Court upholds excise duty on molasses in Kachcha pits, dismisses writ petitions

The court dismissed the writ petitions challenging the excise duty on molasses stored in Kachcha pits. It held that duty is payable even without goods' removal for sale, post-withdrawal of permission. The court found the show-cause notice valid, emphasizing the need for detailed investigation. The plea of limitation was not raised timely, and the court directed the petitioners to pursue appeals under Section 11-A of the Act. The writ petitions were dismissed, instructing the filing of appeals within one month, with interim orders effective for two months from the judgment date.

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Issues Involved:
1. Excise duty payable on removal of goods.
2. Estoppel from withdrawing permission to store molasses in Kachcha pits.
3. Validity of the show-cause notice under Section 11-A of the Central Excise Act.
4. Limitation period for issuing the show-cause notice.
5. Alternative remedy through appeal.

Detailed Analysis:

1. Excise Duty Payable on Removal of Goods:
The primary contention of the petitioners is that excise duty is payable only upon the removal of goods for sale or disposal, and since no such removal has taken place, no duty can be levied. The petitioners argue that the molasses stored in Kachcha pits have not been removed for sale, and thus, no excise duty is due. However, the respondents counter that the storage of molasses in Kachcha pits without payment of duty is in violation of the Central Excise Rules, particularly after the withdrawal of the 1982 circular by the circular dated 1-8-1988.

2. Estoppel from Withdrawing Permission to Store Molasses in Kachcha Pits:
The petitioners argue that the respondents are estopped from withdrawing the permission to store molasses in Kachcha pits, which was initially granted due to the circumstances at the time. They contend that the withdrawal of permission via the circular dated 1-8-1988 should not apply retrospectively to molasses already stored. The respondents, however, maintain that the withdrawal of permission is valid and enforceable, and any storage of molasses in Kachcha pits post-withdrawal requires the payment of duty.

3. Validity of the Show-Cause Notice under Section 11-A of the Central Excise Act:
The petitioners challenge the show-cause notice dated 28-4-1989 and the subsequent order dated 29-1-1990, arguing that they are illegal and invalid. The respondents assert that the show-cause notice and the order are in accordance with the law and the circulars issued by the Central Board of Excise and Customs. The court notes that several factual questions arise from the show-cause notice and the petitioner's explanation, which require detailed investigation not suitable for writ petitions.

4. Limitation Period for Issuing the Show-Cause Notice:
The petitioners claim that the show-cause notice is barred by time, as it was issued beyond the six-month limitation period from the date the duty became payable (1-8-1988). The respondents argue that the duty is demanded as of the date of the show-cause notice, not from the date of the circular's withdrawal. The court observes that the plea of limitation was not specifically raised in the writ petition or before the Assistant Collector, and thus, the respondents had no opportunity to address it.

5. Alternative Remedy through Appeal:
The court emphasizes that the petitioners should pursue the alternative remedy of filing appeals against the impugned orders under Section 11-A of the Act. The court highlights that several questions of fact and the relevance of specific circulars and bonds need to be examined by the appropriate appellate authority. The court dismisses the writ petitions, directing the petitioners to file appeals within one month, which shall be entertained without objection on the ground of limitation.

Conclusion:
The writ petitions are dismissed, and the court instructs the petitioners to file appeals within one month, which will be entertained without raising objections on the ground of limitation. The interim orders granted in these writ petitions shall remain effective for two months from the date of the judgment.

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