2010 (11) TMI 331 - AT - Central Excise

Demand - The show cause notice has alleged unexplained losses of sugar of 11,581 Qtls. of sugar while reprocessing 35390 qtls. of brown sugar/scrap sugar - It cannot be the case of the department that reprocessing of 35390 Qtls. of brown sugar/scrap sugar should yield the same quantity of sugar - Under these circumstances, to rely on a percentage arrived at in the case of M/s. KSCM Ltd. cited (2005 -TMI - 54337 - CESTAT, NORTHERN BENCH, NEW DELHI) as an outer limit is not appropriate - The material used for reprocessing could not be treated as excisable and it is not being disputed that the same has been issued for reprocessing after sending intimation in advance during every season starting from 1999-2000 to 2003-2004 - The appeal of the department is rejected

Issues:
1. Allegation of less recovery of sugar during reprocessing in multiple sugar seasons.
2. Contesting show cause notice on merits and time limit.
3. Claiming remission of duty for lost sugar in reprocessing.
4. Dispute over the percentage of reprocessing loss.
5. Marketability of brown sugar and scrap sugar.
6. Requirement of application for remission of duty.
7. Duty payment on recovered molasses.
8. Applicability of previous tribunal decisions on similar cases.
9. Disputed loss quantity of sugar during reprocessing.
10. Appeal against the order of the Commissioner (Appeals).

Analysis:

Issue 1:
The case involved an appeal by the department against the order of the Commissioner (Appeals) regarding the alleged less recovery of sugar during reprocessing in multiple sugar seasons. The show cause notice claimed a loss of 11,581 Qtls. of sugar during the reprocessing of 35,390 Qtls. of brown sugar and scrap sugar from 1999-2000 to 2003-2004.

Issue 2:
The respondents contested the show cause notice on both merits and time limit. The original authority confirmed the demand and imposed a penalty, which was later set aside by the Commissioner (Appeals), leading to the department's appeal.

Issue 3:
The department argued that the respondents should have claimed remission of duty for the quantity of sugar lost during reprocessing. The respondents, however, maintained that the reprocessing led to the emergence of 23,809 Qtls. of sugar and 12,518 Qtls. of molasses, for which duty had been paid.

Issue 4:
A dispute arose over the percentage of reprocessing loss claimed by the department, which was deemed abnormally high at 32.7%. The respondents supported the order of the Commissioner (Appeals) and contested the department's claim of loss.

Issue 5:
The marketability of brown sugar and scrap sugar was questioned, with the respondents arguing that these products were not marketable as such and required reprocessing. Previous tribunal decisions were cited to support this argument.

Issue 6:
The need for an application for remission of duty was discussed, with the tribunal finding that the material used for reprocessing was not excisable, and the quantity issued for reprocessing had emerged as sugar and molasses, cleared after duty payment.

Issue 7:
The duty payment on the recovered molasses was highlighted, indicating that duty had been paid on the molasses recovered during reprocessing, further supporting the respondents' position.

Issue 8:
The tribunal considered previous decisions on similar cases and found that the department's appeal lacked merit. The appeal was rejected, and the cross objection in support of the order of the Commissioner (Appeals) was disposed of.

This detailed analysis covers the various issues addressed in the legal judgment, providing a comprehensive overview of the arguments presented by both parties and the tribunal's reasoning in reaching its decision.

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