2018 (6) TMI 1597

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....e Appellant is engaged in the manufacture of Sugar and Molasses classifiable under Chapter 17 of the Central Excise Tariff Act, 1985 with principal raw material being Sugar Cane at its factory at West Champaran, Bihar. Consequent to Audit, a Show cause Notice dated 1 June 2007 was served on the Appellant alleging clandestine production and clearance of 88,483.423 Qtls. of Sugar during the financial year 2003 - 04 and 43,502.196 Qtls. of Molasses during the financial year 2002 - 03, without payment of central excise duty, aggregating Rs. 96,96,194/ along with equivalent penalty and interest-. The alleged clandestinely manufactured and cleared quantity was worked out by applying the yield/recovery of Molasses and Sugar as reflected in the fin....

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....Government 2. Molasses Bihar Molasses (Control) Act, 1947 read with rules framed thereunder State Government 3. Sugar Cane Essential Commodities Act, 1956 read with Sugar Cane Order, 1966 Central Government In terms of the above statutes, a Sugar season is duly recognized to be a period of twelve months commencing from 1 October and ending on 30 September. Further, in terms of Rule 10 of the Sugar Control Order read with Rule 3(f) of the Molasses Control Rules, the Appellant is obligated to work out the recovery/yield monthwise as well as for the entire Sugar season which is reflected in the final manufacturing report. Since the Sugar season (October to September) is not symmetrical with the financial year (April to March), applyin....

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....r and reported in sugar season 2002-03. Consequently, the cane crushed during financial year 2003-04 was comprised in two sugar seasons i.e. 2002-03 (covering April 03 to May 03) & 2003-04 (covering December 03 to March 04). Therefore, the yield for the financial year 200203/2003-04 vis-à-vis the yield for the sugar season 2002-03/200304 could not have been uniform and the entire basis for alleging clandestine production and clearance fails. * The ld. Consultant vehemently argued that the entire demand is even otherwise hit by limitation as all the information with respect to month wise production and clearance along with duty payment details was meticulously filed with the excise authorities besides filing the information for the ....

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....the reporting periods for the Sugar seasons 2002 - 03 and 2003 - 04 vis-à-vis the financial years 2002 - 03 and 2003 - 04 are not straight jacket comparable as the Appellant had also produced Sugar and Molasses during the period April and May 2003 which got covered by Sugar season 2002 - 03 although, falling within the financial year 2003 - 04. Therefore, the financial year 2003 - 04 comprised of two Sugar seasons i.e. 2002 - 03 (covering April 2003 and May 2003) and 2003 - 04 (covering December 2003 to March 2004). Hence, the findings of the Learned Commissioner are flawed in so far as he held that the production of Sugar/Molasses took place only during October to March, which was common to both the reporting periods. 6. We also fi....