2002 (10) TMI 440 - AT - Central Excise

Issues Involved:

1. Rejection of refund claims for duty paid on molasses stored in kutcha pits.
2. Applicability of Rule 173H for storage of duty-paid molasses.
3. Provisional debiting under protest and subsequent adjustment of excise duty.
4. Compliance with Rule 49 of the Central Excise Rules, 1944.
5. Procedural adherence and non-appeal against the Assistant Commissioner's order.

Detailed Analysis:

1. Rejection of Refund Claims for Duty Paid on Molasses Stored in Kutcha Pits:
The appellants, engaged in sugar manufacturing, sought to store molasses, a by-product, in kutcha pits due to insufficient storage capacity in steel tanks. They provisionally debited duty under protest based on the last sale value, intending to adjust the duty if the sale proceeds were lower at the time of actual disposal. Their refund claims were rejected by the original authority, and the Commissioner (Appeals) upheld this rejection. The appellants contended that they paid duty under protest and should be eligible for a refund as the market value of molasses was lower than the value adopted for duty payment.

2. Applicability of Rule 173H for Storage of Duty-Paid Molasses:
The Assistant Commissioner granted permission under Rule 173H for storing duty-paid molasses in kutcha pits within the licensed factory premises, with the condition that subsidiary invoices and a stock register be maintained, and the valuation rules in force be considered for duty payment. The appellants argued that Rule 173H was not applicable and that the duty should not have been required until the molasses were issued out of the factory premises.

3. Provisional Debiting Under Protest and Subsequent Adjustment of Excise Duty:
The appellants provisionally debited the duty in their PLA under protest, based on the last sale value, and requested that if the sale proceeds were lower at the time of actual disposal, the excise duty should be adjusted. The Assistant Commissioner, however, rejected this claim, stating that there was no provision in the Central Excise Act or rules for refund of duty in such cases. The appellants' contention that they paid duty under protest and were entitled to a refund was dismissed as they had not followed the procedure for provisional assessment under Rule 233B.

4. Compliance with Rule 49 of the Central Excise Rules, 1944:
The appellants argued that under Rule 49, duty is chargeable only upon removal of goods from the factory premises. They contended that the molasses stored in kutcha pits were not removed from the factory, and thus, duty should not have been required. The Tribunal observed that duty is on the manufacture of goods, not on clearance, and is collected at the time of removal for administrative convenience. Since the molasses were duty-paid at the relevant time, the appellants' claim for a refund was not tenable.

5. Procedural Adherence and Non-Appeal Against the Assistant Commissioner's Order:
The appellants did not appeal against the Assistant Commissioner's order granting permission to store duty-paid molasses, which they termed as a cryptic and non-speaking order. The Tribunal noted that if the appellants were aggrieved by the order, they should have approached the Assistant Commissioner for a speaking order or appealed against it. Their failure to do so and subsequent filing of a refund claim was not acceptable. The Tribunal also referenced the Supreme Court's decision in the case of Wallace Flour Mills Company Ltd. v. CCE, which held that duty can be levied and collected at a later stage for administrative convenience, and the rate prevalent on the date of removal is applicable.

Conclusion:
The Tribunal upheld the orders of the authorities below, rejecting the refund claims of the appellants. The duty was paid at the rate applicable at the relevant time, and the molasses were duty-paid goods stored in kutcha pits. The appellants' failure to challenge the Assistant Commissioner's order and the lack of provisional assessment under Rule 233B rendered their refund claims invalid. The appeals were dismissed accordingly.

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