2017 (3) TMI 988 - AT - Central Excise

Classification of sugar - The appellant had cleared sugar at levy rate which was sought to be denied by central excise authorities - Held that - the distinction between the rival entries is the invoking of the Essential Commodities Act, 1955 compelling manufacturer to comply with direction of the Central Government. The impugned order admits that appellant had no choice but to supply sugar, that was otherwise to be sold as free sale , as levy sugar. In such circumstances, the sale by the appellant cannot but be under levy category. The arguments advanced in impugned order would not be relevant in this context - reliance was placed in the case of Commissioner of Central Excise, Pune - II v. Daulat SSK Ltd & others 2015 (11) TMI 364 - CESTAT MUMBAI , where it was held that Clearance of free sale sugar by the respondent sugar factories are as per the direction and order of the State or the Central Government, which is covered under the tariff heading number 1701.31 and the Central Excise duty is payable as per the tariff entry. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of 'sugar' under Central Excise Tariff Act, 1985.
2. Duty, interest, and penalty under section 11AC of Central Excise Act, 1994 for the period from 1st October 1999 to 30th September 2002.
3. Challenge by M/s T K Warana Sahakari Sakhar Karkhana Ltd regarding duty for the period from 1st October 2001 to 31st December 2002.

Analysis:
1. The dispute revolves around the classification of 'sugar' manufactured by M/s Jawahar Shetkari Sahakari Sakhar Karkhana Ltd under heading 1701.39 of the Central Excise Tariff Act, 1985. The differentiation between levy sugar and non-levy sugar is crucial due to regulatory requirements under the Essential Commodities Act, 1955. The duty rates varied based on whether the sugar was classified as levy or non-levy sugar, impacting the financial liabilities of the manufacturer.

2. M/s T K Warana Sahakari Sakhar Karkhana Ltd contested duty, interest, and penalty under section 11AC of the Central Excise Act, 1994 for the period from 1st October 2001 to 31st December 2002. The issue of duty liability and proper classification of sugar was central to this challenge, emphasizing the importance of accurate classification under the tariff to determine the correct duty obligations.

3. The classification of sugar under the Central Excise Tariff Act, 1985 was a complex issue due to the interplay between levy sugar and free sale sugar regulations. The Tribunal considered past judgments and regulatory directives to determine the appropriate classification. The decision highlighted the necessity of complying with the Essential Commodities Act, 1955 and the implications of misclassification on duty liabilities.

4. The Tribunal scrutinized the arguments regarding the adjustment of sugar quantities between levy and free sale categories in subsequent years. The relevance of official directives and certifications from the Directorate of Sugar was emphasized to validate claims of adjustments. The legal significance of classification based on tariff descriptions was reiterated, emphasizing the need for adherence to statutory provisions for proper classification.

5. The Tribunal referenced relevant case laws to support its decision, emphasizing the importance of tariff descriptions in determining the classification of goods. The judgment underscored the legal obligations of manufacturers to comply with regulatory directives and the implications of misclassification on duty payments. The decision highlighted the need for accurate classification to avoid disputes and ensure compliance with excise laws.