Judgment:
1. Stay application has been filed against the order of the Commissioner (Appeals) confirming the rejection by the Assistant Commissioner of a claim for remission of duty on goods that the appellant manufactured which were destroyed, before clearance from the factory in a fire.
2. The departmental representative based a preliminary objection that the Tribunal lacks jurisdiction to decide the matter, contending that its jurisdiction was excluded in terms of Clause (a) of the first proviso to Sub-section (1) of Section 35B of the Act. After hearing the arguments on this aspect, we are unable to conclude that the Tribunal has no jurisdiction to proceed with the matter. The proviso specifies the circumstances in which the Tribunal has no jurisdiction to decide an appeal against the order passed by the Commissioner (Appeals) under Section 35A of the Act. Clause (a) of this proviso reads as follows :- "(a) a case of loss of goods, where the loss occurs in transit from a factory to a warehouse or to another factory, or from one warehouse to another, or during the course of processing of the goods in a warehouse or in storage, whether in a factory or in a warehouse." 3. The contention of the departmental representative is that since the fire has resulted in a loss of goods, loss by fire or any other such cause would fall within the scope of this clause. Counsel for the applicant draws our attention to the first proviso under Sub-rule (1) of Rule 49 which reads as follows :- "(1) 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 under Rule 9 or are about to be removed from a store-room or other place of storage approved by the Commissioner under Rule 47: 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. He contends that the proviso refers to two specific contingencies, in which the goods are either lost or destroyed, either by natural cause or un avoidable accident. He contends that the terms "lost" and "destroyed" are different words having different connotations. We are unable to accept the contention of the departmental representative that the word "lost" takes into its ambit that the goods destroyed also. The terms "lost" and "destroyed" are two different and separate words which mean different things. A reference to the New Shorter Oxford Dictionary shows "destruction" to mean "the action of destroying; demolition, devastation, slaughter". Among the many meanings of the word "loss", the meaning that we are concerned with is "the fact of losing someone or something, deprivation of or failure to keep a possession, attribute, faculty, etc." Destruction to our mind implies a situation in which the goods thus destroyed cease to exist. Where the goods exist but in a different form, as in the case of product which evaporates, it is lost in the sense that its physical presence continues, but it exits in the possession of someone else, or at some other place. It would be relevant to consider the provisions of Section 23 of the Customs Act, 1962. Sub-section (1) provides that duty shall be remitted on any imported goods which are shown to have been lost or destroyed at the time before clearance for home consumption. The use of the conjunction "loss or destruction" answers the departmental representative's point that the words "lost and destroyed" occurring in the proviso to Section 35B are used as a phrase, for which he relies upon the decision of the Tribunal in Indian Farmers Fertilizers Co-op. Ltd. v. CCE - 1989 (41) E.L.T. 474. It is not permissible while interpreting the provisions of statute to ignore the word contained therein.
5. We are confronted with a situation in which the rule which is the subject of the limitation uses the expression "lost or destroyed" and the proviso under Sub-section (1) of Section 35B refers to loss of goods. If the intention were to bar the jurisdiction of the Tribunal also there could easily have been achieved by employing the phrase "loss or destruction" of the goods in this proviso. The fact that this has not been done, and that the proviso only refers to goods which are lost leads us to conclude that the intention was in fact to limit the jurisdiction of the Tribunal only in the case of loss and not in the case of destruction. It is however not for us to speculate the rationality or otherwise of the rule. We have to apply the rule as it stands. By doing so we do have jurisdiction and therefore proceed to take up the stay application.
6. In the order impugned in the appeal, the Commissioner (Appeals) confirmed the action of the Assistant Commissioner in demanding duty on goods which the appellant manufactured and on which it did not pay duty because they were destroyed by a fire. The Commissioner (Appeals) has noted that the application that was made to the Commissioner for remission of duty under Rule 49 was not accepted by him and therefore the applicant was liable to duty. Counsel for the applicant does not dispute that no appeal was filed against the order of the Commissioner rejecting that claim. However, it is stated that the order of the Commissioner dismissing the claim was received only after the adjudication by the Deputy Commissioner of the show cause notice issued to the applicant demanding duty. If that is the case, the action of the Deputy Commissioner itself is difficult to justify. Apart from that, there is no dispute by any of the authorities concerned that the goods were destroyed by fire. In that case the requirements of Rule 49 are satisfied. In that the manufacturer will have to pay duty on goods which are not shown to the proper officer to have been destroyed by natural cause or unavoidable accident. The notice issued to the manufacturer itself acknowledges the loss of the goods during storage by fire.
7. We also note the decision of the Tribunal in Shri Dudhganga Vedganga Sahakari Sakhar Karkhana Ltd. & Twelve Ors. Sakhar Karkhanas and Ors.
v. CCE 1987 (29) E.L.T. 22 that buyer to collect duty which arises only at the time of removal of goods and there is no question of payment of duty.