Excise duty on molasses became payable on removal from production, despite later destruction of the goods.

Molasses produced as a subsidiary product in sugar manufacture was treated as an excisable commodity, and central excise duty became chargeable on removal from the place of production. The assessee was under a legal obligation to keep the goods in an approved place before removal, but failed to make proper storage arrangements despite adequate time. Subsequent destruction of the molasses was irrelevant because duty liability arose at the stage of manufacture and removal. The assessment requiring payment of duty on the manufactured molasses was therefore upheld.

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Issues: Whether central excise duty was payable on molasses manufactured by the assessee and removed from the place of production without payment of duty.

Analysis: Molasses was a subsidiary product arising from the manufacture of sugar and was an excisable commodity. The record showed that duty became chargeable on removal from the place of production, and the assessee was under a legal obligation to store the goods in an approved place before removal. The assessee had been given sufficient time to make proper storage arrangements, but failed to do so. The subsequent destruction of the molasses was treated as irrelevant because the decisive question was the liability arising at the stage of production and removal. The assessment proceedings therefore disclosed no error in insisting upon payment of duty on the manufactured molasses.

Conclusion: Central excise duty on the molasses was payable and the challenge to the assessment failed.

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