2007 (3) TMI 585 - AT - Central Excise

Summary

Issues Involved:
1. Whether theft or dacoity constitutes an "unavoidable accident" under Rule 49 of the Central Excise Rules, 1944, for remission of duty.
2. Interpretation and application of Rule 49(1) of the Central Excise Rules, 1944.
3. Divergence in judicial opinions regarding the definition of "unavoidable accident."

Detailed Analysis:

1. Whether theft or dacoity constitutes an "unavoidable accident" under Rule 49 of the Central Excise Rules, 1944, for remission of duty:

The appellant sought remission of duty amounting to Rs. 2,71,520/- under Rule 49 of the Central Excise Rules, 1944, citing that the goods were taken away by dacoits. The Commissioner rejected this claim, stating that theft cannot be considered an accident and that dacoity was not an act of nature. The Commissioner relied on the Division Bench judgment of the Hon'ble High Court of Madras in Golden Hills Estate v. CCE, Madras, which held that theft cannot be considered an unavoidable accident.

2. Interpretation and application of Rule 49(1) of the Central Excise Rules, 1944:

Rule 49(1) stipulates that duty is chargeable only upon the removal of goods from the factory premises or an approved place of storage. It includes a proviso that exempts duty for goods lost or destroyed by natural causes or unavoidable accidents during handling or storage, provided the proper officer is satisfied. The term "unavoidable accident" is subject to interpretation, and there have been conflicting judicial views on whether theft or dacoity falls under this category.

3. Divergence in judicial opinions regarding the definition of "unavoidable accident":

The term "accident" has a broad meaning, generally implying an unexpected event without design. The Gujarat High Court in Ambalal Lallubhai Panchal (Ranerwala) v. LIC of India discussed the wide significance of the term "accident," noting that it denotes an unlooked-for mishap or an untoward event not brought about by intention or design. This interpretation suggests that accidents can include events caused by negligence or carelessness.

However, in the context of Rule 49, there is a significant divergence in judicial opinions. The Tribunal in Mahindra and Mahindra v. CCE, Mumbai, following the Calcutta High Court's decision in Bavaji and Motibhai v. Inspector, held that goods lost due to theft or robbery were lost by unavoidable accident. This view was supported in several other cases, including Sialkot Industrial Corpn. v. Union of India and CCE v. Bihar State Sugar Corpn.

Conversely, the Tribunal in Hindustan Petroleum Ltd. v. CCE and Rane TRW Steering Systems Ltd. v. CCE, Chennai, following the Madras High Court's decision in Golden Hills Estates, held that theft is a pre-meditated action and not an unavoidable accident. This view was also supported in cases like CCE, Chandigarh v. International Woollen Mills and CCE, Chandigarh v. Royal Containers.

Conclusion:

Given the acute controversy and divergent views between different Division Benches of the Tribunal on whether theft or dacoity constitutes an unavoidable accident under Rule 49, the matter was referred to a Larger Bench for a definitive decision. The Registry was directed to place the appeal before the Larger Bench for disposal.