2017 (2) TMI 615 - AT - Central Excise

Appellate Tribunal rules Sugar Cess not applicable post-clearance.

M/s Bajaj Hindustan Ltd. Versus Commissioner of Central Excise, Lucknow

M/s Bajaj Hindustan Ltd. Versus Commissioner of Central Excise, Lucknow - 2017 (349) E.L.T. 677 (Tri. - All.) Issues:1. Applicability of increased Sugar Cess on goods cleared from the factory on payment of appropriate duty.2. Interpretation of Sub-section 4 of Section 3 of Sugar Cess Act, 1982 in relation to the levy and collection of Sugar Cess.3. Authority's power to collect duty on goods after clearance from the factory when appropriate duty was already paid.Analysis:The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved three appeals arising from a common issue addressed in Order-in-Appeal No. 146-147 & 144-CE/LKO/2010 dated 19/07/2007 passed by the Commissioner of Central Excise & Customs (Appeals), Lucknow. The appeals were related to the demand of differential Sugar Cess on goods cleared from the factory on payment of Central Excise duty and Sugar Cess, stored in a duty-paid godown, and subsequent increase in Sugar Cess rates. Three Show Cause Notices were issued to the appellants, leading to Orders-in-Original confirming the demands and penalties.In the hearing, the appellant's counsel argued that since the appropriate duty was paid at the time of clearance, the goods could not be considered short paid. The Departmental Representative supported the impugned Order-in-Appeal. The Tribunal, after considering the contentions and records, referred to Sub-section 4 of Section 3 of Sugar Cess Act, 1982, which aligns the levy and collection of Sugar Cess with the provisions of the Central Excise Act, 1944. The Tribunal highlighted that the Central Excise Act mandates duty payment at the time of clearance from the factory and does not authorize authorities to collect increased duty post-clearance on goods already cleared after paying the appropriate duty.Consequently, the Tribunal set aside the impugned Orders-in-Appeal and allowed all the appeals, ruling that the increased levy of Sugar Cess after the clearance date from the factory on payment of appropriate Central Excise duty and Sugar Cess was not applicable. The appellants were granted consequential relief as per the law. The judgment emphasized the legal framework governing duty payment and collection in excise matters and clarified the limitations on authorities to collect additional duty on goods already cleared after paying the appropriate duty.