2015 (5) TMI 944 - HC - Central Excise

Remission of duty - Whether the remission of duty involved on storage loss of molasses be allowed even without filing of remission application though prescribed specifically in the statute under Rule 21 of Central Excise Rules, 2002 - Held that - Notification only prescribes outer limit up to which excisable goods can be said to have been lost in natural course, with reference to the particular good. Such prescription of the outer limit will not mean that the statutory provision for claiming such remission are to be given a go by. It is not open to the assessee to himself determine the remission because of alleged loss even if it is within the permissible limits. - even if in the facts of the case, the assessee claims remission from excise duty of goods said to have been lost in natural course, within the permissible limit, as per the circulars, he has to follow the procedure prescribed under Rule 21 of the Rules. Only after an order is made granting remission in respect of the goods so lost due to natural circumstances, he could be exempted from payment of excise duty. - Since Tribunal did not consider this aspect, Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Whether remission of duty on storage loss of molasses can be allowed without filing a remission application under Rule 21 of Central Excise Rules, 2002?

Analysis:
The case involved a central excise appeal where the Joint Commissioner held the assessee liable for payment under Section 11-A of the Central Excise Act, 1944 for the loss of molasses. The Commissioner (Appeals) rejected the appeal as the assessee failed to produce any document showing an application for remission under Rule 21 of the Central Excise Rules 2002. The Tribunal later allowed the appeal, stating that the loss was within the condonable limit of 2% as per circulars issued by the Additional Collector. The Tribunal set aside the orders of the assessing and appellate authorities based on this finding.

The department contended that even if the loss is within the permissible limit, an application under Rule 21 of the Rules is mandatory for remission of excise duty on lost goods. Since no application was filed, the Tribunal's decision to quash the penalty was unjustified. The assessee argued that the loss was within the permissible limit and referred to circulars supporting their position. They also cited a judgment in a similar case to support their argument.

The High Court disagreed with the Tribunal's reasoning and emphasized that following the procedure under Rule 21 for remission is necessary, even if the loss is within the permissible limit. It cited legal principles stating that statutory requirements must be followed strictly. The Court quashed the Tribunal's order and remanded the matter back to the Tribunal for a fresh decision after verifying if the assessee had filed a remission application. The Court clarified that the Tribunal is the final authority for factual findings, and the appeal was allowed for statistical purposes.