2016 (4) TMI 1192 - AT - Central Excise

Remission of duty - loss due to accident - molasses - whether the assessee are entitled remission of duties on molasses lost (in store) due to auto combustion or accident? - Held that - loss have occurred due to unavoidable accident - Similar question was earlier considered by this Tribunal in RBNS Sugar Mills Ltd. 1996 (5) TMI 205 - CEGAT NEW DELHI wherein this Tribunal took notice that Auto Construction of molasses stored in tanks is a recurrent natural phenomenon. There is no negligence found on the part of the appellant in taking reasonable care - the appellant is entitled to remission of duty under Rule 21 of CER - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues Involved:
Entitlement to remission of duties on molasses lost due to auto combustion or accident.

Analysis:
1. Factual Background: The appellant, a sugar and molasses manufacturer, faced a significant loss of molasses due to auto combustion on a specific date. The appellant promptly took steps to mitigate the loss, informed relevant authorities, and filed a claim for remission of duties amounting to a substantial sum.

2. Adjudication of Claim: The claim for remission was adjudicated and rejected primarily on the grounds that the accident could have been avoided with proper cooling arrangements for the molasses tank. It was also noted that a portion of burnt molasses was sold without duty payment, indicating marketability. The classification of charred molasses under relevant headings was discussed, emphasizing the duty liability on burnt molasses.

3. Contentions and Legal References: The appellant contested the rejection, arguing that no negligence was proven, and all necessary steps were taken to prevent and address the loss. Legal references, including circulars and case laws, were cited to support the appellant's position on the classification and taxability of burnt molasses.

4. Judicial Analysis: The Tribunal considered the circumstances leading to the loss, the actions taken by the appellant, and expert opinions on auto combustion of molasses. It was established that the burnt molasses were no longer fit for consumption, justifying remission under Rule 21 of CER. The Tribunal distinguished previous rulings cited by both parties based on the specific facts and issues involved.

5. Decision and Rationale: The Tribunal allowed both appeals, setting aside the impugned orders and demands. It ruled in favor of the appellant's entitlement to remission under Rule 21 of CER, emphasizing the non-marketability and unsuitability of the burnt molasses for consumption or industrial use. The consequential benefits were also granted to the appellant in accordance with the law.

6. Conclusion: The judgment highlighted the importance of assessing the nature of loss, marketability of damaged goods, and adherence to regulatory requirements in determining the entitlement to duty remission. The detailed analysis considered factual, legal, and procedural aspects to deliver a favorable decision for the appellant in both appeals.