TaxTMI 
TaxTMI 
2016 (7) TMI 231
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....under Chapter sub heading No. 22072000 and 38069090 respectively of Central Excise Tariff Act, 1985 the other products viz Rectified Spirit and ENA are non-excisable goods. The respondents are also availing CENVAT Credit facility on inputs, input services and capital goods in terms of CENVAT Credit Rules, 2004. On scrutiny of ER-I returns for the month of April 2009 to March2010, it has been observed that the respondent has shown some quantity of Denatured Rectified Spirit as process loss after production of the finished goods. The respondent has not mentioned any reason for this process loss in their ER-I return. As excise duty is leviable on the manufacture of excisable goods in a factory of manufacturer in terms of Section 3 of the Central Excise Act, 1944, hence all the gods manufactured in the factory are liable for payment of duty except under the circumstances when the party show sufficient reasons that the said goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing at any time before removal and claim remission of duty in terms of Rule 21 of Central Excise Rules, ....
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....he instructions issued by the Additional Collector, North U.P. Collectorate vide instruction no. 74/89 dated 01.06.1989 for condonation of storage loss for Denatured Rectified Sprit upto 0.5% and letter of CBEC, F.No. 261/15CC/80-CX 8 dated 06.021982 for same, it has been made clear that upto 2% of storage loss of molasses because of natural cause should be condonable for remission of duty. 4.3. That in this case remission of duty by the competent authority arises only when a request through an application or letter is made to him. The respondent has shown storage loss in their ER-I returns for the period of April 2009 to March 2010 without mentioning any reason for the said loss, yet they were not able to produce the receipt of any application of remission before the adjudicating authority. 4.4. That the Commissioner (Appeals) has found that the losses reported in the ER-I returns were much below 0.5% placing reliance on the order of Hon'ble Tribunal in the case of Kishan Sahkari Chini Mills Ltd Vs. CCE, Allahabad and he found that no proof or evidence on record to uphold the allegation of clandestine removal or to prove that the goods have been sold without payment of d....
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....n 0.5%. That the loss was duly reported in the monthly return. That it was not the case here that the department detected the so called shortage, That when the department issued Show Cause Notice and they filed reply to the same refuting the allegations of demand of duty, the same could be treated as sufficient compliance of Rule 21 of Central Excise Rules. 5.3. That the product in dispute being volatile in nature, some losses were bound to occur and that was the reason as to whether the State Excise Officers are recording the losses in the statutory records. That the product is under physical control of State Excise Office, it was not possible for them to remove even a Iitre of Denatured Spirit without accounting the same in the statutory records and without the permission of State Excise Officer. 5.4. That the charge of clandestine removal of Denature Spirit to the extent of storage loss is totally untenable. That clandestine removal is to be established with cogent evidence. That there is nothing on record to show that there was any such removal from the factory in clandestine manner. That the charge of clandestine removal is very arbitrary, loss due to natural causes cann....
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....m remission of duty in terms of Rule 21 of Central Excise Rules, 2002. The respondent has neither shown any reason for such loss nor applied for remission of duty as required in terms of Rule 21 of Central Excise Rules, 2002 on the quantity shown to have been lost in the ER-I returns. A Show Cause Notice was issued on 17.05.2010 to the respondent alleging therein that it appears that the respondent has clandestinely cleared 6137.9 ltr of Denatured Rectified Spirit, shown it as loss in their ER-I return in order to evade Central Excise duty amounting to Rs. 10,092/which is recoverable under the provisions of Section 11 A of the Central Excise act, 1944 along with interest in terms of Section 11 AB of the said Act. As the said goods appears to have been removed without payment of duty the respondent is liable for penal action under Rule 25 of the Central Excise Rules, 2002 for alleged violation of Rule 4 of the said Rules. The Assistant Commissioner, Muzaffarnagar, Division-Il vide Order-in-Original No.24/AC/MZN-II/201 dated 31.052011 confirmed the demand of Central Excise Duty amounting to Rs. 10,092/- and imposed penalty of equivalent amount along with interest. Aggrieved by the sa....