1990 (10) TMI 192 - AT - Customs

Tribunal allows appeal for duty remission on Molasses destruction due to negligence

The appeal was allowed by the Tribunal on both merit and time-barred grounds, setting aside the Collector's order demanding duty remission under Rule 49 ... Remission of duty Issues: Duty remission under Rule 49 for destruction of Molasses due to negligence and storage in unapproved premises; Time-barred demand for duty; Approval of storage premises for Molasses; Compliance with conditions for remission of duty.In this case, the appellants, who are sugar manufacturers, were required to store Molasses due to high sugar and Molasses production during specific seasons. Subsequently, a significant quantity of Molasses deteriorated and had to be destroyed with permission from the Collector. The Collector issued a show cause notice alleging duty remission was not available under Rule 49 due to negligence and storage in unapproved premises. The duty demand was confirmed, leading to the present appeal against the Collector's order.The appellant's advocate argued that the storage pits were known to be approved for Molasses storage, even though no records of approval were available. They also highlighted obtaining specific permission for destruction of Molasses, supervised by the Assistant Collector. The advocate pointed out that the duty demand was time-barred as the show cause notice was issued after a significant delay, and the remission of duty was justified on merits.On the other hand, the Respondent contended that storage premises for Molasses must be approved by the proper officer under Rule 47(3), which was not the case for the katcha pits used by the appellants. The Respondent argued that negligence and improper storage in unapproved premises disqualify the appellants from claiming remission under Rule 49. Additionally, it was argued that Section 11A does not apply if remission of duty is disallowed under an independent provision like Rule 49.The Tribunal observed that while it was unclear whether the katcha pits were approved for Molasses storage, the Department's silence on the matter implied awareness of the storage method. The Tribunal noted that the Molasses had deteriorated and were destroyed under supervision, meeting the conditions for remission under Rule 49. The second proviso to Rule 49 exempts duty on goods unfit for consumption, subject to Collector's conditions, which were met in this case. The Tribunal emphasized that the duty demand should have been made within the normal six-month limit, as indicated by the assessment at nil duty rate on RT-12 returns. Therefore, the appeal was allowed on both merit and time-barred grounds, setting aside the Collector's order demanding duty.