2006 (5) TMI 382 - AT - Central Excise

Summary

Issues:
Central excise duty demands on quantities of molasses found short due to natural losses.

Analysis:
The judgment pertains to central excise duty demands on quantities of molasses found short during the manufacturing of sugar. The appellant argued that the shortages were due to natural losses within the normal limit prescribed by the department. The adjudicating authority confirmed the duty demand as the remission application was not found in the office. The appellant contended that no duty is payable on products lost naturally, emphasizing the lack of evidence supporting the view that goods were removed without payment of duty.

The legal provisions under Rule 11 and Rule 4 of the Central Excise Rules, 2002 were considered. Rule 11 mandates that excisable goods cannot be removed without an invoice signed by the owner or authorized agent. Rule 4 requires payment of excise duty before removing excisable goods. The judgment highlighted that duty is payable only upon removal of goods from the place of storage, and in this case, there was no evidence indicating such removal.

The appellant's explanation cited natural and unavoidable storage losses, falling within the permissible limit of 2% as specified by relevant instructions. The statutory records maintained by the appellant supported the claim of natural loss. The judgment emphasized that duty demands based solely on missing remission applications were irrelevant to the question of duty sustainability. The absence of evidence or reasons to reject the appellant's position led to setting aside the duty demands and penalties, with the appeals allowed in favor of the appellants.

In conclusion, the judgment focused on the justification for central excise duty demands on molasses lost naturally during sugar manufacturing. It underscored the importance of evidence and legal provisions regarding duty payment upon goods' removal from storage. The decision favored the appellant's argument of natural losses within permissible limits, leading to the setting aside of duty demands and penalties due to the lack of supporting evidence against the appellant's position.