1. These 12 appeals and the appeal Nos. 273/83 and 274/83 arise out of and are directed against the Order-in-appeal Nos. 1051-1064/Cal/82 dated 22-11-1982 passed by the Collector (Appeals), Central Excise, Calcutta.
2. The appeal Nos. 273/83 and 274/83 were not considered along with these 12 appeals as the amount of duty involved in each case exceeds Rs. 10,000/- and the single Member Bench cannot hear those appeals.
3. These appeals were filed by the Collector of Central Excise, Calcutta. Originally, the Collector filed only one appeal by reason of the common order passed by the Collector (Appeals) and when this defect was pointed out, the Collector filed 14 appeals against 14 orders (Original). The above 12 appeals are clubbed together as they involve common questions of facts and law. Hence this common order.
4. The case of the Central Excise Department and the contentions of the Indian Oil Corporation (I.O.C.) have been set out in detail in the orders (original) as well as in the common Appellate Order. Therefore, it is unnecessary to set out the facts again in detail. Suffice it to mention that M/s. I.O.C. Haldia, holding Central Excise licence No. L-4 No. 1/FO/CAL-II/74 and working under the record based control of self removal procedure, removed certain consignments of J.B.O. and Furnace Oil without payment of Central Excise Duty from approved storage tanks to different destinations by barges and tankers during the period June 1982 to October 1982. In respect of the said consignments, the Central Excise Superintendent noticed certain losses and since the losses noticed were more than the condonable limit, they levied C.E. duty on the quantity of losses after issuing show cause notice and after considering the explanations offered by the respondents. Feeling dissatisfied with the orders passed by the Supdt. of Central Excise, the Respondents preferred 14 appeals before the Collector (Appeals), C.E., Calcutta, who as stated earlier, by his common order dated 22-11-1982 set aside the orders passed by the Supdt. C.E., Haldia and allowed the appeals with consequential reliefs.
5. Being aggrieved by the Appellate Order, as stated earlier the Collector of Central Excise, Calcutta has preferred these appeals.
Identical contentions have been urged in all these appeals. The contentions are that the Government of India while fixing the condonation limit for losses in transit, have taken into consideration the mode of transport from the storage tanks to the various marketing installations and when the Supdts. C.E. have condoned the losses to maximum permissible limits, the Collector (Appeals) was wholly unjustified in setting aside the orders and accepting the contention of the respondents herein and ordering consequential reliefs. Besides the above, the learned S.D.R. Shri A.K. Saha, during the hearing of the appeal, contended that under law, the respondents were required to account for the whole quantity removed from the storage tanks at the destination and the only allowance they are entitled to is condonation of transit loss to the extent prescribed in the various Government orders and that the Supdts. have allowed such condonations. Under the circumstances, the Collector (Appeals) committed an error in accepting the entire quantity as a loss caused due to natural causes.
6. Shri Saha further contended that the Collector (Appeals) was unjustified in observing that the Central Excise Department should have led evidence that there was pilferage of the excisable goods in transit. It is then contended by Shri Saha that the Collector (Appeals) proceeded on the footing that all the orders in original related to the movement of J.B.O. by barges, in respect of which alone there was no stripping arrangement. Finally, Shri Saha contended that it was for the I.O.C. to make proper arrangement for unloading of the entire quantity removed from the tanks at the destination. Want of stripping pumps or that the pumps were not properly functioning cannot be pleaded as defence. He, therefore, prayed for setting aside the orders passed by the Collector (Appeals).
7. Shri S.B. Basu, Sr. Officer (Excise & Customs), Haldia Refinery, who appeared for the respondents, contended that the barges and tankers used for the movement of the goods in question are not owned by I.O.C.but they belong to different recognised carriers. Other than those tankers and barges, there are no other tankers and barges in the country and in the said circumstances, the I.O.C. cannot be made liable for the losses caused due to the barges and tankers not having elaborate pumping arrangements and stripping pumps. It was the contention of Shri Basu that it is physically impossible to decant the same quantity of mineral oil from the same tank of the barges on all the trips. As a result the quantity unloaded at the destination will be sometimes less and sometimes more than the AR-3A quantity. He urged that I.O.C. is put to double jeopardy in that the Central Excise Department have been demanding duty for the losses but they were not giving any rebate for the gains. He also urged that consideration of loss on the basis of each AR-3A is improper and that from a long time they have been agitating before the Collector that the reconciliation of transit loss and gains relating to in-bond movement of mineral oil by barges and tankers must be allowed on annual basis as in the case of pipe-line movement and that the I.O.C. have been informed by the Collector that the matter had been referred to Delhi for final decision. Finally, Shri Basu urged that the Collector (Appeals) has properly appreciated all aspects and had come to the conclusion that the losses during the transit were due to natural causes and, therefore, the Tribunal should not interfere with the orders passed by the Collector (Appeals).
8. Having regard to the rival contentions, the only point that arises for consideration is whether the order passed by the Collector (Appeals) in so far as it relates to the present appeals is required to be interfered with.
9. The operative portion of the order of Collector (Appeals) reads as "in consideration of the nature of mineral oil product mode of transport i.e. the barge, distance covered from appellants' refinery at Haldia to Budge Budge, period of transit, human error in taking the dip measurement etc., the losses of 2.284 M.T., 2.644 M.T., 2.152 M.T. and 1.739 M.T. in 4 AR 3As making the total loss of 8.819 M.T. on the total quantity of 1366.902 M.T. of J.B.O. do not appear to be excessive and the same are correctly attributable to natural causes as pleaded by the appellants. Moreover, there is no evidence to suggest that there was pilferage of the excisable goods in question in transit. In absence of any evidence in this regard, no duty can be demanded on the losses in transit which are due to natural causes. The percentage of total loss of 8.819 M.T. on the total quantity of 1366.902 M.T. is only 0.645 (approx.) which is very negligible." 10. Now from the above, it is clear, the Collector (Appeals) had taken into consideration, the mode of transport, distance covered, human errors in taking the dip measurements and the absence of evidence as to pilferage of the goods in transit. Now, it is not even the case of I.O.C. that the losses occurred due to pilferage. In the circumstances, that factor taken into consideration by the Collector (Appeals) is an irrelevant factor, in any case, not pleaded by the aggrieved party. The finding of Collector (Appeals) that the entire loss is due to natural causes is rather difficult to accept. The non-availability of stripping pumps or that the barges were not fitted with proper pumps, or that the pumps lose suction after certain operations cannot be considered as natural causes. The aggrieved party viz., I.O.C. have pleaded the consequence of not having elaborate pumping arrangements and the absence of stripping pumps. They have stated that on account of the deficiency in the barges and tankers, it is not possible to decant the same quantity of mineral oil from the same barge on all trips because of the changing trims of the barges during the process of unloading.
This according to him is the reason for the residual stock in any barge not being constant in all the trips. They have contended that the quantity unloaded at the destination is sometimes less and sometimes more than the AR 3A quantity. So, their prayer was that gains will have to be set off against the losses. The Collector (Appeals) however, did not consider this plea at all...In an earlier case, before this Tribunal, I.O.C. Midnapore v. Collector of Central Excise, (ED(T)CAL/16/80) 1984 (15) E.L.T. 479 (Tri.) similar contentions were urged for the Department as well as for the I.O.C. While disposing of that appeal, this Tribunal observed "we strongly feel that it is improper to take into consideration only the losses and not the gains particularly in the absence of allegations of mala fide or wanton negligence on the part of the appellants or their agents." The ratio of the decision in that appeal is equally applicable in these appeals.
11. The proper approach, therefore, should have been to consider the losses or gains on a monthly or quarterly or half-yearly or yearly basis and after allowing condonation upto the permissible limits and on net losses alone duty should be demanded. I, however, leave it to the discretion of the Collector (Appeals) as to whether this set off should be on monthly or quarterly or half-yearly basis.
12. In the result, these appeals are allowed and the orders passed by the Collector (Appeals) are set aside and the matters are remanded to the Collector (Appeals) for disposal in accordance with law and in the light of the observations contained in this order. I also permit the parties to the appeal to adduce fresh evidence if they so choose.