1984 (3) TMI 406 - AT - Central Excise

Summary

Issues Involved:
1. Liability for duty on "excess" quantity of oil dispatched by HPC.
2. Correctness of measurements at consignor's end versus consignee's end.
3. Responsibility for accounting discrepancies under bond Form B-8.
4. Applicability of Chapter X procedures and Board's orders.

Detailed Analysis:

1. Liability for duty on "excess" quantity of oil dispatched by HPC:
The Collector of Central Excise (Appeals) directed HPC to pay duty on the "excess" quantity of oil dispatched, allowing a 1% tolerance per consignment. HPC contested that the entire "excess" should be condoned, while the Collector argued against any condonation. The Tribunal concluded that the excise authorities were unjustified in demanding duty based on apparent excesses observed at the consignee's end. The Tribunal emphasized that the quantity measured at the consignor's end should be the accountable quantity, as supported by the Board's order dated 10-9-1976, which stated that assessments should be based on tank discharge measurements at the consignor's end.

2. Correctness of measurements at consignor's end versus consignee's end:
HPC argued that their measurements were accurate, based on dip measurements and corrections for temperature and density, while the consignee's measurements might be less accurate. The Tribunal noted that the department inconsistently relied on whichever measurement was higher, which lacked consistency and logic. The Tribunal found no evidence to suggest that the consignor's measurements were incorrect and thus should be the basis for duty calculations.

3. Responsibility for accounting discrepancies under bond Form B-8:
HPC contended that the consignee should be held liable for discrepancies as per the bond Form B-8, which places the obligation on the consignee to account for the goods. The Tribunal agreed, stating that the consignee, as the obligor under the bond, is responsible for any duty found leviable due to discrepancies. The Tribunal found the Collector's distinction between partial and complete exemption irrelevant to the principle of liability.

4. Applicability of Chapter X procedures and Board's orders:
The Tribunal highlighted the Board's order dated 10-9-1976, which mandated that assessments should be based on measurements at the consignor's end, even for goods cleared under Chapter X procedures. The Tribunal found this approach logical and consistent, rejecting the department's argument that measurements at the consignee's end should be considered for duty purposes.

Conclusion:
The Tribunal allowed HPC's appeal, dismissing the Collector's appeal. It held that the excise authorities were not justified in demanding duty based on apparent excesses measured at the consignee's end. The Tribunal emphasized that the accountable quantity should be based on measurements at the consignor's end, and the consignee, as the obligor under the bond, is responsible for any discrepancies. The Tribunal found the department's approach inconsistent and lacking legal backing.