1. This is an appeal transferred to the Tribunal under Section 35P(2) of the Central Excises and Salt Act, 1944. The appellants M/s.
Hindustan Petroleum Corporation Ltd. prayed for setting aside of the orders of the lower authorities who have levied on them duty of Central Excise amounting to Rs. 17,994.03 on 17.13 K. Litres of Palex 1500 classifiable under Item 11-B of the Central Excise Tariff on the grounds that these goods were stolen from their warehouse on the night of 15/16-5-1977. In support of their prayer, they contend that these goods were stolen and in this case of theft, the duty on these goods should have been remitted in terms of Rule 147 of the Central Excise Rules, 1944. They, further, submit that the action of the lower authorities to treat this case as one falling under Rule 160 and demanding duty under Rule 9(2) is not correct. In support of their contentions, they have relied on Section 23 of the Customs Act, that provisions of which are analogous to those of Rule 147 of Central Excise Rules, 1944 and they further submit that the ratio of the Delhi High Court's judgment in the case of Sialkot Industrial Corporation v.Union of India 1978 (8) T.L.R. 1700 would be applicable to their case.
They argued that for the purpose of Rule 147, that goods should be treated as having been lost within the meaning of word "lost" as interpreted by the Honourable Delhi High Court in the aforesaid case.
They have also pointed out that it is only now with the Finance Bill of 1983 that Section 23 of the Customs Act is being amended and hence their case is fully covered by the ratio of the Delhi High Court. They seek support also from Bindra's Interpretation of Statutes, 5th edition, Page 61 containing the definition of "loss". As regards their failure to intimate the loss to the Central Excise authorities within 48 hours of the discovery of loss in terms of proviso to Rule 147, the appellants argue that this condition is not such as to deny the benefit of remission under Rule 147 to them. In case they have failed to give the notice within 48 hours, they may be charged with delay in submitting the notice, but they cannot lose the benefit of remission under Rule 147. They further rely on Calcutta High Court decision 1979 (4) E.L.T. Page 282, in the case of Bavaji and Motibhai to buttress their submission that as per Calcutta High Court's decision "loss" or "destruction" under Rule 147 includes theft. They repeat their contention that Rule 147 includes loss by theft. They also attack the order of the Assistant Collector on the grounds that his reliance on Rule 9(2) is incorrect. In brief, they submit that the point for decision is that whether their right of remission is taken away if the notice for loss is not given within 48 hours as per proviso to Rule 147. For the reasons adduced by them, they urge that they are entitled to remission as the goods have not been restored to them and pray for allowing their appeal.
2. The departmental representative has opposed the submissions of the appellants. He has argued that under the proviso to Rule 147, the notice of loss was not taken within 48 hours and this proviso is a necessary condition to the grant of relief under Rule 147. Under the proviso, the Collector does not have any discretion to extend the time limit. Since the notice was not given as per Rule 147, the departmental representative has submitted that no relief is due to the appellants and that their appeal be dismissed.
3. The appellants' representative has argued in reply that the submissions of departmental representative are not correct and applicable to their case.
4. We have examined the submissions on both the sides. The question for consideration is whether the theft of the goods is covered by Rule 147 and if so whether 48 hours notice is necessary in terms of the proviso to entitle the appellants to remission of duty. We observe that the provisions under Rule 147 of the Central Excise Rules, 1944 are distinguishable from those of Section 23 of the Customs Act. Under Rule 147, remission is permissible on warehoused goods lost or destroyed by unavoidable accident. Besides, the remission of duty is discretionary with the Collector. On the other hand, the loss contemplated under Section 23 of the Customs Act need not be through unavoidable accident.
A simple case of loss or destruction of goods is also covered under Section 23 of the Customs Act. Furthermore, under Section 23 there is no discretion with the Assistant Collector of Customs not to remit duty on goods lost or destroyed and this can be claimed as a matter of right by the owner of the goods. In view of these facts, the ratio of the Delhi High Court judgment in the case of Sialkot Industrial Corporation does not apply to the case of the appellant. The demand for duty has been made under Rule 9 of the Central Excise Rules, 1944. It is the contention of the appellants that Rule 9 is not applicable to their case but Rule 147 applies. Subjecting this contention to scrutiny, it is seen that under Rule 9, the goods can be removed from the manufacturing premises to a warehouse licensed under Rule 140 under the first proviso to Rule 9(1). If, therefore, any goods are removed without payment of duty from a warehouse licensed under Rule 140, such removal is in contravention of Rule 9(1) and therefore it attracts the provisions of sub-rule (2). Therefore, in our view, Rule 9 has been properly and correctly invoked by the Assistant Collector as this is not a case of loss through unavoidable accident as contemplated under Rule 147. In fact, the appellants have a tight security arrangement to prevent any theft and if such arrangements were found wanting, which permitted the theft in question, the loss of the goods would not have been unavoidable. Besides, theft is not an accident but a premeditated action and therefore, the case of theft will not be governed under Rule 147. If at all, such case would more appropriately lie within the terms of Rule 160. It is also seen that the Assistant Collector has written a finding in his order that the Superintendent issued the demand in terms of Rule 9(2) and not under Rule 160 or 147 as claimed by the appellants. This rule has been properly quoted in the circumstances of the case and we find that the Assistant Collector's order dated 21-8-1978 is correct and legal. Even if there had been any error in quoting the provisions of a wrong rule, it would not have vitiated the demand if the duty had been leviable in terms of Supreme Court's decision in the case of MB. Sanjana v. Elphinstone Spinning and Weaving Co. Ltd., A.I.R. 1971 SC 2039. In view of the aforesaid circumstances, we find that the orders of the lower authorities are correct. The same confirmed and the appeal is dismissed.