1. The appellant challenges the order of the Commissioner dated 27.1.05 rejecting its claim for remission of duty amount of Rs. 2,71,520/- on the ground that theft cannot said to be an accident and that dacoity was not an act of nature. The Commissioner preferred to rely upon the decision of the Hon'ble High Court of Madras in Golden Hills Estate v.CCE, Madras Bench judgment, as against the contrary decision of the Calcutta High Court in Bavaji and Motibhai v. Inspector , on the ground that former was a Division Bench judgment rendered in 1996.
2. The appellant was engaged in manufacture of copper sheets and circles. By application dated 18.1.01, the appellant requested for remission of duty of Rs. 2,71,520/-, under Rule 49 of the Central Excise Rules, 1944 on the ground that the goods were taken away by the dacoits during the night between 30^th April, 1999 and 1^st May, 1999.
3. Under Section 3 of the Central Excise Act, 1944, it is inter alia, provided that there shall be levied and collected duties of excise on all excisable goods which are produced or manufactured in India as, and at the rates specified in the schedule to the Central Excise Tariff Act, and in such a manner as may be prescribed. The word 'prescribed' as defined under Section 2(g) means prescribed by the rules made under the Act.
3.1 Rule 49(1) of the said Rules provides that, "duty to be chargeable only on removal of goods from the factory premises or from an approved place of storage, by laying down that payment of duty shall not be required in respect of excisable goods made in a factory until they are about to be issued out of the place or premises specified in Rule 9, or are about to be removed from a store-room or other place of storage approved by the Commissioner under Rule 47.
The first proviso to Rule 49(1) strikes a dedicate balance, by providing on one hand that, if the goods are not accounted for in the manner specifically provided in the Rules, duty will be leviable on such unaccounted for goods, and, on the other hand, by laying down that the duty will not be leviable on the goods which are shown to the satisfaction of the proper officer to have been lost or destroyed by natural causes or by unavoidable accidents during handling or storage.
For ready reference the provisos of Rule 49(1) are reproduced herein: Provided that the manufacturer shall on demand pay the duty leviable on any goods which are not accounted for in the manner specifically provided in these rules, or which are not shown to the satisfaction of the proper officer to have been lost or destroyed by natural causes or by unavoidable accident during handling or storage in such store-room or other approved premises: Provided further that the proper officer may not demand duty due on any goods claimed by the manufacturer as unfit for consumption or for marketing subject to such conditions as may be imposed by the Commissioner by order in writing.
4. Loss or destruction of goods may be by natural causes or it may occur due to some unavoidable accident. The expression 'unavoidable accident' occurring in the said proviso has been the subject matter of several decisions, and conflicting views appear to have been taken. The word 'accident' has a very wide significance in its ordinary sense. In the context of meaning the word 'accident', the following observations made by the Division Bench of Gujarat High Court in a different context, in the case of Ambalal Lallubhai Panchal (Ranerwala) v. LIC of India , wherein the question involved was whether a death caused by dog bite can be said to be death caused by an accident so as to make the Life Insurance Corporation of India liable to pay an additional sum equal to sum assured under the extended benefit clause of the Policy, may be referred: 7. The word "accident" has a very wide significance in its ordinary sense. In the present case, we are not concerned with the philosophical meaning of the expression "accident". The word, though easy to understand when used in any particular context, is found to be difficult to define in a manner that would encompass all its shades of meanings. The expression 'accident' generally means some unexpected event happening without design, even though there may be negligence and it is used, in a popular and ordinary sense of the word, as denoting an unlocked for mishap or an untoward event which is not brought about by intention or design. It is however, unnecessary to attempt any uniform definition of a term which has the utility of answering varied situations.
This term has to be applied in law to any occurrence or result that could not have been foreseen by the agent (because not necessarily involved in his action) or to a result not designed (and therefore, presumably not foreseen) or lastly to anything unexpected. The question as to what will and will not constitute an accident under a given circumstance would depend upon the facts of each particular case and would be a mixed question of law and facts. Accidents can broadly be divided into two categories, viz. where there is some external act, agency or mishap and those where there is no such external act, agency or mishap. In legal contemplation, accident happens without any designed, intentional or voluntary causation such as an occurrence which happens by reason of some violence, casualty or vis. major without any design or consent or voluntary co-operation. An unexpected personal injury resulting from an unlooked-for mishap or occurrence would be an accident. The word "accident" would get its colour from the context in which it is used. The word has fallen for our interpretation in context of the following accident benefit clause in a Life Insurance Policy and in context of the question whether death due to dog bite is an accident within the meaning of this clause, so as to merit payment of additional sum equal to the sum assured under this clause.
10. Accident Benefit : If at any time when this policy is in force for the full sum assured, the Life Assured before the expiry of the period for which the premium is payable or before the policy anniversary on which the age nearer birthday of the Life Assured is 70, whichever is earlier, is involved in an accident resulting in either permanent disability as hereinafter defined or death and the same is proved to the satisfaction of the Corporation, the Corporation agrees in the case of b) Death of the Life Assured : To pay an additional sum equal to the Sum Assured under this policy, if the Life Assured shall sustain any bodily injury resulting solely and directly from the accident caused by outward violent and visible means and such injury shall within 90 days of its occurrence solely, directly and independently of all other causes result in the death of the Life Assured. However, such additional sum payable in respect of this policy together with any such additional sums payable under other policies on the life of the Life Assured shall not exceed Rs. 5,00,000/-.
It will be seen that the word "accident" used in this clause is not circumscribed to any narrow meaning. What has been excepted from the liability of the insurer has been specifically mentioned in the said Clauses (i) to (v) of Clause 10(b). All that is required for this clause to operate is that the bodily injury sustained by the Life Assured results solely and directly from the accident caused by "outward violent and visible means", which injury has resulted in the death of the Life Assured within the period as contemplated by the clause." 8. The contention on behalf of the Corporation is that if the contingency is expected to occur, it cannot be said to be an accident and if one can reasonably foresee the occurrence, it would cease to be an accident. In our view, such expectancy test would be a fallacious test. When an unexpected injury occurs then it can be termed as an accident, but that does not mean that whenever any injury is expected, then it could never be an accident. If likelihood of an occurrence in abstract thinking is to be test, then there would hardly be anything which is not thought of as a likely occurrence by men. One can always expect animals to bite or gore but when a person is himself bitten or gored by an animal, that would be an unexpected harm to that person. Mere knowledge of hazard of an occurrence will not take it away from the category of accident in its general sense. Albeit, the law may in a given context define accident to restrict its wider meaning and dilute it to what is called a 'pure accident' but there is no warrant for such restricted meaning in context of the above clause of the Insurance Policy.
9. The argument that if the occurrence could be avoided by reasonable diligence or that if negligence or carelessness have contributed to the event, it should not be treated as accident, if accepted, would abort the very purpose underlying such Insurance Policy which does not circumscribe the word accident beyond stating that it should have been caused by 'outward violent and visible means'. In its ordinary meaning word accident does not negative the idea of negligence on the part of the person whose act brought about that event. An accident may arise from the carelessness of men, and the fact that the negligence of the person injured contributed to produce a result will not make it any less an accident and in this sense accident can be defined as a fortuitous event which may be preventable but is not prevented or an unexpected or unforeseen event happening with or without human fault. The term accident is thus, more comprehensive than the term negligence, and, often the terms "pure accident" or "mere accident" or "unavoidable accident" are employed in the legal context where accidents occurring due to negligence are to be ruled out or excluded from the ordinary meaning of the word accident. In the context of an Insurance Policy to exclude negligence, by the very nature of things, will make the indemnity practically valueless. Therefore, barring the exceptions which are enumerated in the clause itself, all accidents which are caused by "outward, violent and visible means" would be covered whether or not caused by carelessness or negligence or whether or not expected and avoidable. The concept of duty to take reasonable care which is relevant in respect of liability arising out of the tort of negligence need not be imported in a clause of Insurance Policy which assures accident benefits in respect of the loss caused from any accident by 'outward, violent and visible means'. There is no warrant to qualify this clause by carving out any exception on the grounds such as carelessness, negligence, avoidability etc. The only exceptions that apply are those which have been specifically enumerated and for all other eventualities which can be described as accident by its general and non-technical sense the liability to pay the accident benefit arises when the accident is caused by outward violent and visible means. This qualification is meant to provide for ascertainability of the event. A dog bite is not brought about by any design or intention. It is an unexpected harm. A dog bite is surely something that is outward, violent and visible by which the harm is brought about and the death resulting therefrom would therefore in our opinion be a death resulting from an accident caused by outward, violent and visible means within the meaning of the accident benefit clause of the policy under which the LIC was bound to pay an additional sum equal to the sum assured under the policy.
5. However, in the specified context of said provisions of Rule 49, of expression 'unavoidable' occurring under Rule 49 and 147 of the said Rules, there is divergence of opinion even between the Division Benches of the Tribunal which has been brought to notice. It is being pointed out on behalf of the appellant that in Mahindra and Mahindra v. CCE, Mumbai Tribunal, following the ratio of the decision of the Calcutta High Court in Bavaji and Motibhai v. Inspector (supra), has held that the goods lost by the assessee in theft and robbery were goods lost by unavoidable accident (See Para 16-17 of the judgment). It was submitted that the ratio of the decision in Mahindra and Mahindra (supra) was followed in the following cases by the Tribunal: 1. Sialkot Industrial Corporation Meerut v. Union of India 1979 ELT J 329 (Del);Nagreeka Exports Ltd. v. CCE 6. The learned authorised representative of the department, on the other hand, referred to the decision of Division Bench of this Tribunal in Hindustan Petroleum Ltd. v. CCE, which the Tribunal held in Para 4 of the judgment that theft is not an accident but a premeditated action and therefore, the case of theft will not be governed by Rule 147. The learned authorised representative also pointed out that a Division Bench of the Tribunal in Rane TRW Steering Systems Ltd. v. CCE, Cheenai following the decision of the Madras High Court in Golden Hills Estates , held in Para 6 of the judgment that theft cannot be considered to be an unavoidable accident for granting remission of duty in terms of Rule 49 of the erstwhile Central Excise Rules, 1944.
6.1 It was further pointed out that similar view was taken in the following decisions:B.G. Dhatu Udgoy Ltd. v. CCE, Delhi III.7. It is thus evident that there is an acute controversy and diversion of views between different Division Benches of the Tribunal on the issue whether theft or dacoity would be unavoidable accident within the meaning of Rule 49 so as to merit remission of excise duty on the goods so lost. The matter is, therefore, referred to Larger Bench for decision. Necessary directions may be obtained by the Registry for placing this appeal before the Larger Bench for disposal.