1989 (12) TMI 156 - AT - Central Excise

Summary

Issues Involved:

1. Validity of the show-cause notice.
2. Applicability of the limitation period u/s 11A for demanding duty.
3. Jurisdiction of the Collector to adjudicate the case.
4. Interpretation of Rule 196 regarding the loss of goods.

Summary:

1. Validity of the Show-Cause Notice:
The appellants challenged the show-cause notice on the grounds that the Collector had prematurely concluded that the loss was not due to leakage, making the notice defective. The Tribunal held that the Collector's use of the phrase "it appears" did not constitute a pre-determination of the issue. The appellants were given full opportunity to present their case, and thus, the show-cause notice was not defective.

2. Applicability of Limitation Period u/s 11A:
The appellants argued that the demand was time-barred as it was issued two years after the loss was reported, whereas u/s 11A, the demand should be raised within six months. The Tribunal observed that Chapter X of the Central Excise Rules is a self-contained procedure, and the limitation period u/s 11A does not apply to demands made under Rule 196. The Tribunal cited the Calcutta High Court's judgment, which supported the view that specific provisions under Chapter X override the general limitation period u/s 11A.

3. Jurisdiction of the Collector:
The appellants contended that the Collector of Central Excise, Allahabad, did not have jurisdiction to decide the case as the goods were consigned from Gujarat. The Tribunal held that the appellants, as L-6 license holders, were required to account for the goods received at concessional rates, and the Collector of Central Excise, Allahabad, had the jurisdiction to adjudicate the case. The Tribunal also noted that the Assistant Collector's specific mention u/s 11A does not bar the Collector from adjudicating such matters.

4. Interpretation of Rule 196 Regarding the Loss of Goods:
The appellants argued that the goods should be deemed accounted for as they were lost in transit, and thus no duty should be demanded. The Tribunal held that for the goods to be deemed accounted for, the loss must be due to natural causes or unavoidable accidents as specified in Rule 196. The appellants failed to provide evidence that the loss occurred due to such causes. The Tribunal also rejected the plea that the term "lost" should be read disjunctively, stating that the loss must be due to the specified contingencies for it to be considered accounted for.

Separate Judgment by K. Gopal Hegde, Member (J):
Member (J) disagreed with the majority view on the issue of limitation. He opined that the demand for duty should be made within the period stipulated u/s 11A. Since the demand was made beyond six months from the date of knowledge of the loss, it was barred by time. He suggested that the Collector could resort to other remedies such as civil suits or forfeiture of security deposits under Rule 196.

In conclusion, the Tribunal rejected the appeal, holding that the show-cause notice was valid, the demand was not time-barred, the Collector had jurisdiction, and the loss did not meet the conditions specified in Rule 196 for being deemed accounted for.