2011 (2) TMI 741 - AT - Central Excise

Demand of duty - sugar lost in reprocessing - whether the respondent are liable to pay duty on the quantity of sugar lost during the reprocessing - As the judgments of the Tribunal in the cases of Kisan Sahkari Chinni Mills Ltd. vs. CCE, Allahabad (2005 -TMI - 54337 - CESTAT, NEW DELHI), held that no duty is required to be paid - Decided in favour of assessee.

Summary

Issues:
Whether duty is chargeable on sugar lost during reprocessing.
Applicability of Rule 21 of Central Excise Rules for remission of duty.
Interpretation of previous Tribunal judgments on duty payment for lost sugar.

Analysis:

1. Duty on Sugar Lost During Reprocessing:
The case involved reprocessing of 1050 quintals of sugar in January and February 2005, resulting in the loss of 87 quintals. The Assistant Commissioner demanded duty on the lost sugar, which was contested by the respondent. The Commissioner (Appeals) set aside the duty demand, citing previous Tribunal judgments that no duty is chargeable on sugar lost during reprocessing. The Tribunal upheld this decision, emphasizing that since the sugar was reprocessed due to being below standard, and not due to natural causes or unavoidable accidents, Rule 21 of the Central Excise Rules for remission of duty did not apply. Therefore, the respondent was not liable to pay duty on the lost sugar.

2. Applicability of Rule 21 for Remission of Duty:
The Department argued that the respondent should have applied for remission of duty under Rule 21 to be exempt from duty payment on the lost sugar. However, both the Commissioner (Appeals) and the Tribunal held that Rule 21 does not apply in this case as the sugar loss occurred during reprocessing due to quality issues, not natural causes or accidents. The Tribunal reiterated that the previous judgments established that no duty is payable on sugar lost during reprocessing, further supporting the decision that Rule 21 was not applicable in this scenario.

3. Interpretation of Previous Tribunal Judgments:
The Department highlighted that a Special Leave Petition (SLP) had been filed against the Tribunal judgment in a similar case. However, the Tribunal noted that the judgment in question had not been stayed or set aside by the Supreme Court. The respondent's counsel argued that the previous Tribunal judgments had already established that no duty is required to be paid on sugar lost during reprocessing, and this position was upheld in the present case as well. The Tribunal relied on these precedents to dismiss the Revenue's appeal, affirming that the respondent was not liable to pay duty on the quantity of sugar lost during reprocessing.

In conclusion, the Tribunal upheld the Commissioner (Appeals)' decision, dismissing the Revenue's appeal and confirming that no duty was chargeable on the sugar lost during reprocessing due to the established legal principles and previous Tribunal judgments on the matter.