High Court: No duty payment needed for storing molasses in factory premises. Duty payable upon removal. Appeal allowed.

The High Court ruled in favor of the Assessee, determining that duty payment was not necessary solely for storing molasses in earthen pits within the factory premises. The Court emphasized that excise duty is payable upon removal of goods for a specified purpose from the place of production, which did not occur in this case. The judgment clarified that duty liability may arise in other situations such as damage or actual removal of the molasses. The appeal was allowed, overturning the Tribunal's decision, with no order regarding costs.

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Issues: Whether duty was payable on molasses stored in katcha pits within the factory premises contrary to Rule 9 and Rule 49 of the Central Excise Rules, 1944.

Analysis: Rule 9(1) bars removal of excisable goods without payment of duty, and Rule 49 postpones duty until goods are issued out of the specified premises or removed from an approved storage place. The molasses remained within the factory premises and were not removed outside the precincts of the factory. The objection that the pits were not an approved storage place did not amount to removal within the meaning of the rules, since the goods had not left the factory premises. The earlier Patna High Court decision was distinguishable on its facts because it dealt with approved katcha pits without the same factual setting of storage within the factory premises.

Conclusion: The issue was answered in favour of the assessee and against the Revenue. Duty was not payable merely because the molasses were stored in katcha pits within the factory premises.

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