TMI Blog1995 (12) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 5A of the Central Excises and Salt Act (hereinafter referred to as `the Act'), the Central Government has the power to exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon, if it is satisfied that it is necessary in the public interest so to do. Since cement clinker is used for the manufacture of cement which in itself is subject to excise duty, the Central Government issued notification exempting cement clinker from excise duty if used in the manufacture of cement. It is the admitted case of the parties and, therefore, it is not necessary to refer to the notifications, the last one being No. 8/92-C.E., dated 1st March, 1992. 3.Rule 192 of the Rules framed under the Act deals with the application for concession and the relevant portion thereof is quoted below : "192. Application for concession. - Where the Central Government has, by notification under rule 8, or Section 5A of the Act, as the case may be, sanctioned the remission of duty on excisable goods other tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otifications, permission was granted to the petitioner to transport cement clinker from its plants at Dalla and Churk without payment of excise duty. For the purpose of actual transport, the petitioner had to submit application for removal of excisable goods from one warehouse to another in Form AR 3 which requires the various details regarding the quantity of goods, their value, duty, rate and the manner of transport etc. to be filled in. It also requires that an officer of the central excise shall verify the despatch of the consignment from the warehouse of removal and another excise officer will verify the receipt of the consignment at the warehouse of destination. 6.The handling and transport of the cement clinkers from Dalla and Churk clinkerisation plants to Chunar results in certain losses. The Superintendent of Central Excise issued notices to the petitioner for various periods demanding duty in terms of Rule 196 of the Central Excise Rules in respect of the quantity of cement clinkers not accounted for at the destination and the Assistant Collector after hearing the petitioner raised demands for the shortage. A common order dated 21st May, 1992, way passed which is the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and some of it drops down through the small cracks in the wagons and some of it drops down when the train stops with a jolt. According to the petitioner, the loss was due to these natural causes and no duty could be demanded in respect of the resultant shortage. This contention was not accepted and the Assistant Collector who raised the demands as aforesaid allowing no margin for shortage. 9.On appeal, the Collector of Central Excise allowed shortage to the extent of. 5% only by a common order dated 6th November, 1992, to be calculated in respect of each AR 3A consignment. On further revision, the Government of India allowed transit losses to the extent of 2% without specifying whether it is to be calculated in respect of each AR 3A, as ordered by the Collector (Appeals) or it is to be calculated with reference to certain periods, as was done by the Assistant Collector. That is why Writ Petition No. 1787 of 1993 has been filed although the average shortage during that period was less than 2%. 10.In respect of the period 1st January, 1993, to 31st March, 1993, which is the subject matter of dispute in Writ Petition No. 915 of 1995, and for which the order raising the demand wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural causes or by unavoidable accident during transport or during handling or storage in the premises approved under Rule 192. In the present case, the two places of storage are about 125 Kms. away from each other and the goods are, admittedly, carried in open trucks and open railway wagons. Neither of them is pilfer or spillage proof. The extent of shortage is not regulated by any statutory provision nor has the Collector while granting the concession under Rule 192 prescribed the extent of handling loss that would be permissible. Therefore, any loss that occurs during transit for causes which are normal has to be allowed. Rule 196 is wide enough and shows that transit loss on account of any conceivable reason would be allowed unless it can be shown that the loss is fictitious and manipulated and deliberately caused for some ulterior motive. The said rule speaks of loss by natural causes or by unavoidable accident or other losses for other reasons during handling or storage. The words 'natural causes' while certainly referring to the forces of nature like flood and earthquake is not restricted to them. What these words take in their scope is also causes that are related to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the feed back from actual operating plants. The transit/transport losses are mainly on account of the following : Dust losses during the transport as well as unloading point at Chunar. At times the kiln produces dusty clinker due to disturbed kiln operation. In such an event the dust losses are still higher. The normal loss of clinker during the transit distance from the wagon/trucks due to spillage of material through certain crevices in wagon/trucks coupled with the relatively difficult terrain (hilly) between Dalla and Chunar." 18.This report is dated 20th January, 1993, and, as stated therein, this is not the report about the transit losses in the petitioner's units exclusively. The argument of the learned counsel for the respondents that the petitioner's own document shows an average loss of 3% only and that the same could at the most be allowed is not acceptable. As the document shows, the technical expert has based its conclusion on its own experience and feed back from actual operating plants. Therefore it is not a report exclusively based on a study of the petitioner's transport pattern and is not of much use. As stated above, the shortage is not uniform. At times, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act creates a rule of limitation and the excise authorities have to exercise their powers in cases where the excise duty has not been levied or paid or has been short levied or short paid or erroneously refunded within the period of limitation prescribed under Section 11A of the Act. The normal period is six months and the extended period would be available in cases of fraud, collusion, wilful statement or suppression of facts. As stated above, there is not even a whisper of any such conduct on the part of the petitioner and, therefore, the extended period was not available to the petitioner and the Writ Petition No. 915 of 1995 has to succeed on this point as well. 22.Learned counsel for the petitioner contended that cement clinker is not a marketable commodity and, therefore, no excise duty could be levied in respect thereof. This contention is not acceptable. The petitioner never put up such a case before the authorities below. Whether cement clinker is a marketable commodity is a question of fact that should have been agitated before the authorities below and for which requisite evidence should have been produced at the earlier stage of the proceedings. The commodity is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is nothing in these judgments to indicate that it was intended that the aforesaid directions would apply even where the dispute is between the Union of India and a State or a Corporation or Company owned by a State Government. Therefore, the petitioner cannot be asked to seek clearance from the High Power Committee which does not seem to have any representative from the State Government. 26.In respect of Writ Petition No. 915 of 1995, it was contended by the learned counsel for the respondent that in this case, the petitioner had preferred an appeal to the Central Excise and Gold (Control) Appellate Tribunal, New Delhi, and that against that order, the petitioner has an alternative remedy of seeking a reference to the High Court under Section 35G of the Act and that, therefore, this petition should be dismissed on the ground of alternative remedy. 27.It is true that the petitioner had that channel also open to it, but the question is whether in the circumstances of the present case, the petitioner should be directed to avail that long drawn procedure. As is evident, the same controversy has come to this Court in other writ petitions and they cannot be thrown out on the ground ..... 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