ORDER
Gowri Shankar, Member (T)
1. This appeal is against the Order of the Collector of Central Excise, Allahabad in which he has demanded duty on the clinker which was lost in transit by the appellant company.
2. The appellant is a manufacturer of cement. It transported clinker manufactured in its unit at Dalla and Churk to its factory at Chunar. Clinker was ground into cement at the Chunar factory. The authorities found that the entire quantity of clinker despatched from Dalla and Churk did not reach the unit at Chunar and there was a shortage of clinker amounting to 32072.30 M.T.-6%. Accordingly, a show cause notice was issued demanding duty on this quantity of clinker. After considering the reply, and hearing the appellant, the Collector confirmed the demand for duty.
3. Shri L.P. Asthana, Advocate for the appellants, says that the shortage of clinker was due to natural causes. The Clinker had to be transported for a distance of about 110 kms over hilly terrain. During such transport, it was subjected to loss by natural factors. In view of this, no duty is payable on the quantity found short. He further argues that the show cause notice was issued under Section 11A of the Central Excises and Salt Act, 1944. Since it was issued more than six months after the relevant date, it is barred by limitation. Provisions of Rule 196 of the Central Excise Rules will not apply in the present case. He disputes the Collector’s finding that no shortage had been reported prior to 1986. He says that prior to this, the clinker had not been subjected to weighment at the receiving factory and, therefore, it cannot be said that no shortage had occurred earlier. He says further that there has been more than one demand issued for some part of the period. While the show cause notice adjudicated by the Collector was for a period from October 1980 to November 1982, the Additional Collector of Central Excise, Allahabad, in his Order dated 24-7-1989 had.already confirmed demand on the shortage for a period from 1st March, 1982 to 7th July, 1982 and April, 1982 [sic] to August, 1983.
4. Shri J.P. Singh, Departmental Representative points out that it has not been established that the shortage was due to natural causes, and reiterates the Collector’s finding that no shortage had been reported before 1986. The demand had been issued under Rule 196 and hence not barred by limitation. He cites decisions of this Tribunal in Bajaj Auto v. Collector of Central Excise -1987 (31) E.L.T. 970 and IFFCO v. Collector of Central Excise – [1989 (41) E.L.T. 474] in support.
5. The clinker was being transported without payment of duty in terms of permission granted to the appellant under Chapter X of the Central Excise Rules. Rule 196 provides for recovery of duty on such goods which are not shown to have been lost or destroyed by natural causes or by unavoidable accident during transport. No doubt, the show cause notice and the order of the Collector cited Section 11A. However, a reading of the notice and the Order, that the duty was demanded and demand confirmed, only on account of the fact that the shortage of clinker had not been satisfactorily explained. Since the Collector was competent to adjudicate upon a demand under Rule 196, the fact that Section 11A has been cited will not affect the legitimacy of either the show cause notice or his Order. As the Hon’ble Supreme Court observed in paragraph 45 of its judgment in J.K. Steel Limited v. Union of India – [1978 (2) E.L.T. (J 355) (S.C.)].
“If the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercised under a different power does not vitiate the exercise of the power in question.”
The demand, therefore, cannot be held to be barred by limitation.
6. Rule 196 provides that it must be established to the decision of the proper officer that the loss in transit was due to natural causes or unavoidable accident. This has not been done in the present case. The Appellant is not able to show what the natural causes were, due to the operation of which there was such a sizeable shortage during the transport of the clinker. The fact that part of the terrain traversed might have been hilly does not by itself lead to the conclusion that the loss was due to natural causes. Unavoidable accident is not pleaded. In these circumstances, we must hold that the Collector has rightly confirmed the demand. However, we note that there has been some overlapping in that the demand for part of the period appears to have been already confirmed in the Order of the Additional Collector referred to above. If that is the case, the Order of the Collector will have to be modified to the extent that it does not demand duty again for a period for which the Additional Collector has confirmed the duty.
7. In the result, therefore, we confirm the Collector’s order except for the modification that so much of that portion of the duty which has already been confirmed by the Order of the Additional Collector is to be deducted from the total duty demanded.