1983 (11) TMI 197 - AT - Central Excise

Summary

Issues:
1. Demand of duty under rule 196 on lost benzene.
2. Interpretation of Rule 196 regarding loss of goods.
3. Qualification for exemption under Notification No. 34/73-C.E.
4. Requirement of actual use for exemption under the notification.

Detailed Analysis:
1. The case involved a dispute over the demand of duty under rule 196 on 21138 litres of benzene that did not reach the destination. The Assistant Collector held that the loss was not satisfactorily proven to be due to natural causes or unavoidable accidents during transport or storage. The appellant argued that the loss should be condoned as the benzene never reached their factory, and they were not at fault for the loss. The Appellate Collector upheld the duty demand, leading to the appeal before the Tribunal.

2. The appellant contended that the words "by natural causes" and "by unavoidable accident" in Rule 196 only qualified the word "destroyed" and not "lost." They argued that regardless of the cause of loss, if the goods never reached the factory, the loss should be condoned. The department disagreed, stating that loss must be due to natural causes or unavoidable accidents to qualify for exemption under the rule. The Tribunal agreed with the department, emphasizing that the loss or destruction must be caused by factors beyond human control for duty exemption.

3. Regarding the qualification for exemption under Notification No. 34/73-C.E., the appellant argued that the benzene was cleared with the intention to use it as required by the notification, and the actual use was not a condition for exemption. However, the department contended that actual use was necessary as per the procedural requirements of the notification. The Tribunal held that actual use must follow the declared intention for the concession to be earned, unless the intention is thwarted by events like natural causes or unavoidable accidents.

4. The Tribunal concluded that the loss of benzene was not attributable to natural causes or unavoidable accidents, as required by Rule 196 for duty exemption. They emphasized that the intention at the time of clearance under the notification was a legal device to allow concession, but actual use must follow the intention to earn the exemption. Therefore, the Tribunal rejected the appeal of Hindustan Insecticides, upholding the duty demand on the lost benzene.