2025 (3) TMI 497 - AT - Central Excise

Revenue appeal dismissed as 1% transit loss benefit under Circular 30.10.1985 remains valid for export warehousing

CESTAT Chandigarh dismissed Revenue's appeal regarding excise duty liability on goods lost in transit. The tribunal upheld Commissioner's decision ... Remission of duty - Liability to pay excise duty for the goods not reached to the destination - transit loss upto 1% - entitlement to avail benefit of condonation of transit loss upto 1% in the light of Circular dated 30.10.1985 - HELD THAT:- The Ld. Commissioner after considering the various circulars and the Notifications has held that the said circular dated 30.10.1985 is still valid and the same has not been withdrawn till date and consequently has allowed the transit loss upto 1%. We also find that this issue has been considered by the Hon’ble High Court of Gujarat in the case of Indian Oil Corporation Ltd. Vs. Union of India & Ors. [2024 (12) TMI 151 - GUJARAT HIGH COURT], wherein the Hon’ble Gujarat High Court dealt with the same issue in the case of Indian Oil Corporation, the Hon’ble Gujarat High after considering all the Circulars issued by the Department from time to time and the various Rules providing for warehousing provisions had held 'in view of the Notification No. 46/2001 not being disturbed by the CBEC read with Circular No. 261 dated 30.10.1985, the petitioner would be entitled to transit loss upto 1% for non payment of duty on the products transferred from the refinery/factory to the place of storage for the purpose of export only.' Conclusion - The applicability of Circular dated 30.10.1985 to export warehousing affirmed, allowing for condonation of transit loss up to 1%. There is no infirmity in the order passed by the Commissioner of Central Excise, Chandigarh - Appeal of Revenue dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal question considered in this judgment is whether the respondent is entitled to avail the benefit of condonation of transit loss up to 1% under Circular dated 30.10.1985, in the context of export warehousing of petroleum products, and whether the Department's interpretation of the circular as applicable only to home consumption is valid.2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:The case revolves around the interpretation of Circular No. 261/6/20/82-CX dated 30.10.1985, which allows for a condonation of transit loss up to 1% for petroleum products. The Department argued that this circular was inoperative for export warehousing due to the withdrawal of re-warehousing facilities for petroleum products in 2004. The respondent contended that the circular was still valid and applicable to export warehousing under Notification No. 46/2001-CE(NT) dated 26.06.2001.Court's Interpretation and Reasoning:The Court found that the Circular dated 30.10.1985 had not been withdrawn and was applicable to the export warehousing context. The Court noted that the Department's reliance on other circulars, such as Circular No. 581/18/2001-CX and Circular No. 579/16/2001-CX, was misplaced as these did not address the issue of transit loss.Key Evidence and Findings:The Court examined the Circular dated 30.10.1985 and subsequent notifications and circulars. It found that the Circular dated 30.10.1985 was still operative and applicable to the export warehousing of petroleum products, as confirmed by various judicial precedents.Application of Law to Facts:The Court applied the Circular dated 30.10.1985 to the facts, allowing the respondent to claim condonation of transit loss up to 1%. The Court also considered the nature of the goods (petroleum products) and the inevitability of some transit loss.Treatment of Competing Arguments:The Court addressed the Department's argument that the Circular dated 30.10.1985 was applicable only to home consumption by citing judicial precedents that supported the respondent's interpretation. The Court also rejected the Department's interpretation of other circulars and notifications as not relevant to the issue of transit loss.Conclusions:The Court concluded that the respondent was entitled to the benefit of condonation of transit loss up to 1% under the Circular dated 30.10.1985, and that the Department's interpretation of the circular was incorrect.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning:'The revisional authority has ignored the existence of the Circular No. 46/2001 dated 26.06.2001 which is still in operation for the purpose of facility of removal of petroleum products without payment of duty for export warehousing.'Core Principles Established:The judgment reaffirms the applicability of Circular dated 30.10.1985 to export warehousing, allowing for condonation of transit loss up to 1%. It emphasizes the importance of adhering to existing circulars unless explicitly withdrawn.Final Determinations on Each Issue:The Court upheld the Commissioner's decision to drop the demand for excise duty on transit loss up to 1%, dismissing the Revenue's appeal. The Court confirmed that the Circular dated 30.10.1985 remains valid and applicable to the context of export warehousing of petroleum products.