1985 (9) TMI 225 - AT - Central Excise

Summary

Issues:
1. Violation of principles of natural justice by the Collector in levying duty without giving an opportunity for explanation.
2. Whether the demand for duty is barred by limitation under Section 11A of the Central Excises & Salt Act, 1944.
3. Applicability of Section 11A over Rule 160 in determining duty recovery and time limits.

Analysis:
1. The appeal was filed against the Collector's order levying duty on excess kerosene oil beyond the permissible loss during storage. The appellants argued that the duty was imposed without providing an opportunity to explain the loss, violating natural justice principles. They contended that the demand for duty should be set aside due to lack of explanation opportunity and request for condonation of the loss.

2. The Departmental representative acknowledged the absence of a show cause notice to the appellants but argued that it was unnecessary as the RT-12 return submitted voluntarily indicated a storage loss exceeding 0.5%. The representative claimed that Section 11A did not apply to warehoused goods and defended the Collector's order based on Rule 140 and Rule 160, stating that it was not a penal action warranting natural justice principles.

3. In response, the appellants referenced a previous Tribunal case to support their argument that the demand under Rule 160 was subject to time limits prescribed under Rule 10 read with Rule 173J. The Tribunal analyzed the conflict between Section 11A and Rule 160, emphasizing that Section 11A's provisions on recovery of duty within a specific timeframe override the Rules. The Tribunal ruled in favor of the appellants, setting aside the Collector's order as not in accordance with the law and allowing the appeal with consequential relief to the appellants, M/s. Hindustan Petroleum Corporation Ltd.