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TMI Blog1992 (7) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Ltd., Jagatdal by M/s Hindustan Petroleum Corporation Ltd., Budge Budge under Rule 192 of the C.E. Rules, 1944 (Chapter X procedure) was being misused by the said Company in connivance with the vehicle owners and drivers of M/s. Bulk Bitumen Carrier, 28, Sadanand Road, Calcutta-26 and others, the Central Excise Officers ambushed at Dunlop area on B.T. Road on 23-2-1988. At about 6-30 hrs on the same day, the Central Excise Officers intercepted two carrier Tankers bearing Nos. WMQ 113 and WMK 7033 approaching towards the north of B.T. Road. On demand, the drivers of both the vehicles produced AR 3A No.923/JBO/HPCL/87-88 dated 22-2-1988 (in triplicate) along with voice-cum-Cash Receipt No. 009588 (in duplicate) issued by M/s Hindustan Petroleum Corporation Ltd., Budge Budge. On examination by the C.E. Officers the seals of both the tankers were found to be broken. On interrogation, Shri Jagdish Singh said to be owner of vehicle No. WMK 7033 who was on board the tanker bearing No. WMQ 113 admitted vide his statement dated 23-2-1988 that after filling of Hydro Carbon Oil meant for batching of jute, M/s Hindustan Petroleum Corporation Ltd., Budge Budge had sealed both the tankers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er proper custodian receipt. The C.E. Officers drew samples of Mineral Oil recovered from Bajrang Lubricating Oil and Krishna Oil Corporation for chemical test by the Chemical Examiner, Customs House, Calcutta. 6. The Central Excise Officers along with the said Tanker vehicle Nos. WMK 7033 and WMQ 113 went to the factory of the appellants to whom 24000 ltrs/20.610 M.T. of Jute Batching Oil was consigned by M/s Hindustan Petroleum Corporation Ltd. through the appointed/authorised carrier (WMK 7033 WMQ 113 of M/s Bulk Bitumen Carrier) of the appellants and had taken stock of Mineral Oil said to be Jute Batching Oil stored in 5 storage tanks of the factory of the appellants and found 57.773 kl/49.788 M.T. against recorded balance of 60.581 kl/52.465 M.T. in R.G. 16 and thereafter took sample of the Mineral Oil said to be Jute Batching Oil from the common outlet of five storage tanks (meant for storing of Jute Batching Oil) of the appellants in presence of the representative of the appellants. The officers also drew samples of Mineral Oil from each compartment of both the tankers as aforesaid for chemical test. The aforesaid two tankers valued at Rs. 2,00/000/- each along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 16000 ltrs of Jute Batching Oil loaded in Compartment Nos. 2 3 of both the aforesaid tanker vehicles 5000 ltrs of Jute Batching Oil had been taken out and in place of that Diesel Oil was substituted. These statements corroborate the chemical test reports. It appeared that Mineral Oil loaded in Compartment Nos. 2 3 of both the tanker vehicles as aforesaid is liable for confiscation. 9. The stock of 57.773 kl/49.788 M.T. Mineral Oil said to be Jute Batching Oil ascertained on joint physical stock taking on 23-2-1988 in the factory of the said company against recorded balance of 60.581 kl/52.465 M.T. in R.G. 16 appeared to be other than Jute Batching Oil, the flash point of which is below 94OC, as per Chemical Test Report. It appeared that the quantity of 60.581 kl/52.465 M.T. (Closing Balance R.G. 16 on 23-2-1988) of Jute Batching Oil on which the said company had availed of duty concession under Rule 192 of the Central Excise Rules, 1944 were not Jute Batching Oil inasmuch as the flash point was below 94OC as evident from the test report. It further appeared that the said company wilfully received mineral oil which did not conform to Jute Batching Oil inasmuch as in all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant company before the adjudication and the same is not available for confiscation, an amount of Rs. 37,039.26 was appropriated towards the value of the goods from the Security Deposit of Rs. 37,039.26 given by the appellants. But the goods were not confiscated under Section 119 of the Customs Act, 1962 as per the show cause notice. 14. It is against this order, the present appeal is filed. The Learned President of the appellant company, Shri G.R. Saha appeared for the appellants and Shri M.N. Biswas, learned S.D.R. for the respondent Collector. Shri Saha, at the outset, contended that the appellant company has been procuring its requirement of Jute Batching Oil from oil companies from time to time at concessional rate of duty. In the course of its usual business, the appellant Company procured Jute Batching Oil in the month of February, 1988 and entrusted the transport of the consignment to its transport agent, M/s. Bulk Bitumen Carriers, 28, Sadanand Road, Calcutta-26. While the product was in transit from oil company depots to the mills of the appellant company, the tanker lorries were intercepted by the Central Excise officers and it was observed that the seals aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion that on the facts and circumstances of this case the demand of duty as stated above was not in accordance with law. Even otherwise, he contended that the learned Additional Collector erred in demanding the full excise duty on the quantity of Jute Batching Oil to the extent of 66.205 M.T. and if at all he could have demanded duty, it was only on such quantity of J.B.O. which was actually and physically alleged to have been diverted for purposes other than those mentioned in the licence and granted to the appellants. In that view of the matter, it was his contention that only on the quantity of Jute Batching Oil which was given to M/s. Bajrang Lubricating Oil Co. and M/s. Krishna Oil Corporation as per the statements of the drivers of the tankers the duty could be demanded from the appellants. It was also contended that on the facts and circumstances of the case the learned Additional Collector erred in law in appropriating an amount of Rs. 37,039.26 towards the value of the goods from the security deposit made by the appellant Company in terms of B-11 Bond. He, therefore, prayed that the appeal may be allowed. 16. Replying the above-said contentions, the learned S.D.R., Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chambers of each tank lorry were drawn and the same were sent for test report. On test, it was found that the mineral oil found in chamber No. 1 of both the tankers conformed to the flash point at or above 94OC. But with respect to the Jute Batching Oil found in Chamber Nos. 2 and 3 of the two trucks, the flash point was found to be below 94OC and they did not conform to the flash point as indicated in the description against the Jute Batching Oil. The total quantity which is found below the flash point is 13.740 M.T. and this was found in compartment Nos. 2 and 3 of each of the above-said tanker lorries and they were not Jute Batching Oil. In that view of the matter, he stated that the appellants are liable to pay the differential duty on the quantity of 13.740 M.T. since the same did not conform to the specification of Jute Batching Oil even though they had procured this quantity from M/s. Hindustan Petroleum Corporation by payment of a concessional rate of duty in this regard. He also pointed out that the seized mineral oil was released to the appellants in terms of B-11 Bond as well as Cash Security of Rs. 37,039.26 and since the same was liable for confiscation, the learned Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas the Jute Batching Oil found in the tankers of the appellant Company on examination revealed that the Flash Point was 64OC. So, the oil in question stored by the appellants was not Jute Batching Oil conforming to the specification indicated in the description of sub-heading No. 2710.70. The Flash Point thus reveals that the subject goods are not Jute Batching Oil. It is not the case of the appellants that the chemical examiner s test is not reliable. It is not disputed by the appellants before the Adjudicating Authority and also they had not made any request before the Central Excise Officers for a re-test of the sample drawn, within 90 (ninety) days of the date of the receipt of the result of the test in question, in terms of sub-rule (4) of Rule 56 of the Central Excise Rules, 1944. 22. In this connection, it is necessary to mention the provisions of Rule-192 of the Central Excise Rules, 1944, which reads as follows :- Rule 192 : Application for concession. Where the Central Government has, by notification under Rule 8, (or Section 5A of the Act, as the case may be) sanctioned the remission of duty on excisable goods other than salt, used in a specified industrial proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Rules also reads as follows: Rule 196. Duty leviable on excisable goods not duly accounted for. - (1) if any excisable goods obtained under Rule 192 are not duly accounted for as having been used for the purpose and in the manner stated in the application (or are not shown to the satisfaction of the proper officer to have been lost or destroyed by natural causes or by unavoidable accident during transport from the place of procurement to the applicant s premises or during handling or storage in the premises approved under Rule 192) the applicant shall, on demand by the proper officer, immediately pay the duty leviable on such goods. The concession may at any time be withdrawn by the Collector if a breach of these rules is committed by the applicant, his agent or any person employed by him. In the event of such a breach, the Collector may also order the forfeiture of the security deposited under Rule 192 and may also confiscate the excisable goods, and all goods manufactured from such goods, in store at the factory. (2) Where the duty becomes chargeable in terms of sub-rule (1) of any excisable goods, the rate of duty and the tariff valuation, if any, applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in this regard as Rule 196 is attracted in this case. 23. As far as other quantity of 20.610 M.T., of J.B.O. procured by the appellants from M/s. Hindustan Petroleum Corpn. Ltd. on 23-2-1988, is concerned, it is seen that the Central Excise Officers intercepted the two lorries in question which were going to transport this Jute Batching Oil. The drivers of these lorries on interrogation had admitted that they had unloaded about 5000 Ltrs. of Jute Batching Oil in the premises of Messrs Bajrang Lubricating Oil Company and the same was substituted by diesel oil. It is also seen that each of these lorries contained three compartments like 1, 2 and 3 respectively. The samples from each of these compartments were taken by the Central Excise Officers and they were sent by them for testing. On test, it was found that the Jute Batching Oil found in Compartment No. 1 had the flash point more than 94OC and therefore, they were in conformity with the flash point of Jute Batching Oil as per sub-heading No. 2710.70 of the Schedule to the Central Excise Tariff Act, 1985. But the flash points in respect of mineral oil in Compartment Nos. 2 and 3 of the two tanker wagon No. WMK-7033 were foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e whether the provisions of Rule 196 of the Rules are complied with. Under Rule 196 of the Central Excise Rules, 1944, there is a duty cast on the appellants that the goods obtained under Rule 192, should be duly accounted for as having been used for the purposes and in the manner stated in the application. But when the goods which are obtained under Rule 192, was not found to be the same goods in appellants possession and some other goods was found in that place, it would amount to a violation of Rules 192 to 196 of the Central Excise Rules, 1944. In this case, the appellants are responsible for this violation in not accounting for the Jute Batching Oil as having been used for the purposes or in the manner as stated in the application under Rule 192. It is no answer for the appellants to state that they are not responsible for the same. The moment the Jute Batching Oil was found not to have been used properly and some other oil had taken in its place, the provisions of Rule 196 are attracted and the demand of duty is in accordance with law. On this count, the learned Adjudicating Officer has demanded a duty of Rs. 50,294.58. The actual duty payable on 13.740M.T. @ Rs. 3,675.00 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in existence and since they could not be accounted for, the duty was demanded from the appellants. But what was found in the premises of the appellants in those five storage tanks, was not Jute Batching Oil and was also not the excisable goods within the meaning of Rule 196 of the Central Excise Rules, 1944. They were found to be some other goods which did not conform to the specification of Jute Batching Oil. Therefore, the confiscation of those goods, cannot be done. The learned Adjudicating Officer has stated in his order at page 14 as follows :- The seized mineral oils in question was released to the assessee under order dated 4-3-1988 in terms of B-11 (Sec.). Bond of face value of Rs. 1,48,157.05 with a cash security of Rs. 37,039.26. The seized aforesaid mineral oil is liable for confiscation. However, as the said mineral oils was released provisionally to the assessee before adjudication and as the said mineral oil is not available now for confiscation a specified amount towards the value of the said mineral oil is liable to be appropriated from the security deposit of Rs. 37,039.26 and by enforcement of the B-11(Sec.) Bond of face value of Rs. 1,48,157.05. It clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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