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TMI Blog1989 (12) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to have been received by the appellants on 14-10-1981. Paras 1 2 of the show-cause notice, for convenience of reference, are reproduced below: Whereas, it appears, on consideration that there is no evidence to prove that loss of 26.940 Kl. of Raw Naptha was due to leakage in railway tank wagon. M/s. Indian Farmers Fertilizer Corporation is therefore required to show cause to the undersigned as to why duty may not be charged on 26.940 Kl. of Raw Naphtha amounting duty to Rs. 60599.91 reported to have been lost in transit." 2. It is seen from the record of the proceedings that the shortage occurred, as one wagon stated to have been loaded at the consignors end with Raw Naphtha, was received empty at the consignees end. This wagon was stated to be marked not fit for naphtha loading. 3. The Collector adjudicated the case after taking into consideration the submissions made in reply to the show-cause notice as also after giving them a hearing. 4. The learned Advocate for the appellants assailed the impugned order on the following grounds: (i) the show-cause notice was defective in as much as the Collector right at the time of the issue of show-cause notice, came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower vested in the Central Government under Section 37 (2) read with Rule 8(1) of the Central Excise Rules and this exemption was not in the nature of remission contemplated under Section 5 of Central Excises Salt Act. 10. His pleas are that being a case of short levy, under Chapter X under Rule 196, the limitation in terms of Section 11A would be applicable and the demand could be raised only within a period of six months from the time the loss was reported to the Department. 11. He pleaded that in the case, of warehoused goods, where duty was demanded in terms of Rule 160 which is worded similarly as the Rule 196, this Tribunal has held in the case of Hindustan Petroleum Corporation v. Collector of Central Excise that the limitation of Rule 11A would apply. The relevant paras (18 19) of the judgement, are reproduced below for convenience of reference: From the facts of the case it is noticed that the show cause notice was issued on 9-8-1978. The claim relates to the period from 1-4-1978 to 30-6-1978. Rule 160 of the Central Excise Rules, 1944 has been set out in the show cause notice. On behalf of the appellants, it is argued that Rule 160 will not apply to the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the competent Collector to recover the duty short-levied was the Collector of Central Excise having jurisdiction over the IOC instalation in Gujarat and not the Collector of Central Excise, Allahabad at the consignee s end. 16. He, however, did not quote any authority in this regard nor did he elucidate as to how in view of the conditions set out in the notification and in view of the liability taken by the consignee by virtue of holding L-6 licence and execution of a bond in this regard, he could not be called upon to pay the duty by the Collector, Central Excise, Allahabad. 17. He, further, pleaded that the Assistant Collector alone was competent to decide the question of short-levy and recovery of the same and not the Collector, as the Assistant Collector has been mentioned as the proper authority by the name under Section 11A for confirming the demand of duty short-levied. 18. The learned Advocate of the appellants argued that the goods should be deemed to have been accounted for in terms of Rule 196 in as much as wagons have been received empty by the consignees and the goods taken to have been lost and for that reason deemed to be accounted for. He read provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : - He pleaded that before the issue of the show cause notice, the appellants had intimated to the department about the non-receipt of the goods and the Collector, based on the information in his possession, in the absence of any evidence to the contrary, stated that in the show cause notice that the loss was not due to leakage. He pleaded that the issue for consideration before the Collector in terms of Rule 196 was as to whether the goods had been accounted for in the manner prescribed in the said Rule and whether the goods short-received were due to loss or destruction by natural causes or by unavoidable accident. He pleaded that even till today the appellants have not categorically stated whether the goods have been lost due to leakage nor given any other explanation for short receipt of the goods. 24. He pleaded in the light of this, the show cause notice did not in any way suffer from any infirmity. 25. Adverting to the plea of time-bar, he pleaded that the Tribunal in the decision in the case of Bajaj Tempo [1984 (17) E.L.T. 205] have clearly held that no limitation for raising the demand in terms of Rule 196 was applicable. He pleaded that the learned Advocate, who argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regarding the question of jurisdiction and competence of the Collector to adjudicate the case, he pleaded that the appellant are an L-6 licence holder and were bound to account for the goods obtained by them in terms of Chapter X Procedure. He pleaded that it was not understandable as to how the duty could be demanded from the consigners when the accounting was to be done by the consignee in terms of Rule 196. He pleaded that even though under Section 11A, Assistant Collector had been specifically mentioned as the authority for adjudicating on the question of short levy, the Collector was not barred from the adjudicating in the matter. He pleaded that the Tribunal in their order No. 121/88C dated 8-2-1988 in the case of U.P. Leminates -1988 (35) E.L.T. 398 (Tribunal) have held that the Collector could adjudicate the cases under Section 11A. In regard to plea that goods lost should be taken to have been accounted for, he pointed out that there is no plea from the appellants when the goods were in fact lost and no evidence as to the loss has been produced. 29. He pleaded that even till today the appellants have not been able to say as to what happened to the goods which were found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided such Ammonia is used elsewhere in the manufacture of fertilisers and the procedure set out in Chapter X of Central Excise Rules, 1944, is followed." 32. The goods could be allowed clearance at the exempted rate in terms of the above notification for use by the appellants in as much as they had been issued a L-6 licence under Rule 192 of Chapter X and had undertaken to comply with the procedure laid down in Chapter X. They had also executed a bond for accountal of goods and payment of duty if called upon to do so in terms of provision of Chapter X. It is not denied by the appellants that the goods had been short received and there is no plea that quantity found short was not loaded at the consigner s end. Whatever happened to the goods happened during transit before the goods were received in the appellants premises. The appellants themselves have filed the evidence by way of form D3 on 13-10-1979 indicating the shortage in the goods received which had been earlier despatched from the consigners end under Form A.R. 3A under the cover of gate pass No. 503 (as indicated in the D3 form). There is no dispute that the appellants are required to account for the goods. The plea is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re required to comply with Chapter X and in terms of that they were required to account for the shortage and in fact they should have on their own come forward as required under Rule 196 to account for the goods received short rather than to have remained silent, after giving the D3 intimation. They should have shown how in terms of Rule 196 the goods could be taken to have been taken account for. 37. Further, we observed what Collector has said in the opening para, there appears to be no evidence to prove the loss of raw-naphtha was due to leakage in railway tank wagon. He has not concluded the issue but merely mentioned that at the stage when show cause notice was issued, there appeared to be no evidence on record to prove that the loss was due to leakage and he gave full opportunity to the appellants as to put-forth their pleas against the demand made. 38. The appellants were made aware that the demand made was for the shortage of goods received by them and all they had to do was to account for the same in terms of Rule 196 or to pay duty. 39. We, therefore, hold that the show cause notice suffers from no infirmity for the purpose of the proceedings drawn. The next point f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only within a period of three months, as enjoined by Rule 10 of the Central Excise Rules, 1944. Rule 10 provided as follows: When duties or charges have been short-levied through inadvertence, error, collusion or mis-construction on the part of an officer, or through misstatement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners account-current, if any, or from the date of making the refund. On the other hand, on behalf of the respondents action was taken by virtue of Rule 160 of the said Rules. Appellant contended that Rule 160 was inapplicable because according to the appellant, in the instant case the goods had been removed after due filing of the A.R.I. Form and after assessment on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been conferred under Notification 187/61 on a certain class of users subject to their complying with the requirements of Chapter X apart from other conditions of the notification. The provisions of Chapter X are such that while facilitating the benefit of the notification, the revenue is also safe-guarded. If what is pleaded by the appellants is accepted that the demands could be raised only within six months then the whole scheme of the exemption, subject to provisions of Chapter X, would become inoperable as the appellants would be required to render the account for the goods received by them well within six months leaving sufficient time for the revenue to make up their mind for issue of the demand. This would mean that the licencees will have to utilise the material within a period of few months failing which they will be called upon to pay full duty even if they may use the goods for the specified purpose for which the exemption has been allowed later. It is to obviate such situation that a self contained procedure in Chapter X has been provided and under which the licensee has the facility to use the material according to his manufacturing programme without any constraint o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of goods not accounted for under Rule 196. This situation for determining the relevant date for limitation purposes is not covered under Section 11A. This only goes to support the finding that application of limitation of Section 11A is not contemplated when demand is raised in terms of Chapter X. 50. We will like to observe that the judgment of the Calcutta High Court was not brought to the notice of the Bench in the case reported in 1985 (21) E.L.T. 490 referred to supra. 51. We observed that the provisions of Chapter X are a self-contained procedure and the rules set out under this Chapter are for application to an exception carried out to the main rule for levy of duty at standard rate for the purpose of sub-serving broader industrial interests of the country. As pointed out earlier, any concept of limitation if it is read into the scheme of Chapter X, it will militate against the purpose for which the facility of removal of goods at concessional rates for specified purposes has been provided. It is well established principle of interpretation of statutes that such interpretation as will defeat the purpose for which a provision has been made should be avoided and the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acility was with certain limitations placed to safeguard the interest of the revenue and the loss of goods only on account of limited contingencies has been covered for accountal purposes. 54. In view of this, we find no force in the plea of the appellants that the goods could be deemed to have been lost, notwithstanding, the absence of any plea on their side that the goods have not been received by them due to any specific contingency or reason. As it is, the appellants have pleaded as seen from the record that the raw-naphtha had been loaded in a wagon which was not suitable for the loading of the same. If in spite of that, the goods were loaded in that wagon, it can only be said that the loss of goods from the wagon even if it was due to the leakage was due to the negligence. This contingency is not covered in terms of Chapter X and any claim for relief, if the appellants have, will lie against either the consigners on account of whose negligency the goods were loaded in the said wagon or from the railways which chose to carry the goods in the said wagon. So far as the relief in these proceedings is concerned, the same is not available in view of the specific provisions of Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose and in the manner stated in the application. But then, if it has been established to the satisfaction of the proper officer, the goods obtained under Rule 192 have been lost or destroyed by natural cause or by unavoidable accident during transport or during handling or storage, then that person would not be required to pay duty in respect of the goods so lost. 61. Rule 196 (1) itself provides the manner of collection of duty payable in respect of goods not duly accounted for. The relevant portion of the Rules reads: The applicant shall, on demand by the proper officer, immediately pay the duty leviable on such goods. It further authorises the Collector to withdraw the concession, if the person commits breaches of the rules. It also authorises the Collector to order forefeiture of the security deposited under Rule 192 and also to confiscate the excisable goods and all goods manufactured from such goods, stored in the factory, in the event of a breach. Thus three actions are contemplated in this Rule : (1) To withdraw the concession, (2) to demand the duty leviable on the goods not duly accounted for and (3) To forfeit the security deposit and to confiscate the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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