2008 (8) TMI 350 - AT - Central Excise

Remission of duty loss due to driage / seepage - The Appellants filed applications for remission of duty of Rs. 24,750/- and Rs. 58,437/- for the period October, 2000 and July, 2003, respectively, which have been rejected by the Commissioner of Central Excise, Lucknow. held that - The storage losses claimed were 1.88% and 1.91% respectively of total molasses stored during the relevant period. The Appellant claimed remission of duty as within the permissible limit of 2% as prescribed by the Central Board of Excise & Customs vide letter No. 261/15/82-CX.8, dated 18-7-1983. - . In the present case, there is no dispute that the handling loss is before removal of the goods. There is no material available that the losses were occurred deliberately and/or otherwise. Therefore, the Appellants are eligible for remission of duty

Summary

Issues:
- Remission of duty for storage losses in the manufacture of sugar and molasses under Chapter 17 of the Central Excise Tariff Act, 1985.

Analysis:
1. Remission of Duty Application Rejection:
The Appellants, engaged in sugar and molasses manufacturing, sought remission of duty for losses during storage due to driage/seepage. The losses claimed were within the permissible limit of 2% as per a circular by the Central Board of Excise & Customs. However, the Commissioner rejected the application citing lack of precautionary arrangements by the Appellant and failure to quantify losses separately for driage and seepage.

2. Legal Precedents and Interpretation:
The DR argued that the Circular's benefit is not mandatory and must be applied based on the facts of the case, referencing a judgment by the Hon'ble Allahabad Court upheld by the Hon'ble Supreme Court. The Tribunal's decision in a similar case clarified that handling losses before removal of goods are covered under Rule 21 of the Central Excise Rules, even though the Rule does not explicitly mention "handling." In the present case, it was established that losses occurred due to driage before removal, with no evidence of deliberate actions causing the losses.

3. Decision and Ruling:
Considering that the losses were within the permissible limit and occurred due to unavoidable accidents before removal, the Tribunal ruled in favor of the Appellants. The impugned orders rejecting the remission applications were set aside, and the appeals were allowed with consequential relief. The judgment highlighted that the losses were eligible for remission, emphasizing that the percentage of losses fell within the limit specified by the Board's Circular.

In conclusion, the Tribunal's decision in these appeals addressed the issue of remission of duty for storage losses in sugar and molasses manufacturing, emphasizing the applicability of legal precedents, interpretation of relevant rules, and compliance with circular guidelines to determine the eligibility for remission.