ORDER
M.V. Ravindran, Member (J)
1. This appeal is directed against order in appeal dated 20th August 2004 vide which the learned Commissioner (Appeals) set aside the order in original which confirmed the demand of the duty and also imposed penalty.
2. The relevant fact that arise for consideration are the factory of the respondent was visited by the officers on 10/02/98 and on checking of the records, officers found entry in RG 1 register on 16/08/97 indicating stock as nil while on the earlier date i.e. on 15/08/97 i.e. the stock was indicated as 99.50 kgs. of sandal oil. It was intimated to the officers that there was a theft in the factory of the appellant on 15/08/97 and this stock was stolen by the dacoits, who were armed with fire arms. It was also informed by the respondent this incident was intimated to the police officers as well as to the collector of Central Excise, Indore – 1 vide letter dated 17/08/97. The Assistant Commissioner of Central Excise issued a show cause notice proposing to demand duty on such sandal oil which was not found in the factory and also for imposition of penalty. The adjudicating authority confirmed the demand on the respondent and imposed penalties. On an appeal, Commissioner (Appeal) set aside the order in original on the ground that the theft is unavoidable accident. Hence this appeal.
3. Learned SDR submits that the issue involved in this case is not at all a case of remission. It is submitted that the demand was under 9(2) of Central Excise Rules, while the Commissioner has set aside the Order in original on the ground that the Rule 49 will be applicable in this case. It is further submitted that the theft cannot be considered as unavoidable accident. Learned advocate appearing on behalf of the respondent submits that the theft is unavoidable incident, as has been accepted and laid down by the various judicial forums. He relies upon the judgment of Calcutta High Court in the case of Bavaji and Motibhai v. Inspector of Central Excise and Ors. as reported at 1979 E.L.T. (J 282). It was his submission that the Commissioner (Appeal) has correctly come to the conclusion, based on the fact that the respondent had intimated the authorities regarding the theft within one day.
4. Considered the submissions made by both sides and perused records. I find that the show cause notice issued to the respondent demands, the duty on the following allegations:
Now therefore, Notices M/s Indore Sandal Oils are hereby called upon to show cause to Assistant Commissioner, Central Excise, Division I, Indore within 30 days of the receipt of the Noticee, as to why:
(i) Duty amounting to Rs. 143280/- should not be recovered Under Rule 9 (2) of Central Excise Rules 1944.
(ii) Penalty should not be imposed upon them under Rule 173Q of the Central Excise Rules 1944.
(iii) The land, building plant, machinery or anything used in connection with the manufacture, production storage, removal of disposal of such goods or any other excisable goods on such land or in such building or produced or manufactured with such plant, machinery or thing should not be conflicted Under Rule 173Q(2) of the Central Excise Rules 1944.
5. The adjudicating authority while confirming the demand on the respondent confirmed the demand under provisions of Rule 9(2) of Central Excise Rules, 1944. The provisions of Rule 9(2) would indicate that the demand can be confirmed for the goods which were not removed according to the provisions in the Central Excise Rules. As against this, the learned Commissioner (Appeals) has come to the following conclusions for setting aside the order in original:
However, the Appellants have cited various case laws that to show that theft of goods is covered by the expression “unavoidable incident” which is there in Rule 49. Accordingly, in the facts and circumstances of the case, the department has no other way except to accept the explanation given by the Appellant. In my view, merely for not filing intimation within the time limit or for the reason that remission of duty has not been applied for, duty demand cannot be sustained. From the records, I am satisfied that theft which occurred in the premises of the Appellants is an unavoidable accident based on the case laws cited by them and accordingly, I am of the view that duty cannot be demanded in this case in terms of Rule 49. Accordingly, I have no hesitation in holding that the impugned order including the penalty is not sustainable and, therefore, I set aside the same.
6. It can be noticed from the above re-produced findings of the learned Commissioner (Appeals) that learned Commissioner has taken a different stand altogether, than the demand of the duty which was sought to be confirmed on the respondent under Rule 9(2). The learned Commissioner has not addressed himself to the issue in hand but has misdirected his findings towards the remission provisions under Rule 49. The learned Commissioner’s findings in this case are unsustainable for the reason that the demand confirmed under Rule 9(2) is altogether a different proposition than the remission application made under Rule 49. In this case, the respondent has not made any remission application under Rule 49. If that be so, the impugned order of the learned Commissioner (Appeals) is determining a issue which was not a subject matter in dispute.
7. Accordingly, since the issue of demand of the duty under Rule 9(2) has not been considered by the Commissioner (Appeals), the impugned order is set aside and the matter is remanded back to Commissioner (Appeals) to reconsider the issue in light of the above directions. Both sides are at liberty to produce evidence in their support and the learned Commissioner (Appeal) re-decide the matter after granting an opportunity of personal hearing to the respondent. Appeal allowed by way of remand. Since the cross objection filed by the respondent is in support of the order in appeal, the same is also disposed of.
(Dictated and pronounced in the open court)
