2007 (2) TMI 59 - AT - Central Excise

Remission of duty Commissioner rejected the claim of remission of duty by appellant for the reason that intimation about the storage loss was not given within 24 hours Respective authority dismissed the commissioner order and allow the remission

Summary

Issues:
Remission claim rejection under Rule 21 of Central Excise Rules, 2002.

Detailed Analysis:

1. Remission Claim Rejection by Commissioner:
The appellant, engaged in the manufacture of V.P. sugar and molasses, claimed a storage loss of 52.160 MT of molasses, which was below the permissible 2% limit as per a circular of the Board. However, the Commissioner rejected the remission claim citing failure to provide timely intimation of the loss, self-contradictory reasons given by the appellant, and non-applicability of the circular letter dated 18-07-83.

2. Appellant's Arguments:
The appellant argued that the loss was due to natural causes, well below the 2% limit, and the time limit of 24 hours for intimation should not apply since the loss was not due to fire or similar reasons. The appellant contended that the procedural requirement of informing about the loss within 24 hours was inapplicable in this case.

3. Department's Position:
The department's representative supported the Commissioner's decision, highlighting the appellant's conflicting statements regarding the cause of the loss, initially attributing it to storage loss and later to leakage during transfer.

4. Legal Provisions and Interpretation:
Section 5 of the Central Excise Act, 1944 allows for remission of duty on goods found deficient in quantity. Rule 21 of the Central Excise Rules, 2002, provides for remission of duty subject to certain conditions. The Commissioner's satisfaction about the genuineness of the loss is crucial for granting remission. The Trade Notice requiring intimation within 24 hours was analyzed, with emphasis on its administrative nature and limited applicability to specific causes like flood or fire.

5. Judgment and Precedent:
The Tribunal set aside the Commissioner's order, allowing the remission claim under Rule 21. The Tribunal referred to a circular letter of the Board specifying condonable losses in molasses storage. A previous case decision supported the inclusion of handling losses within the remission scope, covering losses from storage and transfer activities. The Tribunal concluded that the appellant's claim fell within the condonable limit of 2% as per the circular letter.

6. Final Decision:
The Tribunal ruled in favor of the appellant, overturning the Commissioner's decision and allowing the remission claim under Rule 21 of the Central Excise Rules, 2002. The appeal was disposed of accordingly on 12-2-2007.