2006 (11) TMI 455 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are the payment of duty on molasses procured from a sugar mill, availing Modvat credit, and the legal obligation to pay duty on molasses.

Payment of duty on molasses:
The case involved the procurement of molasses from a sugar mill and the availing of Modvat credit by the respondents. The revenue contended that duty on molasses should be paid by the person procuring it, as per Rule 4(2) of Central Excise Rules, 2002. The original adjudicating authority confirmed the duty demand against the appellants and imposed penalties. However, the appellate authority set aside the order, stating that duty had already been paid by the supplier and recovered from the procurer, making the demand unjustified. The duty cannot be demanded twice on the same goods, and the Cenvat credit cannot be denied when duty has already been paid by the supplier.

Legal obligation to pay duty on molasses:
The appellate authority observed that molasses is an excisable and dutiable final product, and duty is required to be paid on it. While the burden of paying duty on molasses is shifted to the procurer to avoid registration and formalities for Khandsari sugar, the Khandsari unit is not debarred from paying duty on molasses. In this case, the supplier unit paid duty on molasses and issued valid invoices under Rule 11 of Central Excise Rules, 2002. The appellate authority found that since duty was already paid by the supplier, there was no contravention by the appellants, and they were not liable for any penalty. The provisions of Rule 4(2) of Central Excise Rules, 2002 were deemed inapplicable in this situation.

Conclusion:
The appellate tribunal rejected the revenue's appeal, stating that the duty had already been paid on the molasses, and demanding duty again from the appellants was unjustified. The tribunal found no merit in the revenue's case and held that the situation was revenue neutral. The provisions of Rule 4(2) of Central Excise Rules could not be applied to demand duty from the appellants for the second time when duty had already been paid by the supplier. The appeal was rejected, and the judgment was pronounced on 23-11-2006.