received empty at the consignees' end. This wagon was stated to be marked 'not fit' for naphtha loading.
3. The Collector adjudicated the case after taking into consideration the submissions made in reply to the show-cause notice as also after giving them a hearing.
4. The learned advocate for the appellants assailed the impugned order on the following grounds:
(i) the show-cause notice was defective in as much as the Collector right at the time of the issue of show-cause notice, came to the conclusion that the loss was not due to leakage in the railway tank wagon;
(ii) the demand was time-barred as duty short levied could be demanded only within the period of six months in terms of Section 11A while the demand had been raised after about a period of two years; and
(iii) The Collector had no jurisdiction to decide the case as the competent jurisdictional authority was the one at the consigners end; further since it was a case of short levy in terms of Section 11 A, Assistant Collector alone had the jurisdiction to decide the issue.
5. The learned advocate drew our attention to the opening part of the show-cause notice (para reproduced supra).
6. The Collector, he pleaded right at the time he issued the show-cause notice, concluded that the loss in the tank wagon was not due to leakage. He pleaded that conclusion of the Collector in regard to the reason for the loss was premature and that no correspondence between the Collector and the Department preceded the issue of the show cause notice.
7. He pointed out that there was no mention in the show cause notice as to the material on consideration of which the Collector came to the conclusion that the loss was not due to the leakage in the railway tank wagon during transit. He pleaded that in view of this, the show-cause notice was bad in law and the proceedings drawn in pursuance to that were void.
8. Limitation: - The learned advocate stated that wagons containing the raw-naptha arrived at the Railway Station at Allahabad on 5.10.79 and the loss was reported to the Superintendent (Central Excise) on 13.10.79. He drew our attention to the relevant documents filed in this regard particularly to the intimation sent regarding the receipt of goods by the appellants showing the shortage of the goods received. He pleaded that the show cause notice dated 23.7.81 was received by them on 14.10.81 after a period of two years of their reporting the loss to the Department.
9. He pleaded that even though Chapter X deals with remission of duty on goods for industrial purposes, the removal of goods was under an exemption notification and, therefore, the question involved in the proceedings was not that of remission of duty but of the recovery of duty short levied for alleged non-fulfilment of the conditions of the notification. He pleaded that goods were exempted in pursuance of the power vested in the Central Government under Section 37 (2) read with Rule 8(1) of the Central Excise Rules and this exemption was not in the nature of remission contemplated under Section 5 of Central Excises & Salt Act.
10. His pleas are that being a case of short levy, under Chapter X under Rule 196, the limitation in terms of Section 11A would be applicable and the demand could be raised only within a period of six months from the time the loss was reported to the Department.
11. He pleaded that in the case, of warehoused goods, where duty was demanded in terms of Rule 160 which is worded similarly as the Rule 196, this Tribunal has held in the case of Hindustan Petroleum Corporation v. Collector of Central Excise that the limitation of Rule 11A would apply. The relevant paras (18 & 19) of the judgement, are reproduced below for convenience of reference:
"From the facts of the case it is noticed that the show cause notice was issued on 9.8.78. The claim relates to the period from 1.4.78 to 30.6.78. Rule 160 of the Central Excise Rules, 1944 has been set out in the show cause notice. On behalf of the appellants, it is argued that Rule 160 will not apply to the facts of the case. Rule 160 contemplates demand of duty if the goods are removed without permission or lost or destroyed. The appellants have admittedly removed the goods after following the procedure set out under the Central Excise Rules. So the impugned demand cannot be raised under Rule 160. Even if it is assumed that the rule could be invoked it is subject to Rule 10 as it stood at that time. The period was one year during the relevant time. The annexure to the adjudication order indicates the respective dates of the show cause notices and the period for which the demands were raised. In some of the cases we find that the demand is time-barred. Further the show cause notice has been issued to the appellants for the wash oil received from Fuels Refinery. If the department wanted to rely on Rule 160 the demand for duty should have been raised on the removal by Lube Refinery. In that view also, the present show casue notice is ab initio void."
"We are of the opinion that the show cause notice issued is invalid. Point (iv)".
He cited the following further case in support of this plea:
(a) 1986 (26) ELT 578 (Tribunal)
(b) 1987 (31) ELT 743
(c) 1985 (21) ELT 289
12. He, further, pleaded that in case it was held that the demand was not hit by limitation for the reasons that Rule 196 does not provide for limitation, the finding will be violative of Article 19 of the Constitution as it will bring a procedural discrimination between those who remove the goods in terms of exemption notification and those-who did not do so. He cited the following cases law in support of his this pleas:
(a) AIR 1957 (SC) 532
(b) AIR 1970 (SC) 1126
13. He pleaded that he was aware that in the case of Bajaj Tempo [1984 (17) ELT 205] (para 8) the Tribunal has held that if the demand is raised under Rule 196 no limitation would apply and this has been followed in the case of Amber Paints, Bombay by the Tribunal in the case reported in 1985 (22) ELT 297.
14. He pleaded that in the first case, the decision of the Tribunal was based on the concession by the learned advocate of the appellants and, therefore, no precedence can be taken to have been set and no law could be taken to have propounded on the point.
15. Jurisdiction: - He pleaded that the goods were purchased and cleared on payment on concessional rate of duty at the IOC end in Gujarat and, therefore, the competent Collector to recover the duty short levied was the Collector of Central Excise having jurisdiction over the IOC instalation in Gujarat and not the Collector of Central Excise, Allahabad at the consignee's end.
16. He, however, did not quote any authority in this regard nor did he elucidate as to how in view of the conditions set out in the notification and in view of the liability taken by the consignee by virtue of holding L-6 licence and execution of a bond in this regard, he could not be called upon to pay the duty by the Collector, Central Excise, Allahabad.
17. He, further, pleaded that the Assistant Collector alone was competent to decide the question of short levy and recovery of the same and not the Collector, as the Assistant Collector has been mentioned as the proper authority by the name under Section 11A for confirming the demand of duty short-levied.
18. The learned advocate of the appellants argued that the goods should be deemed to have been accounted for in terms of Rule 196 in as much as wagons have been received empty by the consignees and the goods taken to have been lost and for that reason deemed to be accounted for. He read provision of Rule 196 (1) which, for convenience of reference, is reproduced as under:
"If any excisable goods obtained under Rule 192 are not duly accounted as having been used for the purpose and in the manner stated in the application or are not shown to the satisfaction of the proper officer to have been lost or destroyed by natural causes or by unavoidable accident during transport from the place of procurement to the applicant's premises or during handling or storage in the premises approved under Rule 192 the applicant shall, on demand by the proper officer, immediately pay the duty leviable on such goods. The concession may at any time be withdrawn by the Collector if a breach of these rules is committed by the applicant, his agent or any person employed by him. In the event of such a breach, the Collector may also order the forfeiture of the security deposited under the Rule 192 and may also confiscate the excisable goods, and all goods manufactured from such goods in store at the factory."
19. He pleaded that loss in terms of Rule 196 for the purpose of accounting could be due to any cause. He stated that there are three contingents under which no duty was to be demanded under Rule 196 (1) and these are (i) when the goods were lost; (ii) destroyed by natural causes; and (iii) destroyed due to unavoidable accident.
20. He pleaded that the word 'lost' set out in the Rule should be read disjunctively and ones the loss of the goods was established no duty could be demanded in respect of those goods. In this connection, he cited the case of Mongibai Hariram and Another (Appellants) v. The State of Maharashtra and Another (Respondents) [AIR 1966 (S.C.) 882].
21. He also pleaded that even if the goods were taken to be stolen, the same would be covered by the term 'lost'. He cited the case of Mahindra and Mahindra v. C.C.E., Bombay [1988 (33) ELT 517] and drew our attention to para 17 of the said order wherein following the ratio of the Hon'ble High Court, Calcutta this Tribunal has held that the goods lost by the appellants due to theft and robbery are fully covered as per the provision of the Rule 196 as goods being lost due to unavoidable accidents.
22. The learned J.D.R. for the department, Shri A.S. Sunderajan arguing on the various points made by the learned counsel for the appellants pleaded as under:
23. Maintainability of the show cause notice: - He pleaded that before the issue of the show cause notice, the appellants had intimated to the department about the non-receipt of the goods and the Collector, based on the information in his possession, in the absence of any evidence to the contrary, stated that in the show cause notice that the loss was not due to leakage. He pleaded that the issue for consideration before the Collector in terms of Rule 196 was as to whether the goods had been accounted for in the manner prescribed in the said Rule and whether the goods short-received were due to loss or destruction by natural causes or by unavoidable accident. He pleaded that even till today the appellants have not categorically stated whether the goods have been lost due to leakage nor given any other explanation for short receipt of the goods.
24. He pleaded in the light of this, the show cause notice did not in any way suffer from any infirmity.
25. Adverting to the plea of time-bar, he pleaded that the Tribunal in the decision in the case of Bajaj Tempo [1984 (17) ELT 205] have clearly held that no limitation for raising the demand in terms of Rule 196 was applicable. He pleaded that the learned advocate, who argued in the case had accepted this position after the arguments adduced in the matter and this could not be taken as a concession from him as pleaded by the learned advocate for the appellants and the matter should be taken to have been decided on merits. He pleaded that the Tribunal in the-case of Collector of Central Excise v. Amber Paints [1985 (22) ELT 297] has also held the view that where the goods had been obtained under Rule 192 the time limit specified in Section 11A should not be applicable for review proceedings drawn under Section 36 (2) at the relevant time.
26. He pleaded that the Tribunal confirmed further the same view in the case of Bajaj Auto in their order reported in 1987 (31) ELT 970. He pleaded that these decisions of the Tribunal were binding on this Bench and the plea of the appellant in regard to the limitation does not merit any consideration. He further pleaded that in case the appellants' plea regarding limitation was accepted the Chapter X Procedure and the facility of removal of goods under this Chapter at concessional rates would become unworkable. He pleaded that the goods, after receipt, were kept by the L-6 consignees for long periods till these were actually used for the purposes for which concessional assessment had been allowed and all that a person receiving the goods at concessional rate had to do to get the benefit of the concessional duty without complying with the conditions of end use, etc. was to let the goods lie over for over six months and then use them the way he liked and plead limitation when duty is demanded for violation of conditions of notification. To safeguard against this, the Revenue would have to ensure the utilisation of the materials obtained well within six months to ensure the recovery of the demandable duty within six months as pleaded by the appellants.
27. He pleaded that no time limit could be imported into Chapter X and Rule 196 (1) was a self-contained rule. He pleaded that one of the requirements of Chapter X for obtaining the goods at concessional rate, is the execution of a bond for payment of the differential duty in case appellants did not account for the goods as required under Rule 196. He pleaded that the appellants could not be heard to say after they have availed of the concession subject to their observance of Procedure under Chapter X that they are not bound by it.
28. Regarding the question of jurisdiction and competence of the Collector to adjudicate the case, he pleaded that the appellant are an L-6 licence holder and were bound to account for the goods obtained by them in terms of Chapter X Procedure. He pleaded that it was not understandable as to how the duty could be demanded from the consigners when the accounting was to be done by the consignee in terms of Rule 196. He pleaded that even though under Section 11 A, Assistant Collector had been specifically mentioned as the authority for adjudicating on the question of short levy, the Collector was not barred from the adjudicating in the matter. He pleaded that the Tribunal in their order No. 121/88C dated 8.2.88 in the case of U.P. Leminates -1988 (35) ELT 398 (Tribunal) have held that the Collector could adjudicate the cases under Section 11A. In regard to plea that goods lost should be taken to have been accounted for, he pointed out that there is no plea from the appellants when the goods were in fact lost and no evidence as to the loss has been produced.
29. He pleaded that even till today the appellants have not been able to say as to what happened to the goods which were found short. He pleaded that in view of the wording of Rule 196 only where the loss of goods was due to natural causes or by unavoidable accident during the transit, from the place of despatch to the applicants' premises no demand was required to be made. In the instant case, he pointed out that there is no evidence and nothing on record to show that the goods have been lost as set out under Rule 1%. He pleaded that the term 'lost' as used under Rule 196, only covers such contingencies when the loss of goods has occurred due to natural causes or by unavoidable accident. He pleaded that this is not the plea of the appellants that the loss was on account of these limited contingencies.
30. The learned advocate for the appellants pleaded in reply that the Tribunal in the case of EID Parry in their order No. C-208/85 dated 25.2.85, have held that the goods lost due to mechanical failure could be taken to have been lost due to unavoidable accident.
31. We observe that the goods were cleared from the premises of M/s. Indian Oil Corporation after payment of duty at concessional rates under Section 187/61 Central Excise dated 23.12.61 as amended from time to time and despatched to the premises of the appellants. The exemption under this notification was available subject to the specified end use by the appellants in the factory and the observance of Chapter X Procedure. For convenience of reference, this notification is reproduced below:
"Partial exemption to Raw Naphtha for manufacture of fertilisers. - In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government, hereby exempts Raw Naphtha falling under Item No. 6 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from the payment of so much of the duty of excise leviable thereon as is in excess of four rupees and forty paise per kilo litre at fifteen degrees of Centigrade thermometer:
Provided that -
(i) it proved to the satisfaction of an officer not below the rank of an Assistant Collector of Central Excise that such Raw Naphtha is intended for use in the manufacture of fertilisers; and
(ii) the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed.
2. The exemption contained in this notification shall also apply in respect of such Raw Naphtha as is used in the manufacture of Ammonia, provided such Ammonia is used elsewhere in the manufacture of fertilisers and the procedure set out in Chapter X of Central Excise Rules, 1944, is followed."
32. The goods could be allowed clearance at the exempted rate in terms of the above notification for use by the appellants in as much as they had been issued a L-6 licence under Rule 192 of Chapter X and had undertaken to comply with the procedure laid down in Chapter X. They had also executed a bond for accountal of goods and payment of duty if called upon to do so in terms of provision of Chapter X. It is not denied by the appellants that the goods had been short received and there is no plea that quantity found short was not loaded at the consigner's end. Whatever happened to the goods happened during transit before the goods were received in the appellants' premises. The appellants themselves have filed the evidence by way of form D3 on 13.10.79 indicating the shortage in the goods received which had been earlier despatched from the consigners' end under Form A.R. 3A under the cover of gate pass No. 503 (as indicated in the D3 form). There is no dispute that the appellants are required to account for the goods. The plea is that since the goods have been received short by them, they should be taken to have been accounted for and no duty should be demanded in respect of the same.
33. The appellant's first challenge is that the show cause notice issued was defective as according to the learned advocates for the appellant that the Collector, at the very outset in the show cause notice, has held that the goods had not been lost due to leakage. We find that the Collector has qualified his observation with the words 'it appears'. The question that arises for consideration is whether this tentamounts to predetermination of the issue by the Collector for the purpose of the proceedings drawn for recovery of duty in terms of Rule 196.
34. We observe it is not the plea of the appellants that in case the goods have been taken to have leaked from the wagon the same in terms of Rule 196 could be taken to be accounted for by reason of leakage and therefore, no duty of demand whatever become due. In fact even now it is a surmise of the appellants that goods could have been lost due to leakage or due to some other cause of which they are not aware.
35. We observe that there will be no duty demand against the appellants in case they are able to show that the goods have been lost or destroyed by natural causes or by unavoidable accident during transport from the place of despatch to the applicant's premises. The appellants having been allowed to receive the goods at exempted rates under Notification 187/61 as amended and have to show that the loss of goods was due to the causes as mentioned above or is otherwise covered in terms of Rule 196 for the purpose of accountal. Mere mention by the Collector that the loss did not appear to be due to leakage does not place the appellants at any disadvantage so far as accountal of the goods is concerned. As it is on the date of the issue of the show cause notice the appellants did not inform the Collector as to the reason for which the shortage took place. In any case they were given the full opportunity to putforth their pleas regarding the duty demand and to account for the goods and it was only after taking into account their pleas the Collector proceeded to adjudicate the case.
36. We observe that the appellants having obtained their L-6 licence in terms of Chapter X, got raw-naptha in terms of Notification 187/61 at concessional rates, and were required to comply with Chapter X and in terms of that they were required to account for the shortage and in fact they should have on their own come forward as required under Rule 196 to account for the goods received short rather than to have remained silent, after giving the D3 intimation. They should have shown how in terms of Rule 196 the goods could be taken to have been taken account for.
37. Further, we observed what Collector has said in the opening para, there appears to be no evidence to prove the loss of raw-naphtha was due to leakage in railway tank wagon. He has not concluded the issue but merely mentioned that at the stage when show cause notice was issued, there appeared to be no evidence on record to prove that the loss was due to leakage and he gave full opportunity to the appellants as to put-forth their pleas against the demand made.
38. The appellants were made aware that the demand made was for the shortage of goods received by them and all they had to do was to account for the same in terms of Rule 196 or to pay duty.
39. We, therefore, hold that the show cause notice suffers from no infirmity for the purpose of the proceedings drawn. The next point for consideration is the point of limitation.
40. We observe that the loss was reported by the appellants on 13.10.79 and according to them the show cause notice was issued to them on 14.10.81. No doubt, there is a long lapse of two years between filing of their report and the issue of the show cause notice and the same is not explained from the records before us. The question, however, falls for consideration is whether the limitation of Section 11A can be imported into Chapter X for raising the demand under Rule 196.
41. We observe that this Tribunal has held in the case cited by the Revenue in this regard that limitation of Section 11A cannot apply in case of demand made in terms of provision of Chapter X Rule 196.
42. The learned advocate for the appellants has staled that in one case the decision was on a concession by the learned advocate in that case and in the other by way of obiter. He stated that the West Regional Bench of the Tribunal in the case have held in the case of demand under Rule 160 of the limitation of Rule 10 for demand was applicable. His plea is that the limitation of Rule 10 for raising the demand has been held to be applicable for the purpose of raising the demand under Rule 160.
43. We observe that, no doubt, the Rules 160 and 1% are similarly worded and there is an apparent conflict between the two decisions of the Tribunal given in the context of Rule 160 and Rule 1%. This tribunal also, in the case of incentive rebate given, has also held the limitation of Rule 11A will be applicable in the cases of Jagatjit Sugar Mills Co. Ltd., Phagwara v. Collector of Central Excise, Chandigarh [1985 (21) ELT 289 (Tribunal)] and Collector of Central Excise, Madras v. Madras Petro-chem Ltd., Madras [1987 (31) ELT 743 (Tribunal)] respectively.
44. We observe that in the context of Rule 160 above, the Hon'ble High Court, Calcutta, in the case of Mahinder Nath Chatterjee, (Appellant) v. The Collector of Central Excise and Others, (respondents), judgment by the Hon'ble Justice (Sabyasachi Mukher-ji and M.M. Dutt, as they then were), have held on the issue of applicability of the limitation in Rule 10 for raising the demand under Rule 160, as under:
The main contention, however, of the petitioner - appellant was that the proceeding in question was beyond time. According to the appellant, the proceeding could have been taken only within a period of three months, as enjoined by Rule 10 of the Central Excise Rules, 1944. Rule 10 provided as follows:
"When duties or charges have been short-levied through inadvertence, error, collusion or mis-construction on the part of an officer, or through misstate-ment as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners account-current, if any, or from the date of making the refund."
On the other hand, on behalf of the respondents action was taken by virtue of Rule 160 of the said Rules. Appellant contended that Rule 160 was inapplicable because according to the appellant, in the instant case the goods had been removed after due filing of the A.R.I. Form and after assessment on the said goods. According to him, the goods might have been removed by mis-description or as a result of collusion between him and the assessing authority, as have been found by the Collector, but it could not be said that the said goods had been removed without permission because permission had been granted. Rule 160 is in Chapter VII dealing with warehousing. The allegation against the appellant is that he had removed the goods from his warehouse without permission.
Rules 157 to 162 deal with the consequences of removal of the goods from warehouse. In the instant case, the goods in question, as found by the Collector, were unmanufactured tobacco classifiable under item 4-1 (5) (iv) (wrongly indicated in the order as 9-1 (5) (iv) of the First Schedule to the Act). Goods which had been subjected to duty were 'stalks'. These are two different types of goods, contemplated by the Tariff Schedule under the Central Excises and Salt Act, 1944. There was, in fact, no permission to remove such goods, and no permission in respect of goods which could be described as unmanufactured tobacco under that schedule. Counsel for the appellant contended that what had been removed were specified goods, though described wrongly. In our opinion, it would be wrong, where the misdescription is of such a magnitude or degree that it amounts to not a description at all or of an entirely different description, to term it as misdescription. In the facts of this case, therefore, it appears that the type of goods known as unmanufactured tobacco as indicated in the schedule had been removed without permission. If that is the position, then clearly the removal was -without permission and it comes within Rule 160 of the said Rules."
45. We have reproduced the judgment of the Hon'ble Bench in extenso for the proper appreciation of the ratio of the judgment.
46. We observe the Hon'ble Court has clearly held that the plea on limitation where specific provision for demand of duty under Rule 160 is there, was not maintainable. Likewise, in the present case, when there is specific provision under Rule 196, there is no warrant to import the limitation of Rule 11A under Chapter X.
47. We, further, observe that removal of goods has been allowed at exempted rate of duty for certain specified end use subject to fulfilment of conditions of the Procedure set out under Chapter X.
48. This benefit has been conferred under notification 187/61 on a certain class of users subject to their complying with the requirements of Chapter X apart from other conditions of the notification. The provisions of Chapter X are such that while facilitating the benefit of the notification, the revenue is also safe-guarded. If what is pleaded by the appellants is accepted that the demands could be raised only within six months then the whole scheme of the exemption, subject to provisions of Chapter X, would become inoperable as the appellants would be required to render the account for the goods received by them well within six months leaving sufficient time for the revenue to make up their mind for issue of the demand. This would mean that the licencees will have to utilise the material within a period of few months failing which they will be called upon to pay full duty even if they may use the goods for the specified purpose for which the exemption has been allowed later. It is to obviate such situation that a self contained procedure in Chapter X has been provided and under which the licensee has the facility to use the material according to his manufacturing programme without any constraint of time with a safeguard for revenue provided for raising the demand of duty for goods not accounted for in terms of Chapters X without any limitation. Even otherwise, under Section 11A, the limitation has been fixed with reference to the relevant date as set out therein for the purpose of the limitation. The same, for convenience of reference, is reproduced below:
SECTION 11A - Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.
(1) "When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made requiring him to show cause why he should not pay the amount specified in the notice."
(2) x x x x x x x x x x x x x x x x x x x x (3) For the purpose of the section -
(i) x x x x x x x x x x
x x x x x x x x x x
(ii) "relevant date" means :-
(a) In the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid -
(A) where under the rules made under this Act a monthly return, showing particulars of the duty paid on the excisable goods removed during the months to which the said return relates, is to be filed by a manufacturer or producer or a licensee of a warehouse as the case may be, the date on which such return is so filed;
(B) where no monthly return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(C) in any other case, the date on which the duty is to be paid under this Act or the rules made thereunder;
(b) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after final assessment thereof;
(c) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund.
49. It is seen in the present case that the goods are allowed exemption at the lower rate in terms of notification and the final determination of the duty for shortage is to be done at the L-6 licence holder's end in respect of goods not accounted for under Rule 196. This situation for determining the relevant date for limitation purposes is not covered under Section 11A. This only goes to support the finding that application of limitation of Section 11A is not contemplated when demand is raised in terms of Chapter X.
50. We will like to observe that the judgment of the Calcutta High Court was not brought to the notice of the Bench in the case reported in 1985 (21) ELT 490 referred to supra.
51. We observed that the provisions of Chapter X are a self-contained procedure and the rules set out under this Chapter are for application to an exception carried out to the main rule for levy of duty at standard rate for the purpose of sub-serving broader industrial interests of the country. As pointed out earlier, any concept of limitation if it is read into the scheme of Chapter X, it will militate against the purpose for which the facility of removal of goods at concessional rates for specified purposes has been provided. It is well established principle of interpretation of statutes that such interpretation as will defeat the purpose for which a provision has been made should be avoided and the interpretation placed on any provision should be such as would advance the purpose for which the legislature has made a provision.
52. In view of the above and following with respect the ratio of the Hon'ble Division Bench of the Calcutta High Court, we hold that the limitation of Section 11A cannot be made applicable in the facts of this case. The demand, therefore, is to be held to be not hit by limitation.
53. Adverting to the appellants' last plea that word 'lost' in the expression 'lost or destroyed by natural causes or by unavoidable accident' should be read disjunctively and in this view of the matter since the goods had not been received by the appellants, these should be deemed to have been lost and therefore, no duty could be demanded on the goods short received, we observe that the word loss is a very comprehensive expression and would cover even the destruction of the goods by natural causes or by unavoidable accident and if the appellant's plea is accepted, expression 'destroyed by natural causes or by unavoidable accident' would become superfluous. We, therefore, in this context, have to give natural meaning to the expression as given in the Rule 1% and to read in a manner as to avoid the situation where some words have to be considered redundant. The Rule and the words have to be so interpreted as to give meaning to each of the words and expression used therein. The way Rule is worded it has to be held that the 'loss' or 'destruction' of the goods in respect of which no demand is to be made, has to be such as arises due to natural causes or unavoidable accident i.e. to say the word 'natural causes' or 'unavoidable accident' used in the expression above qualified the word 'lost' as well as 'destroyed'. No authority has been quoted by the appellants that these words could be read in the manner as pleaded and as used in the expression. The judgment of the Supreme Court cited by the learned Advocate for the appellants [AIR 1966 (882)] was in the context of Bombay Land Acquisition Act and interpretation given there was relevant to the expression used therein to effectuate the purposes of that Act. In the case before us, a facility had been given for removal of the goods at concessional rate with the undertaking to pay the differential duty in case the goods were not used for the purpose for which the concessional assessment was allowed and this facility was with certain limitations placed to safeguard the interest of the revenue and the loss of goods only on account of limited contingencies has been covered for accountal purposes.
54. In-view of this, we find no force in the plea of the appellants that the goods could be deemed to have been lost, notwithstanding, the absence of any plea on their side that the goods have not been received by them due to any specific contingency or reason. As it is, the appellants have pleaded as seen from the record that the raw-naphtha had been loaded in a wagon which was not suitable for the loading of the same. If in spite of that, the goods were loaded in that wagon, it can only be said that the loss of goods from the wagon even if it was due to the leakage was due to the negligence. This contingency is not covered in terms of Chapter X and any claim for relief, if the appellants have, will lie against either the consigners on account of whose negligency the goods were loaded in the said wagon or from the railways which chose to carry the goods in the said wagon. So far as the relief in these proceedings is concerned, the same is not available in view of the specific provisions of Rule 196.
55. In view of the foregoing, we hold that there are no merits in the plea of the appellants and the appeal, is therefore, rejected.
K. Gopal Hegde, Member (J)
56. I have had the advantage of going through the order proposed by brother Shri V.P. Gulati Brother Gulati had in detail set out the facts, the contention urged on behalf of either side and had elaborately dealt with the contentions and recorded his findings. I agree with all his findings except on the question of limitation. On question of limitation I respectfully disagree with his view.
57. All the contentions of Shri Murthy relating to the question of limitation, are correctly set out in paragraphs 9 and 10 of the order of Brother Gulati.
58. From the show cause notice issued, it is clear that the appellants were called upon to pay duty in respect of Raw Naphtha, which were not duly accounted for. Un-disputedly, the show cause notice was issued beyond the period of six months from the date of intimation of loss of Raw Naphtha to the department. If Section 11A is applicable, then the demand of duty is barred by time. It was the contention of the Departmental Representative that the provisions of limitation contemplated by Section 11A would not fit in within the Scheme of Chapter X procedure. I am inclined to agree with the above contention. Chapter X procedure is a complete Code by itself. In all there are 17 rules in this Chapter. The remission of duty on goods used for special industrial purposes contemplated by this Chapter cannot be availed of by all persons. It is only those persons who have been permitted by the Collector that could avail of the remission of duty contemplated in the said Chapter. Even those persons are required to comply with certain conditions contemplated under Rules 192,193 and 194. Under Rule 192, one of the conditions required to be fulfilled is to enter into a bond in the proper form with such surety or sufficient security, in such amount and under such conditions as the Collector approves.
59. It is Rule 196, which authorises the levy of duty on unaccounted goods. Since this rule had already been extracted by brother Gulati, I consider it unnecessary to extract it again.
60. The liability to pay duty on excisable goods obtained under Rule 192 arises only if that person does not duly account for the goods so obtained as having been used for the purpose and in the manner stated in the application. But then, if it has been established to the satisfaction of the proper officer, the goods obtained under Rule 192 have been lost or destroyed by natural cause or by unavoidable accident during transport or during handling or storage, then that person would not be required to pay duty in respect of the goods so lost.
61. Rule 196 (1) itself provides the manner of collection of duty payable in respect of goods not duly accounted for. The relevant portion of the Rules reads:
"The applicant shall, on demand by the proper officer, immediately pay the duty leviable on such goods."
It further authorises the Collector to withdraw the concession, if the person commits breaches of the rules. It also authorises the Collector to order forefeiture of the security deposited under Rule 192 and also to confiscate the excisable goods and all goods manufactured from such goods, stored in the factory, in the event of a breach. Thus three actions are contemplated in this Rule: (1) To withdraw the concession, (2) to demand the duty leviable on the goods not duly accounted for and (3) To forfeit the security deposit and to confiscate the excisable goods removed under Rule 192 and also the manufactured goods stored in the factory. If the Collector were to resort to demand of duty other than by way of forefeiture of security deposit, he will have to make the demand within the period of limitation prescribed in the Act or the Rules. It is true that Chapter X does not prescribed any limitation for demanding duty. But, on that account it cannot be said that the Collector is entitled to demand duty at any time. If the Collector were to demand duty under the Act, then the demand will have to be made within the period stipulated in the Act itself. It is always open to the Collector to enforce the demand within the period of limitation prescribed under the Limitation Act by resorting to Civil Suit. It is also open to the Collector to forfeit the security deposit after making a formal demand.
62. In the instant case, the Collector has chosen to resort to the provisions of , the Act for demanding the duty, leviable in respect of the goods not duly accounted. This demand has to be made within the stipulated period prescribed under Section 11 A. Since the demand in this case is beyond the period of six months from the date of knowledge of the loss, the same is barred under the Act. This does not mean the Collector cannot resort to other remedies such as resorting to the Civil Court or to forfeit the security deposit under Rule 196.
63. In the above view of the matter, the demand made under the Act, in my humble opinion, is barred by time and as such the appeal is required to be allowed on the ground of limitation.
64. Brother Gulati had placed reliance on the decision of the Calcutta High Court. Since brother Gulati has not stated the citation of the case law I could not lay my hand. However, from the extract of the judgment contained in Paragraph 44, it would be clear that the question whether the limitation prescribed under Rule 10 was applicable to the recovery under Rule 160 was not specifically in issue. It is true that the appellants therein did contend that the demand was barred by time under Rule 10, since the demand was made beyond the period of three months. On behalf of the respondent, reliance was placed on Rule 160. The appellants contended that Rule 160 was not applicable since the goods had been removed after duly filing of the AR-I form and after assessment on the said goods. The High Court held that the removal of the goods was without permission and it comes within Rule 160 of the said Rule. The High Court did not go into the question of limitation for recovery under Rule 160. Therefore, the ratio of that decision, in my view, is inapplicable.