9911796707
TMI Blog2003 (6) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... overy of interest, in terms of Section 28AA of the Act. 2. The brief facts of the case are that the appellants herein had taken over all the assets and liablities of M/s. OMC Alloys, Bamnipal as per the terms and conditions laid down in the agreement with the Government of Orissa and by virtue of Gazette Notification No. 1176, dated 27-9-91 issued by the Department of Steel and Mines, Government of Orissa and subsequent permission granted by the Development Commissioner, FALTA Export Processing Zone, Calcutta. The Unit is engaged in production of Charge Chrome/Ferro Chrome falling under Chapter Heading No. 7202.00 and the said goods are exported under bond and there were no domestic sales at all. LAM Coke is one of the main raw-materials in the manufacture of the final product and the Unit was regularly importing the raw material by availing exemption. On the date of take over, there was a stock of 8756.477 MT of imported LAM coke lying in the Bonded store of M/s. OMC Alloys Ltd. as recorded in the closing balance of Stock on 26-9-91. But TISCO in their books of accounts took a stock of 7107.528 MT of the LAM coke leaving the opening balance as on 27-9-91 thereby short accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he SCN already issued on 20-9-1996. The Stock verification on 1-12-1997 was a subsequent event giving rise to a new cause of action. 18.2 The appellant contends that during the period starting from the date of stock taking by way of volumetric measurement basis held on 26-9-1991 up to the date of subsequent stock taking done on 1-12-1997, they received and issued the following quantities :- (MT) (i) OB as on 27-9-1991 8756.477 (ii) Quantity received from 27-9-1991 to 30-11-1997 1,62,163.710 (iii) Quantity issued during 27-9-1991 to 30-11-1997 1,69,546.240 (iv) Opening Balance as on 1-12-1997 1,373.947 (v) Quantity found as per physical weighment 983.780 (vi) Shortage found 390.167 (vii) Percentage of shortage (-) 0.16% 18.3. The appellant submits that the parameters for stock verification report existing on 26-9-1991 were entirely different from the parameters, as on 1-12-1997. Accordingly, the Show Cause Notice issued on 20-9-1996 for the shortage quantity of 1648.949 MT can not be said to include the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner in the impugned Order-in-Original and confirmed demand on the quantity of 390.167 MT allegedly found short and/or not accounted for in terms of Section 72(1)(d) of the Customs Act, 1962. The appellants state that they could explain the short quantity of 390.167 MT as storing loss due to natural causes. The coke is hygroscopic substance, the weight of which varies depending upon the humidity in the atmosphere. Since the Stock taking was done in the month December, 1997, which happened to the dry season the moisture content in the Coke was very low and accordingly the stock was found to be less by 0.17% (to be read as 0.16%). Since the deference was only (-) 0.16%, it should have been condoned as a loss due to natural causes. In the decision of the Tribunal in the case of Ferro Alloys Corporation Ltd. v. C.C. C. Ex., reported in 1991 (52) E.L.T. 268 (T) loss on account of evaporation of moisture has been condoned. 21.1. The appellant has enclosed a number of certificates of moisture from M/s. Mitra S.K. Pvt. Ltd., Surveyors, Cargo Inspector and Analytical Chemists, of Cuttack-753 008 obtained on the basis of samples taken at the time of loading of the consignments of LA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting aside the impugned order : (1) IOC Ltd. v. CC, Bombay reported in 1985 (21) E.L.T. 881 wherein it has been held that Section 70 of the Customs Act. Will apply if the warehoused goods are found deficient in material loss and it will not affect the application of Section 23 of the Act to warehoused goods. (2) Ferro Alloys Corporation Ltd. v. CC CE reported in 1991 (52) E.L.T. 268 wherein it has been held that the expression lost or destroyed appearing in Section 23(1) of the Customs Act, is not used in any narrow or particular sense, but in a broader sense and includes loss or destruction caused by whatsoever reason at any time before they are cleared for home consumption. (3) Sarjoo Sahakari Chini Mills Ltd. v. CCE reported in 1995 (75) E.L.T. 336 (Tribunal) wherein it has been held that no duty is payable on goods shown to the satisfaction of proper officer to have been lost or destroyed due to natural causes. (4) UP State Cement Corporation Ltd. v. UOI reported in 1996 (86) E.L.T. 6 (All.) wherein it has been held that the term natural causes is restricted not only to forces of nature like flood and earthquake and causes related to nature and norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order and so also he has dealt with the plea regarding imposition of penalty in Para 3 of the order. He in the circumstances sought for sustaining the impugned order and rejection of the appeal. 6. We have carefully considered the rival submissions and gone through the case records. We observe that in this case, the appellants herein had taken over the assets and liabilities of M/s. Alloys Ltd. a 100% EOU on 26-9-1991. On the date of take over the quantity of the raw material viz. LAM coke found short was 1648.949 MT which fact was not intimated to the department. Show cause notice dated 20-9-1996 was accordingly issued to the appellants alleging suppression of fact and asking them to explain the shortages found and the appellants replied to the show cause notice explaining that there was no physical verification of the stock and the above alleged shortage found was because of the verification by volumetric measurements and it was only an approximate figure. They have asserted that no show cause could be issued on the figures arrived on volumetric measurement basis. They have also pleaded that if at all there was any loss it was due to natural causes in storing and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notice was issued after the joint verification. This show cause notice was redundant and the Commissioner has clearly stated so in the impugned order that since the subject matter of both the show cause notices are one and the same, he has withdrawn the second show cause notice. It is an admitted fact that before adjudication of the first show cause notice, the appellants prayed for stock verification which was done and the adjudication order is as a result of the proceedings instituted by the first show cause notice. In the circumstances it is absolutely incorrect to say that the demand confirmed is based on the second show cause notice. The demand confirmed is based on the first show cause notice itself and not on the second show cause notice because the first show cause notice was itself pending adjudication because of the specific ground taken by the appellants that they wanted physical stock verification before the demand is confirmed. Therefore this plea of the appellants fails. The case law cited by the appellants in the matter of ACC Machinery (supra) does not come to the rescue of the appellants as the facts and circumstances therein are quite different from the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ltd. v. CC - 1999 (114) E.L.T. 103 (T)] = 1999 (34) RLT 532. The IOC case was a case dealing with petroleum products as against heavy metal in the present case. In the case of Ferro Alloys there was loss of LAM coke during transit before it was warehoused and the shortage occurred before clearance of the goods from Wharf and it was in that circumstances that remission of duty was allowed. In the case of Indian Charge Chrome Ltd. there was difference in the quantity purported to have been unloaded from the ship and the quantity actually despatched from the port and it was in those circumstances it was held that duty cannot be demanded on the quantity found short. Therefore, all these case laws do not help the appellants as the facts and circumstances are different. In the present case before us, duty is demanded on the quantity ultimately found as shortage as confirmed by the appellants themselves. Appellants have produced certificate from M/s. Mitra S.K. Pvt. Ltd. Surveyors, Cargo Inspector Analytical Chemists in support of their plea of moisture content in the LAM Coke. The certificate dated 12-9-2000 is for the representative samples taken on 11-9-2000, another certificate da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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