2012 (10) TMI 502 - AT - Central Excise

Tribunal grants appeal, remits duty & penalty on damaged molasses. Controlled sale emphasized.

The Tribunal allowed the appellant's appeal, setting aside the demand for duty and penalty imposed by the Commissioner. The case centered on the ... Demand of duty in respect of molasses - clandestinely removed - Molasses stored in kuchcha pit - rejection of remission application - Held that:- Revenue is simply proceeding on the ground that it cannot be believed that molasses were intact during 14 months of the period irrespective of stored in katcha pits, but lost the same within a period of 4 months. As sale of molasses is controlled by UP Sheera Niyantran Adhiniyam, 1964 and manufacturer again cleared the goods beyond the State Supervision and Promotion by the State Controller of Molasses. It is found that there is absolutely no evidence on record reflecting upon clandestine removal of the goods. It has been held in number of decisions that where the molasses are stored in katcha pits and are unfit for consumption their destruction has to be allowed as decided in U.P. STATE SUGAR & CANE DEVELOPMENT CORPN. LTD. Versus CCE, ALLAHABAD [2007 (2) TMI 473 - CESTAT, PRINCIPAL BENCH, NEW DELHI] - as in thus case it has to be held that Molasses were destroyed or damaged on account of weather conditions and rainy season, the remission has to be granted in such a case - in favour of assessee. Issues:Confirmation of demand of duty in respect of molasses stored in katcha pits and destroyed due to weather conditions.Detailed Analysis:The case involved the confirmation of demand for duty on molasses stored in katcha pits and destroyed due to weather conditions. The appellant, engaged in the manufacture of V.P. Sugar with molasses as a by-product, faced a situation where the storage capacity of their tanks became insufficient during the crushing season of 2002-2003, leading to the storage of molasses in kachcha pits. The State Controller of Molasses controlled the storage and disposal of molasses, prohibiting the appellant from disposing of the molasses without authorization. The appellant later cleared a portion of the stored molasses after inviting tenders from distilleries and paying Central Excise duty. However, due to exposure to weather conditions, a significant quantity of molasses deteriorated, leading to an application for remission of duty on the remaining stock.The Assistant Commissioner issued a show cause notice alleging that the appellant clandestinely removed a portion of the molasses without payment of duty, violating Central Excise Rules. The Commissioner confirmed the demand for duty and imposed a penalty, prompting the appellant to appeal the decision. During the hearing, the facts were not in dispute, focusing on the duty demand concerning the destroyed molasses. The Revenue contended that the molasses could not have remained intact for 14 months before deteriorating over a 4-month period, leading to the demand confirmation based on clandestine removal.The Tribunal analyzed the case law and found no evidence of clandestine removal, emphasizing that the sale of molasses was controlled by specific regulations. Citing previous decisions, the Tribunal highlighted that destruction of molasses stored in katcha pits, especially when unfit for consumption, warranted remission of duty. The Tribunal concluded that the molasses were damaged due to weather conditions and not removed clandestinely, thus granting remission and setting aside the demand and penalty imposed by the Commissioner. The appellant was entitled to consequential relief.In summary, the Tribunal's decision revolved around the confirmation of duty demand on molasses stored in katcha pits and destroyed due to weather conditions. The Tribunal found no evidence of clandestine removal, emphasizing the controlled nature of molasses sale and the need for remission when goods are damaged and unfit for consumption. The appellant's appeal was allowed, and the demand and penalty were set aside, providing consequential relief to the appellant.