Indian Metals & Ferro Alloys Limited V. Union of India and Others

WP(C)/19814/2010

AI Insights

M/s. Indian Metals & Ferro Alloys Ltd. filed a writ petition challenging the order of the Joint Secretary to the Government of India, Ministry of Finance, which denied condonation of transit/handling losses incurred during the export of charge chrome. The petitioner argued that similar cases had been granted condonation and cited various judgments and circulars supporting their claim. The revisional authority's decision was criticized for not adequately considering these precedents and for a perceived non-application of mind. The court found merit in the petitioner's arguments, noting the need for consistency and uniformity in judicial decisions, and remitted the matter for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 800705 (HC-CUTTACK)
• Appeal Type: Others
• Pronouncement Date: 16-03-2023
• Assessment Year: misc
• Other Referred Cases: CCE&C, BBSR-I v. Ispat Alloys Ltd., CCE&C Bhubaneswar-I v. Indian Metals & Ferro Alloys Ltd., Ispat Alloys Ltd. v. CCE&C, Bhubaneswar-I, Bar Council of Maharashtra v. M.V. Dabholkar, Prem Singh v. C.G., Kalandi Charan Mallick v Union of India, Gondakar Vrs. CCT, Orissa Forest Corporation Ltd. Vrs. Assistant Collector, K. Ajit Babu v. Union of India, Jayawals NECO Ltd. v. CCE, Bharat Sanchar Nigam Limited v. Union of India, Principal Commissioner of Income Tax v. Maruti Suzuki (India) Limited
• Laws Referred To: Articles 226 and 227 of the Constitution of India, Central Excise Act, 1944, Central Excise Rules, 1944
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: TUSHARKANTI SATPATHY
• Assessee Lawyers: JAGABANDHU SAHOO; KAJOL SAHOO; N K ROUT; P MOHAPATRA
• Keywords: Handling Loss; Transit Loss; Condonation of loss; Draft survey; Weight difference; Export of charge chrome
• Section: 13; 35-A; 35 EE

Judgement Text

" ORISSA HIGH COURT: CUTTACK W.P(C) No. 19814 of 2010 In the matter of an application under Articles 226 and 227 of the Constitution of India. --------------- M/s. Indian Metals & Ferro Alloys Limited ..… Petitioner -Versus- Union of India and others ….. Opp. Parties For petitioner : M/s. Jagabandhu Sahoo, Sr. Advocate along with M/s (Mrs.) Kajol Sahoo, N.K. Rout and P. Mohapatra, Advocates. For opp. parties : Mr. Tusharkanti Satpathy, Sr. Standing Counsel for Revenue (O.P. No.4) P R E S E N T: THE HONOURABLE DR. JUSTICE B.R.SARANGI AND THE HONOURABLE MR JUSTICE M.S. RAMAN Date of Hearing and Judgment: 16.03.2023 DR. B.R. SARANGI, J. M/s. Indian Metals & Ferro Alloys Ltd., a company registered under the Companies Act, 1956 and engaged in manufacture and sale of high carbon ferro AFR // 2 // chrome/charge chrome, has filed this writ petition seeking to quash the order dated 26.04.2010 passed by the revisional authority, i.e. Joint Secretary to the Government of India, Ministry of Finance (Department of Revenue)- opposite party no.2 in Annexure-10. 2. The factual matrix of the case, succinctly put, is that the petitioner in course of its business has cleared 2000.000 M.T. of high carbon ferro chrome/charge chrome from its factory at Therubali in the district of Rayagada for export under Bond without payment of duty vide ARE-1 No.1 dated 15.04.2006 to No.06 dated 21.04.2006 and dispatched the same in bulk and loose condition to Visakhapatnam Port. Before dispatch of charge chrome from the factory of the petitioner, the same are physically weighed in the weigh bridge and thereafter goods are loaded in truck which is transported to Visakhapatnam Port by road. The consignment after arrival at the port is dumped in the area allotted in the Port and thereafter goods moved from the wharf to the jetty by truck. The goods are loaded in the ship by crane after which, the quantity of charge // 3 // chrome exported by the petitioner is measured on the basis of a draft survey conducted in the port. This mode of determination of weighment on the basis of draft survey gives rise to difference in quantity dispatched from factory on actual weighment and the quantity exported on the basis of ascertainment of weight by draft survey. Thus, there being difference in weight giving rise to short shipment on account of loss in transit, handling of goods within and outside the Port Area, moisture condition and several other allied factors, the petitioner submitted applications to the jurisdictional Assistant/ Deputy Commissioner for condonation of such shortages. The result of weighment by draft survey relating to the quantity exported after loading of charge chrome into the ship are reflected in AR-4. The details of shortage arising out of charge chrome dispatched from petitioner's factory and the export made relating to various shipments aggregates to 20.735 M.T. The petitioner as per the physical weighment in its factory has cleared charge chrome weighing 2000 M.T. as against which the ascertained quantity exported, as figures in ARE-Is, weighs 1979.265 M.T. giving rise to short // 4 // shipment of 20.735 M.T. for shortages taking place on account of handling/transit loss etc. which works out close to 1% of the quantity of charge chrome exported. 2.1 The Superintendent, Central Excise and Customs issued a show cause notice on 22.11.2006, objecting to shortage of quantity on account of transit/handling loss and the petitioner has claimed for condonation of the said loss. By issuing such show cause notice, the petitioner was called upon to submit written explanation and produce the documentary evidence in support of its defence as to claim of transit handling loss resulting in short shipment. In response to the notice of show cause, the petitioner submitted written explanation and adduced evidence in support of its claim of transit/handling loss. 2.2 The Asst. Commissioner of Central Excise and Customs-opposite party no.5, vide order dated 20.03.2007 read with corrigendum dated 27.03.2007, disposed of the proceeding by holding that upon submission of evidence relating to proof of export, the short shipment quantity as // 5 // ascertained denoting the difference between the quantity dispatched from the factory and the quantity exported was subjected to levy of duty under the Central Excise Act, 1944. Needless to say, the Asst. Commissioner, Central Excise and Customs being the Assessing Authority had on several occasions after thorough examination and verification of connected documents and while appreciating the intricacies involved relating to export of charge chrome has recorded specific finding that loss occurs broadly on account of two factors, firstly, on account of transit loss which occurs from factory to the port of export and secondly, handling loss which occurs at the port of export. The percentage of loss occurred having also been found to be less than 1% as per the circular of the Board of Central Excise, the same was allowed in several occasions by the opposite parties in the case of present petitioner. 2.3 But the opposite party no.5, while taking a sharp departure from the earlier stand resorted to imposition of duty denying grant of condonation of short shipment of goods which also occurred on account of handling/transit // 6 // losses. Even though the petitioner has highlighted its legitimate claim for condonation of transit/handling loss and has referred to relevant circular/instructions and order passed by the CEGAT in very many cases and other Courts, without considering the same, the said opposite party no.5 passed the order levying duty in respect of total shortage of 20.735 M.T., which resulted in duty demand of Rs.1,02,358/- including cess amounting to Rs.2007/-, by relying upon the letter dated 08.01.03 of the Ministry of Finance and order dated 30.06.2006 passed by the Joint Secretary to Government of India in the revision proceeding. 2.4 The Ministry of Finance in its letter dated 12.02.1987 on the subject of fixation of norms of handling and other losses relating to export of charge chrome by M/s. Ferro Alloys Corporation Ltd., which is a 100% EOU, has directed after considering the matter relating to transit/handling loss up to 1% towards charge chrome clearance from factory to the stage of export for condonation of such loss. But opposite party no.5 has not // 7 // considered the same and denied the benefit admissible to the petitioner. Apart from the same, directive was issued on 12.02.1987 by the Ministry in respect of M/s. Ferro Alloys Corporation Ltd., but subsequently the Regional Advisory Committee of Central Excise and Customs, Collectorate, Bhubaneswar in its meeting held on 17.03.1987 decided to give the benefit of condonation of loss to other units engaged in export of charge chrome and resolved to issue suitable instructions to the Divisional Asst. Collectors in that regard. The Govt. of India, Ministry of Finance (Department of Revenue), Central Board of Excise and Customs (“CBEC” for short), in its office memorandum dated 25.04.2001, with reference to NALCO’S claim and fixation of norms of handling and other losses in respect of export of Calcined Alumina, issued instructions that in respect of export of Calcined Alumina under Bond, the Board in consultation with DGI (CCE) has accepted the views of the DGI (CCE). As the loss could not be explained by NALCO, therefore, the DGI Inspection opined not to grant any such condonation of loss in respect of export of Calcined Alumina which in turn was also accepted by the // 8 // Central Board of Excise & Customs in its office memorandum dated 25.04.2001. Thus, the instruction issued on 25.04.2001 has nothing to do with grant of condonation of loss in case of export of charge chrome. The Director General of Inspection (CCE) declined to fix a norm to allow condonation for handling and other loss in respect of export of Calcined Alumina on account of several factors including serious anomalies in the accounts of NALCO which reflected excess stock of several years followed by shortage of stock for 2 years and in respect of which NALCO could not explain. But that ipso facto cannot be applicable to the petitioner, because it is dealing with completely different material like charge chrome and, as such, the petitioner has furnished all the information pursuant to the show cause notice issued to him and while following the circular issued by the CBEC dated 25.04.2001, opposite party no.5 passed the order on 20.03.2007 denying the benefit admissible to the petitioner. 2.5. Against the order dated 20.03.2007 passed by opposite party no.5, the petitioner preferred appeal before // 9 // the Commissioner of Central Excise (Appeals), as provided under Section 35-A of the Central Excise Act, 1944, who rejected the appeal on 08.11.2007 by holding that in view of the letter dated 08.01.2003 there is no provision for condonation of handling and natural loss after removal of goods from the factory and the proposal for specifying a limit for condonation of such losses after removal from the factory was not found to be feasible. 2.6. Against the order dated 08.11.2007 passed by the Commissioner of Central Excise (Appeals)-opposite party no.4, the petitioner filed a revision before the Central Government as provided under Section 35-EE of the Central Excise Act, 1944 contending therein that the order passed by the Commissioner (Appeals) does not appear to be proper and legal on the ground that in view of the letter of the CBEC in consultation with DGI (CCE) accepting the view of the said DGI (CCE) communicated vide letter dated 06.06.2001 not to condone transit/handling loss in respect of export of Calcined Alumina, no benefit under the earlier CBEC circular dated 12.02.1987 could be given to the // 10 // petitioner for grant of benefit of condonation of transit/ handling loss in respect of export of charge chrome for the clearance from factory to the stage of export for condoning the transit/handling loss up to 1%. 2.7. The letter dated 08.01.2003 issued by the Ministry is in the context of chrome concentrate falling under Tariff Entry 26.10 whereas the petitioner has dispatched charge chrome for export which falls under Tariff Entry 72.20, therefore circular dated 08.01.2003 is not applicable in case of the petitioner. 2.8. The revisional authority has referred to the letter dated 06.06.2001 to justify his conclusion that there is no provision for condonation of losses under Central Excise law once the goods have been cleared out of the manufacturing factory, but the same is contrary to and is inconsistent with the contents in letter dated 25.04.2001 issued by the Board accepting the views of DGI (CCE). The CBEC circular dated 29.11.1979 clarifies that the provisions under Rule 13 of the Central Excise Rules, 1944 is of wide amplitude and no bar and restriction can be // 11 // comprehended under the said provision in allowing handling and transit losses. But opposite party no.2 passed an order on 26.04.2010 in rejecting the revision case without due consideration of the material document and various judgments relied upon by the present petitioner. Hence, this writ petition. 3. Mr. Jagabandhu Sahoo, learned Senior Advocate appearing along with Ms. Kajol Sahoo, learned counsel for the petitioner contended that even though the petitioner had filed certain judgments and same has been taken note of, but the same has not been considered while adjudicating the matter and the revisional authority, without application of mind mechanically dismissed the revision applicable denying the benefit admissible to the petitioner. It is further contended that the circular issued by the CBEC on 12.02.1987 in respect of Ferro Alloys Corporation Ltd. would apply to other charge chrome exporters including the present petitioner and the petitioner would be entitled to condonation of loss in respect of transit/handling loss. It is further contended that in view of // 12 // the judgment passed by the CEGAT, Kolkata in CCE&C, BBSR-I v. Ispat Alloys Ltd., 2002 (48) RLT 347 (CEGAT- Kol.), similar benefit should have been extended in favour of the petitioner, but the said judgment though referred to, but has not been considered. Therefore, it is contended that similar claim of condonation of loss in case of Indian Metals & Ferro Alloys Ltd., which is a sister concern of the present petitioner, was also allowed by the CEGAT, Kolkata in the case of CCE&C Bhubaneswar-I v. Indian Metals & Ferro Alloys Ltd., 2002 (52) RLT 984 (CEGAT-Kol), wherein judgment was rendered by the CEGAT following its earlier judgment in Ispat Alloys Ltd. (supra), but the case of the petitioner was not considered. Therefore, since the law has already been decided applying the ratio thereof, the petitioner should have been extended with such benefit, but the order impugned has been passed without application of mind and without referring to the judgments cited by the petitioner. Therefore, the order so passed by the revisional authority is liable to be quashed. // 13 // 4. Mr. T.K. Satapathy, learned Sr. Standing Counsel appearing for the Revenue vehemently contended to justify the order impugned passed by the revisional authority and sought for dismissal of the writ petition. 5. This Court heard Mr. Jagabandhu Sahoo, learned Senior Counsel appearing along with Mrs. Kajal Sahoo, learned counsel for the petitioner and Mr. T.K. Satpathy, learned Sr. Standing Counsel for the Revenue in hybrid mode and perused the records. With the consent of learned counsel for the parties, the writ petition is being disposed of finally at the stage of admission. 6. The sole consideration before this Court is whether the condonation of loss of 1% on the basis of CBEC circular dated 12.02.1987 would cover the case of the petitioner and if that is not applied to the case of the petitioner whether the demand so raised can be sustained and, as such, the claim of the petitioner can be allowed. 7. On the basis of factual matrix, as discussed above, it is made clear that admittedly there was transit // 14 // loss caused due to weight difference at the factory site and weight loss was calculated on the basis of the survey made when transportation was made to the ship. Therefore, the only question arises whether the petitioner is entitled to get benefit of condonation of such transit loss or not. The CBEC in its circular dated 29.11.1979 on due consultation with the Ministry of Law on the question of condonation of loss occurring due to natural or human causes in terms of Rule- 13 of the Central Excise Rules instructed that such losses are to be permitted and in each case of loss the claim should be decided on merit allowing remission to the extent the adjudicating officer is satisfied about the genuineness of the losses. The said circular has also taken note of the expression “otherwise accounted for to the satisfaction of the Collector occurring in Rule-13” and while referring to the said expression it is clarified that the language used is of wide amplitude so as to take in all losses occurring whether due to natural or human causes. In the present case there being factual adjudication of occurrence of transit/handling loss after clearance from the factory to the post of export, thereby the order passed by the revisional // 15 // authority disallowing the transit loss cannot sustain in the eye of law. To substantiate the stand of the petitioner, reliance has been placed on CCE&C, BBSR-I v. Ispat Alloys Ltd., 2002 (48) RLT 347 (CEGAT-Kol.), CCE&C Bhubaneswar-I v. Indian Metals & Ferro Alloys Ltd. 2002 (52) RLT 984 (CEGAT-Kol) and Ispat Alloys Ltd. v. CCE&C, Bhubaneswar-I, 2004 (61) RLT 85. On perusal of the order impugned it is seen that though aforementioned judgments cited by the petitioner have been taken note of by the revisional authority in paragraph 3.11 thereof, but the said judgments have not been considered nor discussed in the judgment itself. Without taking into consideration of the same, the revisional authority has observed that no condonation of losses can be allowed. However, the Government notes that there is no case for imposition of penalty as adjudicating authority has not given any finding on the penal action and straightaway imposed penalty. As such, the Government sets aside the “personal penalty” imposed by the adjudicating authority and accordingly modified the order to that extent. Consequentially, conclusion arrived at by the revisional authority is an // 16 // outcome of non-application of mind. If the decisions cited on behalf of the petitioner have been noted down, but the same have not been discussed, that indicates that there is clear non-application of mind by the revisional authority. 8. In Bar Council of Maharashtra v. M.V. Dabholkar, (1975) 2 SCC 702, at paragraph-59, the apex Court observed that certiorari is not confined by a narrow conception of locus standi. It contains an element of action popularis because it looks beyond the personal rights of the applicant. It is designed to keep the machinery of justice in proper working order by preventing inferior tribunal and public authorities from abusing their powers. 9. In Prem Singh v. C.G., AIR 1957 SC 304, it has been observed that in a case of certiorari, error of law should be apparent. Similar view has also been taken by the apex Court in Satyanarayan L. Hegde v. M.P. Tirumali, AIR 1960 SC 137. 10. In Kalandi Charan Mallick v Union of India, 51 (1981) CLT 67, it has been observed that the High Court in its “certiorari jurisdiction” under Article 226 of the // 17 // Constitution cannot sit in appeal over findings of the fact rendered by the domestic tribunal. Its jurisdiction is very limited in that respect. All that High Court can do is to enquire whether the finding is based on no evidence at all or whether non-consideration of material evidence on record has resulted in miscarriage of justice. 11. Sri Jagabandhu Sahoo, learned Senior Counsel appearing for the petitioner has buttressed his argument by submitting that in the case of sister concern of the petitioner-company, as reported in 2002 (52) RLT 984 (CEGAT-Kol), identical loss in transit had been condoned and the authority was held to be duty bound to respect such decision of higher authority. 12. In Gondakar Vrs. CCT, (1983) 54 STC 190 (Kar), it has been held that consistency in the judicial administration should not ordinarily be sacrificed unless there is compelling reason. The need for consistency in approach and uniformity in the exercise of judicial discretion in respect of similar cases require that all similar matters should receive similar treatment except where the // 18 // factual difference require a different treatment. Merely stating that the circular of the Commissioner is not applicable to the case can hardly be said to be a reason to be given by a quasi judicial authority. While taking a different view the quasi judicial authority has to give justifiable reason. In this respect, it is profitable to refer to the following observation of this Court in Orissa Forest Corporation Ltd. Vrs. Assistant Collector, 1982 ELT 875:- “3. We do not think this should be the attitude of the Union Government. The demand is under the statute and the statutory appellate authority on the set of facts which are common both to the period when relief was granted and the period for which the impugned demand has been made has already determined that no levy is exigible. As long as the appellate order stands, it must be duly respected and only when the revisional authority vacates the order and holds that the decision of the appellate authority is wrong and the demand was justified, no demand should be raised. It has been indicated on more than one occasions by the Supreme Court with reference to directions of the Appellate Tribunal under the Income Tax Act that such directions are binding and decisions rendered by the appellate authorities should be respected by the subordinate revenue authorities and no attempt should be made to wriggle out of the binding decisions of higher authorities as long as they remain in force. ***” // 19 // 13. In K. Ajit Babu v. Union of India, (1997) 6 SCC 473, it has been emphasized that there must be consistency, certainty and uniformity in the field of judicial decisions as it sets a pattern upon which future conduct may be based. One of the basic principles of the administration of justice is that identical/similar cases should be decided alike. Apt here to have regard to the following observation of the Supreme Court in Jayaswals NECO Ltd. v. CCE, (2007) 13 SCC 807: “7. This Court in Birla Corpn. Ltd. Vrs. CCE [(2005) 6SCC 95] relying upon an earlier decision of this Court, held that the Department having accepted the principles laid down in the earlier case cannot be permitted to take a contra stand in the subsequent cases. In para 5 of the said judgment it was observed, thus: (SCC p. 97) ‘5. In the instant case the same question arises for consideration and the facts are almost identical. We cannot permit the Revenue to take a different stand in this case. The earlier appeal involving identical issue was not pressed and was therefore, dismissed. The respondent having taken a conscious decision to accept the principles laid down in Pepsico India Holdings Ltd. [CCE v. Pepsico India Holdings Ltd., (2001) 130 ELT 193 (cegat)]cannot be permitted to take the opposite stand in this case. If we were to permit them to do so, the law will be in a state of confusion and will place the authorities as well as the assessees in a quandary.’ …” // 20 // 14. In Bharat Sanchar Nigam Limited v. Union of India, (2006) 3 SCC 1, Hon’ble 3-Judge Bench of the apex Court has held as follows:- “20. The decisions cited have uniformly held that resjudicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why the courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi-judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fetters only on a coordinate Bench which, failing the possibility of availing of either of these gate ways, may yet differ with the view expressed and refer the matter to a Bench of superior strength or in some cases to a Bench of superior jurisdiction.” 15. In Principal Commissioner of Income Tax v. Maruti Suzuki (India) Limited, (2020) 18 SCC 331 it has been succinctly said:- “37. We find no reason to take different view. There is a value which the Court must abide by in // 21 // promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. No doing so will only result in uncertainty and displacement of settled expectations. This is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.” 16. Applying the above basic principles, as laid down by the apex Court as well as this Court, to the present context, this Court is of the considered view that the revisional authority though has taken note of the judgments cited before it, but has not analysed the same in its order nor discussed the same and applying the ratio of those judgments has not passed the order impugned. Had the ratio of those judgments been taken into consideration, the result would have been different than what has been done in the order impugned. In view of such position, this Court sets aside the order dated 26.04.2010 passed by the revisional authority under Annexure-10 and remits the matter back to the very same revisional authority to re- consider the same afresh by taking into consideration all // 22 // the judgments cited before him and by affording opportunity of hearing to the parties. 17. In the result, the writ petition is allowed. However, there shall be no order as to costs. (DR. B.R. SARANGI) JUDGE M.S. RAMAN, J. I agree. (M.S. RAMAN) JUDGE Orissa High Court, Cuttack The 16th March, 2023, Arun/GDS "