Tribunal upholds duty demand on molasses storage despite company's arguments

The Tribunal upheld the duty demand on molasses cleared to a katcha pit by a company engaged in sugar and molasses manufacturing, despite the appellant's argument based on a previous case. The penalty under Rule 25 was reduced from Rs. 50,000 to Rs. 25,000 due to the admitted mistake and subsequent compliance. The appellant's stance that duty was paid upon actual removal from the factory was rejected as their records treated the storage as removal, making duty payable. The duty demand was upheld, but the penalty was reduced considering the circumstances.

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Issues:
1. Duty liability on molasses cleared to katcha pit.
2. Applicability of penalty under Rule 25 of Central Excise Rules, 2002.

Analysis:
1. The appellant, engaged in sugar and molasses manufacturing, cleared molasses to katcha pit without paying duty initially. A statement admitted the mistake, and duty with interest was paid later. The show cause notice demanded duty, interest, and penalty. The Tribunal considered the appellant's argument based on a previous case but found that the appellant treated the storage in katcha pit as removal in their records, making duty payable. The appellant's stance was not accepted, and duty demand was upheld. However, considering the mistake, the penalty under Rule 25 was reduced from Rs. 50,000 to Rs. 25,000.

2. The appellant argued that since they paid duty at the time of actual removal from the factory, no penalty should apply for storing molasses in katcha pit. The Tribunal noted that the appellant's own records treated the storage as removal, making duty payable as per Rule 8 of Central Excise Rules, 2002. While duty demand was upheld, the penalty was reduced to Rs. 25,000 due to the admitted mistake and the appellant's compliance post the error. The Tribunal acknowledged the appellant's error but upheld the duty demand and reduced the penalty amount in light of the circumstances.

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