2004 (1) TMI 442 - AT - Central Excise

Summary

Issues:
Challenge to impugned order-in-appeal setting aside duty demand for denatured ethyl alcohol storage loss.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a challenge by the Revenue against an order-in-appeal that set aside a duty demand of Rs. 474 for the period from September 1999 to December 1999. The Revenue contended that the loss of denatured ethyl alcohol was not natural and that no remission was requested by the respondents. The learned SDR relied on the legal precedent set in Madan Mohan v. Superintendent of Central Excise - 1992 (58) E.L.T. 497 to support this argument. On the other hand, the respondents argued that the loss was natural due to evaporation, involving a small amount of duty, and that they had requested remission in response to the show cause notice. The Commissioner (Appeals) had accepted the respondents' plea, leading to the appeal.

Upon hearing both sides and reviewing the record, the Tribunal found that the duty amount evaded was Rs. 474 due to storage loss of denatured ethyl alcohol in the factory. The Commissioner (Appeals) determined that the loss was natural because ethyl alcohol is volatile and was stored in non-airtight containers. The Commissioner allowed the remission of duty, equating it with dropping the duty demand, based on the natural cause of evaporation. The Tribunal supported this decision, stating that there was no legal flaw in the order, even if the term "remission of duty" was used instead of "dropping of duty." The Tribunal distinguished the case from Madan Mohan's case, where duty remission was sought for different reasons related to tobacco storage.

Ultimately, the Tribunal upheld the validity of the order-in-appeal, dismissing the Revenue's appeal. The decision was based on the natural loss of denatured ethyl alcohol due to evaporation, which justified the remission of duty as accepted by the Commissioner (Appeals).