9911796707
TMI Blog1984 (3) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... er on the ground that the entire "excess" should have been condoned. The Collector has appealed against this order on the ground that even the 1% should not have been condoned. 2. The basic facts are that the appellants are manufacturing Transformer Oil Base Stock (TOBS) in their refinery. This is classifiable under item 11A(3)(a) C.E.T. During the material time clearances of TOBS were eligible for assessment at a concessional rate of duty when cleared for being used in the manufacture of Transformer Oil elsewhere than in the factory of production, subject to the procedure in Chapter X of the Central Excise Rules being followed. During the period February to October, 1980, the appellants supplied to M/s. Savita Chemicals Ltd. (hereinafter referred to as "the consignee", a total quantity of 1442.647 MT of TOBS against AR3A documents. Duty at the concessional rate was paid on the quantities dispatched by the appellants (these quantities being determined on the basis of dip measurement of their own tanks). The gate passes and AR3As were also made out on the basis of these measurements. At the consignee's end the quantities received were shown by the consignees and these were cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emsp;Shri Bhave, on behalf of HPC, again based his arguments on the main grounds urged before the Collector (Appeals). Firstly, he reiterated that the measurements had been properly made at HPC's end by dip measurements of their tanks. As seen from their out-turn reports, the density and the temperature had also been duly taken into account. As against this, he felt that the measurements at the consignee's end might have been made by weighing the tank wagons in which the oil was transported, which would be less accurate than measurements by dipping of tanks. He, however, admitted that he had no precise information regarding the manner in which the quantity was measured at the consignee's end. 5. Shri Bhave placed reliance on the letter No. CBE & C. F. 261/6/23/75-CX-8, dated 10-9-1976 of the Central Board of Excise & Customs. The relevant part of this letter, as furnished to us by Shri Bhave, reads as under :- "It has been brought to the notice of the Board that in one of the Collectorates the internal Audit party observed excess/short removals of mineral oils in quantity dispatched from the storage tanks on the basis of tank discharge system and the quantity actually found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof being made in writing by the said officer of Central Excise ; This obligation shall be void." Accordingly, HPC could not in any case be held liable. Shri Bhave added that the Department seemed subsequently to have accepted this view, as HPC had not received any similar demands subsequently. (Shri Pattekar did not controvert this, but said it was not 'in the record'). 7. In reply to a query from the Bench, Shri Bhave stated that a representative of the consignee was invariably present when measurements were taken at HPC's premises and therefore they were fully aware of the quantity of goods for which they were accountable. 8. Shri Bhave also referred to two decisions of the Calcutta Bench of the Tribunal in which, according to him, that Bench had taken a view that condonation of small differences was applicable not only for shortages but equally for excesses. He stated that these decisions bad been reported in 1984 ECR 282 and 1984 ECR 379. 9. For the Department, Shri N.K. Pattekar contended that the measurements taken at the consignee's end could not be ignored and if they showed an excess, then duty was payable on the excess quantity. On the point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such as contamination by water etc. Thus there are several circumstances in which there could be an apparent excess or gain in transit. 13. Where there is a loss (or apparent loss) in transit, duty on the shortage (after allowing 1% or whatever percentage is considered appropriate) is demanded on the basis that the measurement at the consignor's end correctly shows the quantity despatched and can be relied upon. In the less common case of an apparent gain in transit, as in this case, the duty has been demanded on the apparent excess. This obviously implies that it is the measurement at the consignee's end which is taken as correct. As we pointed out to Shri Pattekar, there appears to be no basis for preferring the measurement at the consignee's end to the measurement at the consignor's end except that the former measurement shows a larger quantity which is more favourable to the revenue. This does not appear to us to be a proper criterion. Basically, the position is that a certain quantity of dutiable goods has been removed from the consignor's premises without payment of duty (or full duty) and that this quantity has to be properly accounted for. This is also evident from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to succeed. But quite apart from this, the matter is concluded by the second ground which they have advanced, viz., that in any event it was the consignee and not themselves who was responsible for any duty found leviable as a result of the differences between the quantity removed and the quantity found on measurement at the consignee's end. It is not disputed that the bond for this purpose is given by the consignee, who is the 'obligor', and this has also been admitted in the order of the Collector (Appeals). He has, however, sought to draw a distinction on the basis of the fact that this is a case of partial exemption and not complete exemption. We do not see how this can affect the principle of the case, or the liability of the L6 Licensee, who is the consignee and the obligor under the bond. We have noted that, according to Shri Bhave, the department itself has subsequently accepted that it was the consignee and not the consignor who was responsible in such cases and again according to Shri Bhave, no such demands were made from the consignors subsequently. 16. We do not find anything on record to support Shri Pattekar's suggestion that the demand in this case should be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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