2011 (3) TMI 905 - AT - Central Excise

Tribunal Upholds Excise Duty Remission Rejection for Molasses Losses

CCE, Allahabad Versus M/s UP. State Sugar & Cane Development Corpn. Ptd.

The appeals challenging the remission of excise duty on molasses storage loss were rejected by the Tribunal. The Tribunal emphasized that storage losses ... Remission of duty - storage loss of molasses - the department denied the duty on the ground given is that 2% loss is to be accounted for for the entire year and in this case the loss has taken place in 12 days - Section 8(4) of the U.P. Sheera Niyantran Adhiniyam, 1964 also provides for 2% loss in a year - This section is to the effect that even in cases of loss above 2%, if it is proved that mistake and deficiency has been caused by accident or any other unavoidable cause the sugar factory was not liable to any penalty - It is the same principle that is sought to be applied in the circular issued by CBEC letter No. 261/15CC/8/82-CX.4 dated 18.7.93 - Hence, appeal is filed contesting condonation of excise duty on account of molasses lost while in storage in a factory operated by the UP State Government is misconceived and devoid of any merit and therefore the appeal is rejected. Issues:1. Remission of duty on storage loss of molasses detected in the factoryAnalysis:In Appeal No. 1502 of 2008, the case revolves around the loss of molasses during a specific period, with the duty remitted by the Assistant Commissioner of Central Excise being contested by the Revenue. The contention is based on the timing of the loss, which occurred over 12 days as opposed to being spread out over the entire year. The Revenue argues for a proportional calculation of the condonable loss, while the appellant emphasizes that the loss was accounted for after the sugar season ended, covering various reasons for such losses. The Tribunal notes that storage losses are inherent in the industry and cannot be completely prevented, citing a circular condoning losses up to 2% of the total quantity stored annually. The argument to calculate losses on a daily basis is deemed absurd, and the appeal is rejected based on the misconceived challenge to the excise duty remission.Moving to Appeal No. 1503 of 2008, the facts are similar to the previous case, with the period and quantity of molasses loss differing. The reasoning applied in Appeal No. 1502 is found equally relevant here, leading to the dismissal of this appeal as well. The judgment emphasizes the principle that losses beyond the prescribed limit can be excused if caused by accident or unavoidable circumstances, aligning with both the statutory provision and the circular issued by CBEC. Overall, both appeals challenging the remission of excise duty on molasses storage loss are deemed devoid of merit and misconceived, resulting in their rejection by the Tribunal.