2011 (5) TMI 631 - AT - Central Excise

Natural loss - loss not intimated within 24 hours - denial of remission of duty - Held that - Commissioner who rejected the remission application only proceeded on the terms of a trade notice No.206/84 dated 01.12.1984 requiring lodging of claim within 24 hours of occurrence. The basis of trade notice in the absence of statutory provision authorising issuance thereof. Prescribing a procedure not known to law is not acceptable. Learned appellate authority failed to follow guideline of Board as aforesaid. Therefore, dispute should not perpetuate. The appellant succeeds and both the appeals are allowed.

Summary

Issues:
1. Permissible natural loss of molasses during handling and storage.
2. Denial of remission of duty due to belated intimation of loss.
3. Examination of reasons for loss and explanation provided by the appellant.
4. Rejection of remission application based on trade notice without statutory provision.

The judgment addresses the appellant's grievance regarding the natural loss of molasses during handling and storage. The Central Board of Excise and Customs (CBEC) clarified that a permissible loss of 2% is acceptable without levying duty, a fact not disputed by the department. However, the denial of remission of duty was based on the belated intimation of the loss, overlooking CBEC's guidelines. The appellant explained the reasons for the loss, including molasses sticking to tank walls/floors and unavoidable leakages, which the Commissioner failed to consider. The rejection of the remission application solely on the basis of a trade notice requiring a claim within 24 hours was deemed unjustified as it lacked statutory authorization. The appellate authority's failure to adhere to the CBEC guidelines led to the allowance of both appeals in favor of the appellant, emphasizing the need to avoid perpetuating the dispute.

The judgment highlights the importance of understanding and applying CBEC guidelines regarding permissible natural loss in cases involving duty remission. It underscores the necessity for authorities to consider explanations provided by appellants for losses incurred during handling and storage, especially when such losses are within permissible limits. Furthermore, the judgment criticizes the reliance on trade notices lacking statutory backing for making decisions on duty remission, emphasizing the need for adherence to established legal provisions and guidelines. By upholding the appellant's arguments and allowing the appeals, the judgment sets a precedent for ensuring fair treatment based on valid justifications rather than procedural technicalities.

In conclusion, the judgment serves as a reminder for authorities to interpret and apply statutory provisions and guidelines accurately while considering duty remission claims related to permissible natural losses. It highlights the significance of evaluating explanations provided by appellants for losses incurred during handling and storage activities. Moreover, it cautions against relying on procedural requirements lacking legal validity, emphasizing the importance of adhering to established legal frameworks in making decisions related to duty remission. The judgment ultimately upholds the appellant's position, signaling the importance of fair and reasoned decision-making in customs and excise matters.