2010 (9) TMI 486 - AT - Central Excise

Demand - Rule 19 of the Central Excise Rules, 2002 - The show cause notice clearly discloses the fact that appellants had failed to export the goods which were sought to be cleared for export under the bond was revealed to the department pursuant to the scrutiny of the financial records of the appellants by the audit party and thereupon the necessary show cause notice was issued - None of those documents on the face of it would disclose the goods have been actually exported, nor would disclose the goods having left the territorial limits of the country - the claim was barred by limitation and there was no case for invocation for extended period of limitation - the ruling cannot be binding, rather being not in consonance with the law laid down by the Larger Bench, cannot be binding - Appeal is dismissed

Issues Involved:
1. Liability to pay excise duty on goods lost in transit.
2. Interpretation of Rule 19 of the Central Excise Rules, 2002.
3. Proof of actual export of goods.
4. Applicability of extended period of limitation.
5. Definition and implications of 'loss' under excise law.
6. Remission of duty on goods destroyed or lost post-clearance.

Issue-wise Detailed Analysis:

1. Liability to Pay Excise Duty on Goods Lost in Transit:
The appellants contested their liability to pay excise duty on goods lost in transit, arguing that they had cleared the goods for export under bond as per Rule 19 of the Central Excise Rules, 2002, and fulfilled all prescribed conditions. They contended that the loss of goods in transit was beyond their control and thus, they should not be liable for the duty. However, the department argued that the goods were never exported and the appellants were liable for the duty as the factum of actual export was not established.

2. Interpretation of Rule 19 of the Central Excise Rules, 2002:
The appellants argued that they had complied with Rule 19 by furnishing all required documents, including ARE-I, bill of lading, and shipping bill, which they claimed proved the export. The department countered that these documents, prepared at the time of clearance, did not establish actual export as they did not show that the goods had left the country's territorial limits.

3. Proof of Actual Export of Goods:
The tribunal noted that the documents provided by the appellants were insufficient to prove actual export. The documents were prepared for compliance with Rule 19 but did not confirm that the goods had been exported. Furthermore, the appellants failed to provide evidence of the insurance claim or details about the alleged theft, such as an FIR or communication from the foreign recipient.

4. Applicability of Extended Period of Limitation:
The appellants claimed that the demand was time-barred as the goods were cleared on 9-12-2005 and the show cause notice was issued on 23-8-2007. However, the tribunal found that the extended period of limitation was applicable due to the appellants' failure to disclose the non-export of goods, which was discovered only during the audit of their financial records. The tribunal held that there was willful suppression of facts with intent to evade duty, justifying the extended period.

5. Definition and Implications of 'Loss' Under Excise Law:
The tribunal referred to the Larger Bench decision in Gupta Metal Sheets, which clarified that 'loss' under excise law does not include theft or dacoity. Such incidents are not considered 'unavoidable accidents' and do not qualify for remission of duty. The tribunal emphasized that theft involves intentional removal of goods and is not a natural cause or unavoidable accident.

6. Remission of Duty on Goods Destroyed or Lost Post-Clearance:
The tribunal cited the decision in S.V.G. Exports, which held that duty remission is not applicable for goods destroyed or lost after clearance from the factory. The law only allows remission for goods damaged before removal from the factory. Since the appellants' goods were lost post-clearance, they were liable to pay the duty.

Conclusion:
The tribunal dismissed the appeal, holding that the appellants failed to establish the actual export of goods and were liable to pay the excise duty with interest. The tribunal also upheld the applicability of the extended period of limitation due to willful suppression of facts by the appellants.

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