1995 (3) TMI 247 - AT - Central Excise

Summary

Issues:
- Duty demand on lost clinker in transit
- Natural causes for shortage
- Barred by limitation under Section 11A
- Application of Rule 196
- Confirmation of duty demand by Collector
- Overlapping demands for duty

Analysis:

The appeal was filed against the duty demand on clinker lost during transit by the appellant company, a cement manufacturer. The appellant transported clinker from its unit at Dalla and Churk to its factory at Chunar for further processing into cement. A shortage of clinker amounting to 32072.30 M.T.-6% was noted by the authorities, leading to a duty demand. The appellant argued that the shortage was due to natural causes during transport over hilly terrain, thus no duty was payable on the lost quantity. Additionally, the appellant contended that the show cause notice issued under Section 11A of the Central Excises and Salt Act, 1944, was time-barred as it was issued more than six months after the relevant date. The appellant disputed the Collector's finding that no shortage was reported before 1986, highlighting previous demands issued for certain periods.

The Departmental Representative countered the appellant's argument by stating that the cause of the shortage was not proven to be natural and reiterated the Collector's finding on the absence of prior shortage reports before 1986. It was emphasized that the demand was issued under Rule 196, making it not barred by limitation. Precedents from the Tribunal were cited to support this position.

The Tribunal analyzed the situation, noting that the clinker was transported without duty payment under permission granted by Chapter X of the Central Excise Rules. While the show cause notice referenced Section 11A, the duty demand was based on the unexplained shortage of clinker rather than a specific provision. Referring to a Supreme Court judgment, the Tribunal concluded that citing a different power in the notice did not affect the legitimacy of the demand. Rule 196 required proof that the loss was due to natural causes or unavoidable accident, which the appellant failed to establish. The Tribunal upheld the Collector's decision on the duty demand, acknowledging an overlap in demands for certain periods. Consequently, the Tribunal confirmed the duty demand but directed the modification of the Collector's order to account for the already confirmed duty by the Additional Collector for the overlapping period.

In conclusion, the Tribunal confirmed the duty demand on the lost clinker during transit, except for the adjustment required for the overlapping duty demands previously confirmed by the Additional Collector.