1987 (5) TMI 211 - AT - Central Excise

Summary

Issues Involved:
1. Liability to pay duty on goods destroyed by fire before export.
2. Applicability of proviso (c) to Rule 14-A of the Central Excise Rules, 1944.
3. Impact of the bond executed by the appellants on their duty liability.
4. Relevance of the Tribunal's decision in the Indian Oil Corporation case.

Summary:

1. Liability to Pay Duty on Goods Destroyed by Fire Before Export:
The appellants, M/s. Siraj Sons, cleared 603 bales of cotton fabrics for export without payment of central excise duty under 45 AR 4(s) forms after executing a general bond. These goods were destroyed by fire before export. The Collector demanded duty amounting to Rs. 2,09,703.66, which was confirmed by the Board. The appellants argued that the duty was not chargeable as the goods were destroyed in fire and not exported.

2. Applicability of Proviso (c) to Rule 14-A of the Central Excise Rules, 1944:
The appellants contended that proviso (c) to Rule 14-A, which exempts duty if goods are accounted for to the satisfaction of the Collector, applied to their case. The Tribunal examined Rule 14-A and concluded that it does not provide for waiving the duty payable on the goods. The proviso (c) was interpreted to mean that it does not authorize waiving of the duty but only precludes the application of penalty provisions if goods are satisfactorily accounted for.

3. Impact of the Bond Executed by the Appellants on Their Duty Liability:
The appellants argued that the bond executed under Rule 14 could not override the provisions of Rule 14-A. The Tribunal agreed that the bond is supplementary to the provisions of the Rules and not a parallel instrument. However, the duty liability arises under Rule 14-A, and the bond serves as additional security for the collection of duty.

4. Relevance of the Tribunal's Decision in the Indian Oil Corporation Case:
The appellants relied on the Tribunal's decision in the Indian Oil Corporation case, arguing that the bond cannot override the Rules. The Tribunal found this case inapplicable as it pertained to the Customs Act, which explicitly provides for remission of duty under Section 23. The Tribunal emphasized that Rule 14-A is intended to demand duty, not to waive it.

Conclusion:
The Tribunal concluded that the duty was correctly demanded under Rule 14-A, and the appeal was rejected. The destruction of goods by fire did not exempt the appellants from their duty liability, and proviso (c) to Rule 14-A did not authorize the waiver of duty. The bond executed by the appellants did not override their duty liability under Rule 14-A. The Tribunal's decision in the Indian Oil Corporation case was not applicable to the present case.