2011 (1) TMI 745 - AT - Central Excise

Remission of duty - The molasses, in question was of 1987-88 and the same had been stored in four kachha pits and one pucca pit in the factory premises - It is not disputed that from November, 1990 onwards, a number of letters and reminders had been written by the respondents to the Commissioner for permitting the destruction of the molasses which has deteriorated and the State Excise Authorities were pressing them to drain out the same on the same was causing environmental and pollution problems - there is no dispute that the molasses had become unfit for consumption and the same had been destroyed in presence of State Excise officers under Rule 49 of the Central Excise Rules, 1944, the remission of duty in respect of such molasses has to be allowed and the same cannot be refused on the basis of some undertaking given by the respondent regarding not claiming the remission - Decided in favor of the assessee

Summary

Issues:
1. Central excise duty demand on drained out molasses.
2. Imposition of penalty.
3. Appeal against the order of the Commissioner (Appeals).

Analysis:
1. The case involved manufacturers of sugar and molasses charged with central excise duty on 27,309.69 quintals of molasses drained out without payment of duty due to being unfit for consumption. A show cause notice was issued demanding duty and proposing a penalty. The Additional Commissioner confirmed the duty demand under Rule 9(2) of Central Excise Rules, 1944, and imposed a penalty of Rs. 5,000. The Commissioner (Appeals) allowed the appeal stating that the molasses had deteriorated since 1990, and the manufacturers had been requesting permission for its destruction due to pressure from State Excise Authorities. The destruction was done in the presence of State Excise Officers, and the Commissioner (Appeals) set aside the duty demand.

2. The Revenue contended that the manufacturers were not entitled to remission of duty as they had stored the molasses at their own risk without the possibility of claiming remission under Rule 49 of the Central Excise Rules, 1944. They argued that a portion of the molasses had been drained out without payment of duty, which was ignored by the Commissioner (Appeals). The manufacturers defended by highlighting their continuous efforts since 1990 to seek permission for the molasses' destruction, which was finally carried out in the presence of State Excise Authorities due to its deteriorated condition, making it unfit for consumption.

3. The Tribunal considered the submissions and records, noting that the molasses had been stored without permission in kachha and pucca pits since 1987-88. Despite repeated requests for destruction due to deterioration and environmental concerns, the Central Excise Authorities did not respond. The manufacturers eventually drained out the molasses in the presence of State Excise Authorities, following which the Commissioner (Appeals) set aside the duty demand. The Tribunal upheld the Commissioner's decision, citing Rule 49 of the Central Excise Rules, 1944, which allows remission of duty for goods unfit for consumption under proper supervision, emphasizing the lack of response from the department despite the deteriorated state of the molasses.

Therefore, the Tribunal found no infirmity in the Commissioner (Appeals) order and dismissed the Revenue's appeal, affirming the remission of duty for the drained out molasses deemed unfit for consumption and destroyed under supervision, in compliance with the Central Excise Rules, 1944.