TATA CHEMICALS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE appellant has challenged the Order of Commissioner (Appeals) dismissing both the appeals filed against the orders in original under which amounts of Rs. 10,98,867/ - and Rs. 16,65,572/' - were demanded by way of duty and penalty of Rs. 10,000/ - was imposed in appeal No. C/636/06.

(2.) IT was contended on behalf of the appellant while pointing out that the full duty amount of Rs. 1,66,572/ - (Rupees one lac sixty six thousand five hundred and seventy two only) has been paid (A. No. E/635/06). The rest of the duty amount of Rs. 1,09,667/ - (Rupees one lac nine thousand six hundred and sixty seven only) required to be paid (A. No. E/636/06) and the penalty of Rs. 10,000/ - (Rupees ten thousand only) imposed in that matter may be waived. He submitted that the shortage in naptha was attributable to evaporation. He placed reliance on the decision of the Supreme Court in BPL Display Devices Ltd. v. Commissioner of Central Excise, Ghaziabad reported in 2004 (174) E.L.T. P. 5 (S.C.), pointing out in paragraph 2 of the judgment that the Supreme Court was of the view that no material distinction can be drawn between the loss on account of leakage and loss on account of damage and that the words "for use" in the exemption notifications have to be construed to mean "intended for use".

(3.) UNDER the exemption Notification No. 3/2001 -C.E., dated 1 -3 -2001, the Central Government granted exemption to the excisable goods, as mentioned therein subject to relevant conditions specified in the annexure to the notification. Accordingly, naptha and natural gasoline liquid for use in the manufacture of fertilizers or ammonia was made subject to "nil" rate of duty. In this connection, the rules made by the Central Government under Section 37 of the Central Excise Act, 1944, namely, Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 are applicable, and as per Rule 6, it is provided that where the subject goods are not used by the manufacturer for the intended purpose, the manufacturer shall be liable to pay the amount equal to the difference between the duty leviable on such goods, but for the exemption and that already paid, if any, at the time of removal from the factory of the manufacturer of the subject goods, along with interest. As per the explanation to Rule 6, it has been clarified that the subject goods shall be deemed to have been used for the intended purpose even if any of the quality of the subject goods is lost or destroyed by natural causes, or by unavoidable accidents during transport from the place of procurement to the manufacturer's premises or during handling or storage in the manufacturer's premises. This would mean that loss of goods due to any natural causes or even unavoidable accidents, would result in liability to pay the duty because in such cases the goods will be treated as "not used". Since no such explanation was before Hon'ble the Supreme Court while construing Notification No. 13/97 -Cus. in BPL Display Devices (supra), the ratio of that decision cannot apply to the present case, because of a deeming fiction that the goods shall be deemed not to have been used for the intended purpose even if they are lost or destroyed by natural causes or by unavoidable accidents during transport or even during storage. In this view of the matter, the applicant has not made out any prima facie case for waiver of the pre -deposit. We, therefore, direct that the amount of Rs. 1,66,572/ - (Rupees one lac sixty six thousand five hundred and seventy two only) said to have been deposited by the appellant of Appeal No. E/635/06 be treated as pre -deposit for the purpose of hearing that appeal. That appeal will come up for final hearing in its due course.