Custom, Excise & Service Tax Tribunal
M/S Gupta Metal Sheets vs Cce, Gurgaon on 22 September, 2008
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL PRINCIPAL BENCH, COURT No.I NEW DELHI Appeal No.E/1574/2005-Cust(Br) (Arising out of Misc order No. 141/ 2007-SM(BR) dated 9.3.2005 passed by the CESTAT, Principal Bench, New Delhi) LARGER BENCH Date of Hearing: 22.9.2008 Date of decision: .10.08 For approval and signature: Hon'ble Mr. Justice S.N. Jha, President Honble Mr. M. Veeraiyan, Member(Technical) Honble Mr P.K. Das, Member(Judicial) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should 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 Departmental authorities? M/s Gupta Metal Sheets Appellant (Rep. by Ms. Reena Khair, Advocate) Vs CCE, Gurgaon Respondent
(Rep. by Mr K.K. Goyal, Jt CDR) Mr. R.K. Verma, DR Coram: Honble Mr. Justice S.N. Jha, President Honble Mr. M. Veeraiyan, Member(Technical) Honble Mr P.K. Das, Member(Judicial) ORDER No._____________ Per M. Veeraiyan:
Referral Bench Vide Order No 141/07-SM(BR) dated 9.3.2007 referred the issue whether theft or dacoity would be unavoidable accident within the meaning of Rule 49 so as to merit remission of excise duty on the goods so lost.
2. Heard both sides.
3. The facts, in brief, relevant for considering the referred issue are as follows:-
a) The appellant is a manufacturer of copper sheets and circles; there was a dacoity in the premises during the night between 30th April, 1999 and 1st May, 1999; approximately 18,040 kgs of brass/copper billets and sheets was taken away forcibly by the dacoits; during police investigation, 1070 kgs were recovered and handed over to the party as per Courts order.
b) The appellant sought for remission of duty of Rs.2,71,520/- involved in the balance quantity of 16,970 kgs valued at Rs.16,97,000/- under Rule 49(1) of Central Excise Rules, 1944.
Commissioner vide his order dated 27.1.2005 following the decision of the Honble Madras High Court in the case of Golden Hill State Vs CCE Madras 1997 (90) ELT 301 Madras rejected the partys request for remission of duty.
4. Learned Advocate appearing for the appellant submits that the word accident requires to be understood in proper prospective; it is to be understood as a mishap beyond the control of the victim. The theft or dacoity occurs not as per any design of the victim and it is, in fact, beyond the control of the victim. In the appellants case, it was a totally unexpected dacoity during the night and from the perspective of the appellant, it is very much an accident and it is also unavoidable and hence they should be granted remission of duty on goods losts by decoity under Rule 49.
4(a) She relies on the decision of Calcutta High Court in the case of Bavaji and Motibhai Vs Inspector of Central Excise & Others reported in 1979 (4) ELT (J-282) (Cal.). She also relied on the observation of the Honble Supreme Court in the case of Kedarnath Jute Manufacturing Co. Ltd Vs Commercial Tax Officer & Others reported in AIR 1966 (SC) 12 wherein, in the context of loss of declaration forms under Sales-tax Act, it was observed He may have lost the declaration forms by a pure accident such as fire, theft etc. and yet he will be penalised for something for which he is not responsible. Relying on the above observation, she submitted that theft has been considered as a pure accident by the Honble Supreme Court. She also relied on the decision of the Tribunal in the case of DSM Sugar Vs CCE Meerut reported in 2006 (201) ELT 263 where remission was granted in respect of molasses which got leaked due to a truck hitting the pipeline, though the truck belonged to somebody else. The remission has been allowed by the Tribunal on the finding that there could be no lack of care by the manufacturer in the said case.
5.1 The learned Joint CDR submitted that the theft cannot be considered as an accident; unlike in the case of accident like fire or damage by flood, etc. where the goods are not available for consumption, in a case of theft, the goods are not lost or destroyed. They have entered the market for consumption though illegally. He relies on the decision of the Madras High Court in the case of Golden Hills Estates Vs CCE Madras reported in 1997 (90) ELT 301(Mad) wherein it has been held that theft could not be said to be an accident by any stretch of imagination. It has also been held therein that Rule 147 of the Central Excise Rules, 1944 did not contemplate loss of goods by theft. He also relied on the decision of the Tribunal in the case of Rahul Springs Pvt Ltd Vs CCE Bolpur reported in 2008 (225) ELT 135 (Tri. Kolkata) which has relied the decision of the Madras High Court in the case of Golden Hills Estates Vs CCE Madras and held that Rule 21 did not allow remission of duty for goods stolen, pilfered or lost consequent upon robbery, dacoity.
5.2 He also relied on the following decisions:
(a) Himalaya Granites Limited vs. Assistant Commissioner of C.Ex., Chennai 2007 (211) ELT 542 (Mad.)
(b) C.C.E. & Cus., BBSR I vs. Indian Metals & Ferro Alloys Ltd. 2008 (224) ELT 65 (Tri-Kolkata) ) C.C.E., Chandigarh vs. Royal Containers 2006 (197) ELT 381 (Tri-Del.)
(d) Rane TRW Steering Systems Ltd. vs.C.C.E., Chennai 2003 (154) ELT 557 (Tri-Chennai)
(e) B.G.Dhatu Udyog Ltd. vs.C.CE., Delhi III 2003 (158) ELT 624 (Tri-Del.)
(f) Indian Oil Corporation vs. C.C., Bombay 1985 (21) ELT 881(Chennai)
6.1 We have carefully considered the submissions from both sides. Taxable event under excise law is manufacture; the liability to pay excise duty arises on completion of manufacture. However, the payment of duty is deferred till the time the excisable goods are about to be issued out of the place or premises specified under Rule 9 or Rule 47. Removal for whatever reasons or whatever circumstances required to be done on payment of duty unless exempted by a notification or duty is remitted. Remission is provided under Rule 49 when the goods are lost or destroyed by natural causes or unavoidable accident.
6.2 The word accident as commonly understood does not include theft or dacoity. Rule 49 dealt with case of remission on account of loss of excisable goods lost due to unavoidable accident and due to natural causes. Rule 147 had similar provisions in respect of warehoused goods. Rule 49(1) may be reproduced at this stage:
Rule 49. Duty chargeable only on removal of the goods from the factory premises or from an approved place of storage. (1) Payment of duty shall not be required in respect of excisable good made in a factory until they are about to be issued out of the place or premises specified under rule 9 or are about to be removed from a store-room or other place of storage approved by the Commissioner under rule 47:
Provided that the manufacturer shall on demand pay the duty leviable on any goods which are not accounted for in the manner specifically provided in these rules, or which are not shown to the satisfaction of the proper officer to have been lost or destroyed by natural causes or by unavoidable accident during handling or storage in such store-room or other approved premises: 6.3 From the reading of Rule 49(1), it is to be noted that remission can be granted on excisable goods lost due to unavoidable accident. First of all, there should be an accident; second, the same should be unavoidable; and third that there should be loss of goods due to such accident. Loss cannot be understood in the limited sense as loss to the manufacturers. It has to be understood in the context of Central Excise law to mean becoming unavailable for consumption in the market. We find merit in the submission of the learned Joint CDR that in the case of theft or dacoity, the goods are not lost or destroyed, they rather enter the market, though illegally, for consumption. They have been removed from the approved premises. The decision of the High Court of Madras in Gold Hills Estates Vs CCE Madras (supra) which has taken into account the decision of the Calcutta High Court is appropriate to the present facts of the case and we, respectfully follow the same. We thus hold that the dacoity cannot be considered as accident so as to give rise to any claim for remission of Central Excise duty..
6.4 Certain decisions in the cases of Himalaya Granites Limited, Indian Metals & Ferro Alloys Ltd., Indian Oil Corporation cited supra relating to loss of imported goods due to theft, pilferage have been relied upon. These decisions are not directly relevant to loss of excisable goods due to theft or dacoity. Unlike the Customs Act where there are provisions for remission of duty when the goods are pilfered while in the custody of custodian and with a corresponding provision for demand of duty from the Custodian, Rules 49 and 147 do not cover the cases of pilferage, theft or dacoity.
7. In view of the above, we answer the reference against the appellants and in favour of the Revenue.
8. The Registry is directed to place the records before the Regular Bench for final disposal of the appeal in view of our decision.
(Pronounced in the Court on .10.2008)
(Justice S.N. JHA)
President
( M. Veeraiyan)
Member(Technical)
(P.K. Das)
Member(Judicial)
MPS*