2022 (9) TMI 125 - AT - Central Excise

Extended period of limitation - Remission of duty - appellant s contention is that it was switching over to a new system which caused teething troubles because which of it was unable to provide the data within time - Rule 21 of the Central Excise Rules - HELD THAT - The learned Authorised Representative for the Revenue that this is not a decision on application for remission of duty by the appellant but is a case of demand of duty on the goods which were not received in the LMIs as required under Rule 20 of the Central Excise Rules. It is also evident that the appellant had not provided the required data despite being repeatedly asked by the Range officer. Having not provided the data despite repeated requests, the appellant cannot now take shelter on the ground that the demand is time barred. The information of the extent of losses is within the exclusive knowledge of the appellant and it is its responsibility to provide the data. The appellant s contention is that it was switching over to a new system which caused teething troubles because which of it was unable to provide the data within time. Even if it be so, the fact remains that appellant has not provided the data and is now trying to profit from its own inaction to claim that the demand is time-barred. Therefore, the appellant had actually suppressed the information from the Department and now cannot benefit by claiming that the demand is time-barred. When a demand is made, the noticee has a right to put up whatever the defence it wants to and which may be considered and accepted or rejected by the adjudicating authority. Now the only question which remains is if the extent to which the claim of remission on account of losses has been rejected by the Commissioner is correct or otherwise - in respect of certain commodities such as Sulphur, Naptha, JBO, ATF etc, the Commissioner has reckoned condonable limit of 0%. This is probably because these products were not mentioned in Circulars of 1956 and 1959. However, since the 1981 Circular of the Board clarifies that losses of up to 1% can be allowed without detailed scrutiny and loss above 1% can be condoned after scrutiny, we find no reason to not condone losses in these cases as claimed. There is no allegation, let alone evidence, that the losses were not genuine or that the products were suspected to have been diverted or pilfered. The appellant is entitled to remission of the losses as claimed and consequently the demand of duty on the appellant cannot be sustained - Appeal allowed.

Summary

Issues:
Demand of duty under Section 11A of the Central Excise Act, 1944 along with interest under Section 11AB based on losses of petroleum products during transit and storage.

Analysis:
The appellant, a Government of India Undertaking engaged in refining crude petroleum and manufacturing petroleum products, was aggrieved by a demand for duty amounting to Rs. 1,06,58,056/- imposed by the Commissioner of Central Excise. The demand was based on losses of finished products during transit and storage, as per Rule 20 of the Central Excise Rules, 2002. The appellant had Local Marketing Installations registered as warehouses and was entitled to remove finished products to these LMIs. The losses of petroleum products were common due to their volatile nature, and the appellant had failed to provide details of losses in its monthly excise returns, leading to a show cause notice covering the period April 2004 to March 2006.

During the adjudication process, the appellant attributed delays in submitting loss statements to a new ERP system but eventually provided the required details to the Commissioner. The Commissioner remitted duty on some losses but confirmed a demand for the remaining losses, prompting the appellant to challenge the decision. The appellant argued that losses were below permissible limits set by CBEC Circulars and should be condoned under Rule 21 of the Central Excise Rules, 2002. The appellant also highlighted clerical errors in the calculation of losses, contending that the demand was time-barred and lacked evidence of fraud or willful misstatement.

In response, the Authorized Representative supported the Commissioner's decision, emphasizing the responsibility of the consignor for duty payment on goods not received in warehouses. The Representative argued that the appellant had not applied for remission of duty and that the demand was justified based on Rule 20 requirements. The Tribunal considered both arguments and found that the appellant's failure to provide timely data precluded the claim of the demand being time-barred. However, regarding the demand on merits, the Tribunal noted that losses were below permissible limits and should be condoned as per CBEC Circulars of 1981. The Tribunal also acknowledged clerical errors in loss calculations, ultimately allowing the appeal and setting aside the demand for duty, granting relief to the appellant.