2012 (7) TMI 829 - AT - Central Excise

Remission of excise duty - Loss of molasses stored in masonary tank due to auto-combustion - Held that - there is nothing in the report of the State Excise officer who visited the site for inspection which may suggest that the respondent was negligent or he failed to take steps to ensure cooling of the pipeline leading to the molasses tank and also recirculation of the molasses within the tank. Instead the report suggests that there was a provision for cooling of pipeline from the Mill to the storage tank and two pumps were installed for recirculation of the contents of storage tank. Report also says that auto combustion took place because of abnormal rise in temperature of molasses. From this report it cannot be concluded that the respondent was grossly negligent in maintenance of storage tank - no reason to fault the order of Commissioner granting remission of duty on the ground that the molasses has burnt due to unavoidable auto combustion accident - Decided against Revenue.

Summary

Issues:
Appeal against remission of excise duty under Rule 21 of Central Excise Rules, 2002 for loss of molasses due to auto-combustion.

Analysis:
The Department appealed against the Commissioner's decision allowing remission of excise duty amounting to Rs. 15,82,450 to the respondent under Rule 21 of the Central Excise Rules, 2002 due to the loss of 31649 qtls. of molasses stored in a tank because of auto-combustion. The local excise team confirmed the loss and reported that there were provisions for cooling the pipeline and recirculation of molasses in the tank. The respondent did not appear despite receiving the notice, leading to the appeal being heard in their absence.

The Commissioner concluded, after considering the report and submissions, that the molasses burned due to auto-combustion without negligence on the respondent's part, thus allowing the duty remission. The appellant argued that the remission was not justified as the respondent could have prevented the auto-combustion by ensuring proper cooling arrangements, which they failed to do. The appellant urged to set aside the impugned order.

The Tribunal considered the arguments and facts presented. It was established that the molasses stored in the tank burned due to auto-combustion, rendering it unfit for distillation and marketing. The key point of contention was whether the accident could have been avoided with adequate precautions. The State Excise officer's report did not indicate negligence on the respondent's part, stating that there were cooling provisions and pumps for recirculation in place. The report attributed the auto-combustion to an abnormal rise in temperature of molasses, not gross negligence in tank maintenance by the respondent. Therefore, the Tribunal found no fault in the Commissioner's decision to grant duty remission based on the unavoidable auto-combustion accident.

Consequently, the Tribunal dismissed the appeal and the Counter Objection, as there was no merit found in the arguments presented.