1999 (5) TMI 388 - AT - Central Excise

Summary

Issues Involved:
1. Whether the quantity actually received in the shore tank should be the quantity required to be accounted for by the appellant.
2. Whether the alleged unaccounted quantity represented losses during storage and transit due to natural causes, evaporation, etc.
3. Whether the demand for differential duty is justified.
4. Whether the demand is time-barred u/s 28 of the Customs Act, 1962.

Summary:

Issue 1: Quantity to be Accounted
The appellant argued that the quantity actually received in the shore tank should be the quantity required to be accounted for, not the notional quantity discharged from the ship. The tribunal found that the quantity received and consumed as per the end-use certificates issued by the Central Excise department is more relevant than the notional quantity.

Issue 2: Losses During Storage and Transit
The appellant contended that the alleged unaccounted quantity represented losses during storage and transit due to natural causes, evaporation, etc. The tribunal accepted this argument, noting that raw naphtha is a volatile substance and losses due to evaporation and transit are plausible. The tribunal also noted that there was no allegation of diversion or sale of the unaccounted quantity.

Issue 3: Demand for Differential Duty
The Assistant Commissioner of Customs issued a show cause notice demanding differential duty of Rs. 11,68,04,329/- for the unaccounted quantity. The tribunal found that the demand for differential duty was not justified as the appellant had complied with all the conditions of the relevant notifications and there was no evidence of diversion or sale of the unaccounted quantity.

Issue 4: Time-Barred Demand
The appellant raised the issue that the demand was time-barred u/s 28 of the Customs Act, 1962, as the demand was issued beyond six months from the date of final assessment. The tribunal rejected this argument, stating that the final assessment was made under the impugned order and the demand was within the permissible time frame.

Conclusion:
The tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellant. The tribunal found that the appellant had complied with all the conditions of the relevant notifications and that the alleged unaccounted quantity represented losses due to natural causes, evaporation, etc. The demand for differential duty was not justified, and the appeal was allowed.