1999 (7) TMI 249 - AT - Central Excise

Summary

Issues:
Transportation of clinker without following proper procedure under Central Excise Rules, demand of duty on quantity of cement not received at Chunar factory, applicability of time bar under Section 11A, permissible percentage of shortage under Rule 196.

Analysis:

1. Transportation Procedure Violation:
The appellant, engaged in cement manufacturing, faced show cause notices for not following proper transportation procedures for clinker. The Collector upheld a demand of Rs.1,39,191.36, directing a recalculation with a 2% transit loss allowance. The appellant argued that the demand lacked intention to evade duty and cited a High Court ruling on transit loss percentage.

2. Time Bar and Duty Demand:
The appellant contended that the show cause notices, barring one, lacked allegations of misstatement or suppression to trigger Section 11A's extended limitation period. Citing a Supreme Court decision, the appellant argued that the demands beyond six months were time-barred due to absence of key ingredients in the notices.

3. Permissible Shortage and Natural Causes:
The appellant's advocate argued that losses during transit were due to natural causes and should be allowed under Rule 196, challenging the 2% shortage limit. The High Court's ruling favored the appellant, stating that losses within the normal course of handling and transport, even beyond 2%, were permissible under Rule 196.

4. Applicability of Time Bar:
The learned JDR defended the duty demand, claiming the appellant violated excise rules and that Rule 196 had no time limit, exempting it from Section 11A's limitation. However, the Tribunal considered the High Court's judgment, applying the time bar to Rule 196 and ruling in favor of the appellant on both time bar and permissible shortage percentage.

5. Judgment and Relief:
The Tribunal set aside the impugned order, granting consequential relief to the appellant based on the High Court's decision. The appellant succeeded on the issues of time bar and permissible shortage percentage, leading to the appeal's allowance and relief as per law.