2008 (12) TMI 513 - AT - Central Excise

Summary

Issues:
Determining excess stock of molasses based on dip reading in storage tank, acceptance of calibration chart for conversion, foam formation possibility during winter, consideration of margin due to foam, relevance of previous judgments on similar cases.

Analysis:
The case involved a dispute regarding the determination of excess stock of molasses in a storage tank based on dip reading, leading to the confiscation of the excess stock and imposition of penalties. The Central Excise Officers found a discrepancy between the recorded stock in the RG.I register and the actual stock determined through dip reading, resulting in the seizure of the excess stock. The Assistant Commissioner's order-in-original confiscated the excess stock with an option for redemption on payment of a fine and imposed a penalty. The Commissioner (Appeals) later set aside the confiscation and penalty, leading to the Revenue filing an appeal against this decision.

The main argument put forth by the Revenue was that the Commissioner erred in accepting the Respondent's claim of foam formation inside the tank during dip reading, especially during winter when foam formation was unlikely. The Revenue also highlighted the lack of evidence supporting the claim that the molasses produced was of a lower brix level than the calibration chart used for conversion. Reference was made to a judgment by the Allahabad High Court emphasizing the reliability of dip measurement methods and the lack of grounds to dispute the method's accuracy in specific instances.

On the Respondent's side, reliance was placed on previous Tribunal judgments that allowed a margin of up to 15% for foam formation during dip reading to account for discrepancies. The Respondent argued that if this margin was considered, the excess stock would fall within an acceptable range. Additionally, it was pointed out that the Assistant Commissioner did not adequately address the discrepancy between the brix level of the molasses produced and the calibration chart used for conversion.

Upon careful consideration of the arguments presented, the Tribunal found that the Respondent failed to provide evidence supporting the claim of lower brix level molasses production. Moreover, the Tribunal noted the difference in circumstances between the current case and the precedent cited by the Respondent regarding foam formation during dip reading. As a result, the Tribunal set aside the Commissioner's decision, reinstated the redemption fine in lieu of confiscation, and upheld the penalty imposed in the original order. The Revenue's appeal was allowed based on these findings.