PACIFIC GRANITES LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS is an appeal against the order dated 22 -4 -1994 passed by the Collector of Central Excise (Appeals), New Delhi. Briefly stated the facts of the case are that the appellants are a 100% Export Oriented Undertaking engaged in the manufacture of polished granite slabs falling under sub -heading 6807.00 of the Central Excise Tariff Act, 1985. The appellants cleared 77 polished granite slabs measuring 353.9374 Sq. Mtrs. for export under bond to Hong Kong from their factory in Udaipur against AR -4 No. 2, dated 21 -4 -1992. The goods were sealed at the factory premises in a container. It has been claimed that the said container met with an accident near Adalaj container Yard at Ahmedabad and information in this regard was given by the appellants' clearing agent to the Assistant Collector of Customs, C.F.S., Adalaj vide their letter dated 24 -4 -1992. According to the appellants the Assistant Collector of Customs, Adalaj inspected the contents of the container and recorded the damage suffered by the goods. On an application made by the appellants the container was permitted to be returned to Udaipur. The appellants vide their letter dated 24 -4 -1992 sought permission of the jurisdictional Assistant Collector at Udaipur to take back the container in the factory under Rule 97A of the Central Excise Rules, 1944. The appellants' claim that the Assistant Collector vide his letter dated 11 -5 -1992 addressed to the Suptd. Central Excise, Udaipur granted permission under Rule 97A to take back the container in the factory and directed the Suptd. to submit his report regarding the damages suffered by the goods. The appellants also claimed that the contents of the returned containers were inspected by the officer of the Central Excise Div., Udaipur on 12 -5 -1992 and according to the inspection report dated 12 -5 -1992 out of 77 slabs of granite measuring 353.9374 Sq. mtrs. cleared for export only 7 slabs measuring 30.7221 Sq. mtrs. were intact and in original condition and 70 slabs were found in broken or partly broken condition. According to the appellants, after reprocessing of the damaged goods only a quantity of 86.0439 Sq. mtrs. of granite slabs was found to be exportable and the remaining quantity of 267.8935 Sq. mtrs. of granite slabs was not found fit for export on account of the heavy damage. The appellants were served with a notice to show cause as to why duty amounting to Rs. 4,02,826 / - should not be demanded from them under Section 11A(1) of the Central Excises and Salt Act, 1944 on 267.8935 Sq. mtrs. of polished granite slabs cleared for export but not exported. The appellants in their reply to the show cause notice and also during the personal hearing contended that no duty was chargeable since the damaged granite slabs were permitted to be returned back to the factory under Rule 97A of the Central Excise Rules, 1944 and the same were lying in the factory. However, by order dated 3 -1 -1994 the Additional Collector held that the duty was recoverable on goods which were permitted to be cleared without payment of duty for the purpose of export but were not actually exported. Being aggrieved by the Additional Collector's order the appellants preferred an appeal before the Collector (Appeals) who by the impugned order confirmed the findings of the Additional Collector.

(2.) ON behalf of the appellants Shri K.K. Anand, learned counsel submitted that the Collector (Appeals) had erred in confirming the duty liability in respect of goods which were cleared for export from the factory but could not be exported. He contended that the fact that goods were allowed to be returned to the factory under Rule 97A implies that the jurisdictional Assistant Collector was satisfied that they were to be remade, refind or subjected to other similar processes in the factory and the conditions laid down in clause (I), (II), (III) of sub -rule (1) of Rule 97A were satisfied in respect of the goods in question. He argued that under these circumstances duty on such goods could not be held as recoverable unless they were disposed off in any manner otherwise then for production of goods of the same class as provided in sub -rule (3) of Rule 97A. The learned advocate reiterated his stand that the goods having been allowed to re -enter the factory under Rule 97A duty, if any, would be recoverable on the goods which may be cleared for home consumption after reprocessing. He, therefore, pleaded that the impugned order may be set aside.

(3.) ON behalf of the respondent Shri K.K. Dutta, Ld. JDR reiterated the findings of the Collector (Appeals) and prayed for the rejection of the appeal.