2013 (9) TMI 817 - HC - Central Excise

Court upholds excise duty demand and penalty for molasses disposal without payment. Writ petition dismissed.

The Court upheld the excise duty demand and penalty imposed on the petitioner for allegedly disposing of molasses without payment, rejecting the appeal ... Loss of Molasses During Storage – Shortage Amounts to Removal of Molasses OR Not - Whether petitioner had suffered loss of molasses during storage due to natural process in the season – Held that:- The petitioner applied for remission but the application was rejected - The order was not challenged by the petitioner at any stage - It had not been challenged even in the present writ petition - Therefore, it had attained finality, meaning thereby, that plea of the petitioner that the aforesaid quantity of molasses was destroyed by natural causes during the storage was not accepted by the authorities and had failed - Since the order had not been challenged and having become final shall be treated to have been accepted by the petitioner, leaving no scope to challenge the levy of excise on the said part of alleged molasses - there was no loss due to natural process – it had been removed or disposed of without payment of excise duty and the petitioner as such was liable for its payment and penalty both – Decided against Petitioner. Issues:1. Claim for remission of excise duty on molasses due to storage loss.2. Show cause notice for non-payment of excise duty on molasses.3. Confirmation of excise duty demand and penalty imposition.4. Dismissal of appeal against the excise duty demand.5. Rejection of revision by the State Government.6. Writ petition challenging the State Government's order.Analysis:1. The petitioner, engaged in manufacturing excisable items, sought remission of excise duty on molasses due to storage loss under Rule 21 of the Central Excise Rules 2002.2. A show cause notice was issued for allegedly disposing of molasses without paying excise duty, leading to a demand of Rs. 2,80,525 under Section 11-A of the Central Excise Act, 1944.3. The Deputy Commissioner confirmed the excise duty demand and imposed a penalty of Rs. 10,000, which was upheld by the Commissioner (Appeal).4. The petitioner's appeal against the order was dismissed, prompting the filing of a revision under Section 35-EE before the State Government, which was rejected.5. Instead of appealing to the Excise Tribunal, the petitioner invoked the writ jurisdiction under Article 226 of the Constitution to challenge the State Government's order.6. The main issue was whether the loss of molasses was due to natural causes or amounted to removal without payment of excise duty, as the application for remission was rejected and not challenged further.7. Rule 21 allows remission for goods lost by natural causes, but since the petitioner's remission application was rejected and not contested, the loss was deemed not accepted as due to natural causes.8. As the rejection of the remission application was final and unchallenged, it established that the molasses were removed without payment of excise duty, making the petitioner liable for payment and penalty.9. The Court found no error in the impugned orders, concluding that the writ petition lacked merit and dismissing it accordingly.