Approved storage in sanctioned kaccha pits defeated excise violation, duty demand, and penalty for alleged molasses removal.

Storage of molasses in kaccha pits was treated as lawful where the pits formed part of the department-approved ground plan, so the arrangement did not constitute a breach of the Central Excise Rules. The show-cause notice was also found not to disclose an enforceable duty demand, and there was no proved unauthorised or clandestine removal from the approved premises. In the absence of a valid demand and evidence of removal, penalty under Rule 9(2) or Rule 173Q could not be sustained, and the departmental challenge failed.

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Issues: Whether storage of molasses in kaccha pits, in premises whose ground plan including such pits had been approved by the department, constituted a violation of the Central Excise Rules so as to justify demand of duty and imposition of penalty under Rule 9(2) or Rule 173Q; and whether the show-cause notice disclosed any enforceable demand of duty.

Analysis: The approved ground plan including the kaccha pits was in force during the relevant period, and keeping molasses in those pits was found to be within the sanctioned arrangement. On that basis, the storage did not amount to any violation of Rules 9 and 47. The notice was also held not to disclose any demand of duty, and there was no evidence of unauthorised or clandestine removal from the approved . In the absence of a proper demand and any proved removal, penalty could not be sustained under Rule 9(2) or Rule 173Q.

Conclusion: The appeal by the department failed, and the order of the Collector (Appeals) was upheld in favour of the assessee.

Final Conclusion: Approved storage in sanctioned kaccha pits did not attract excise violation, duty demand, or penalty on the facts found, and the departmental challenge was rejected.

Ratio Decidendi: Where storage takes place in premises and structures approved by the department, and the show-cause notice does not disclose a valid duty demand or proved unauthorised removal, penalty under the Central Excise Rules cannot be sustained.

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