1. The Appeal No. 13/80 arises out of an Order-in-Appeal No. 153/WB/80 dated 19-4-1980 passed by the Appellate Collector of Customs and Central Excise, Calcutta. The Appeal No. 20/80 arises out of an Order-in-Appeal No. 144/WB/78 dated 28-11-1978 passed by the Appellate Collector of Central Excise, Calcutta.
2. As the point for determination in both these appeals being identical, they are clubbed together. Hence this common order.
3. The brief facts in Appeal No. 13/80 are that M/s. Indian Oil Corporation Ltd., Jalpaiguri could not account for a quantity of 91.097 KL of Motor Spirit against advised quantity of 15137.907 KL cleared during the quarter-ending June, 1978 from the installation at New Jalpaiguri. The movement took place against 80 AR-3 As. On demand being made in the show cause notice the appellants contended that the overall loss works out 0.60% which is within guideline limit of 0.75% and, therefore, no duty was payable. The adjudicating authority, i.e., Dy.
Collector condoned the loss to the extent of 0.75% on individual consignment and the balance quantity, if any, beyond the condoned limit was charged to duty. So far as gains are concerned, the Deputy Collector held that they cannot be set off against losses in other consignments. He, therefore, held that duty was chargeable where gains have been recorded. Feeling aggrieved by the order, the appellants preferred an appeal unsuccessfully before the Appellate Collector.
4. Before the Appellate Collector the appellants contended, among others, that the loss should be treated on the basis of Quarterly Balancing System by adjusting the losses with the gains during the material period. In that connection, they also placed reliance on the Board's letter F. No. 26/11A/1072/CX. 8, dated 26-10-1973. The Appellate Collector, however, held that the Board's letter is not applicable to the facts and circumstances of the case and it was applicable only in respect of products received from the same refinery source and it has no application to the transit loss from one marketing installation to other marketing installation. Feeling aggrieved by the order of the Appellate Collector, the appellants preferred a Revision Petition before the Government of India and the said petition stood statutorily transferred to the Tribunal. Hence this appeal.
5. The brief facts in Appeal No. 20/80 are that the appellants, M/s.
Indian Oil Corporation, Jalpaiguri sustained transit loss of 19.987 KL of R.D.O. (H.S.D.) under 17-AR-3As. On demand being raised, the appellants contended before the Assistant Collector that the transit loss be treated in Quarterly Balancing System of overall loss. They also contended that if transit losses are so treated, it comes within condonable limit. Therefore, no duty can be demanded. The Assistant Collector, however, did not accept this contention and he rejected their contention and directed them to pay the amount demanded. The appellants preferred an appeal against the Assistant Collector's order unsuccessfully before the Appellate Collector. The Appellate Collector held that there is no scope to apply the direction contained in the Board's letter dated 26-10-1973 as the losses relate to the period prior to 26-10-1973.
In the above view of the matter, he confirmed the adjudication order of the Assistant Collector. Feeling aggrieved the appellants filed a Revision application under Section 36 of the Central Excises and Salt Act, 1944 before the Government of India and said application stood statutorily transferred to the Tribunal. Hence this appeal.
6. As has been stated earlier, both these appeals involve an identical question and that being whether the losses should be treated on the basis of Quarterly Balancing System by adjusting the loss with the gain or on the basis of individual consignment as has been done by the Deputy Collector/Assistant Collector and the Appellate Collector.
7. Now from the narration of the facts, it is seen in Appeal No. 13/80 the Appellate Collector refused to apply the Quarterly Balancing System on the ground that Quarterly Balancing System laid down by the Central Board of Excise & Customs in their letter dated 26-10-1973 was applicable in respect of products received from same refinery source and it has no application in respect of transit losses which occurred during the transit from one marketing installation to another marketing installation. We are of the opinion that the Appellate Collector was not justified in making such a distinction. The transit loss is condoned taking into consideration the volatility of the products and other natural causes such as variation in temperature and density. In short, to condone the deficiency caused due to natural causes the characteristic of the Motor Spirit does not depend as to whether the transit is from refinery or from marketing installation. The Appellate Collector, in our opinion, has made an invidious distinction to deny the benefits of Board's instructions to the appellants. The object behind the Quarterly Balancing System is to prevent double payment of tax and to overcome certain hardship that was being experienced by the oil refineries. Unless there is strong and justifiable reasons for not applying the said system, the benefit of said system should not be denied. In the instant case, the Appellate Authority has not given any such strong or justifiable reasons to deny the benefit of Quarterly Balancing System. We, therefore, allow this appeal and set aside the order of the Deputy Collector as well as the Appellate Collector. We direct the Deputy Collector to consider afresh the liability of the appellants after applying Quarterly Balancing System.
8. In the other appeal, the Assistant Collector as well as the Appellate Collector denied the benefit of Quarterly Balancing System on the sole ground that the loss took place prior to 26-10-1973, i.e., during the year 1971 and, therefore, the instructions contained in the Board's letter dated 26-10-1973 are not applicable. This reasoning, in our opinion, is not sound. Before the adjudication order, the instructions from the Board have been received. So, the Board's instructions should apply to all pending matters irrespective of the fact that the losses took place prior to 26-10-1973 (the date of Board's letter). What is important is the principle involved and the spirit behind the instructions. As has been stated earlier, if the adjudication proceedings are not completed before the receipt of Board's instructions all such proceedings should be covered by the Board's instructions. If, however, the adjudications were finally settled then, of course, the adjudicating authorities or the Appellate Authorities are not required to re-open the past cases.
9. In the above view of the matter, we allow this appeal also by setting aside the order of the Assistant Collector and the Appellate Collector. The Assistant Collector shall examine the case afresh by applying Quarterly Balancing System.