2018 (5) TMI 534 - AT - Central Excise

Remission of duty - normal loss - molasses stored in steel tanks - validity of SCN - Held that - the SCN is in gross violation of the Board Circular No.261/15 CC/1/80 CX 8 dated 06.02.1982 - the SCN had been issued belatedly by way of change of opinion, almost after three years of filing application for remission - the extended period of limitation is not available and that the show cause notices are not maintainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Application for remission of duty under Rule 21 of CER. 2002
- Allegations of filing remission application for enjoying benefits of Board Circular
- Validity of show cause notices issued belatedly
- Applicability of extended period of limitation

Analysis:

1. Application for Remission of Duty: The appellant, a manufacturer of sugar and molasses, cleaned their storage tanks towards the end of the sugar season and reported a loss of molasses due to storage loss and evaporation. They applied for remission of duty under Rule 21 of CER. 2002, citing a loss amounting to a specific sum. The appellant informed the authorities and submitted the remission application as a precautionary measure, even though it was a case of normal loss.

2. Allegations of Filing Remission Application for Benefits: The show cause notices issued in response to the remission application alleged that the appellant filed the application simply to benefit from a Board Circular dated 06.02.1982, which allows for a normal loss of 2% in the case of storage loss. The notices further claimed that the steel tanks used for storage were safe and secure, implying there should have been no loss, thereby questioning the genuineness of the remission application.

3. Validity of Show Cause Notices: Upon hearing the parties and examining the records, the judge found that the show cause notices were in violation of the Board Circular No.261/15-CC/1/80-CX-8 dated 06.02.1982. Additionally, the judge noted that the notices were issued belatedly, almost three years after the remission application was filed. Consequently, the judge held that the extended period of limitation was not applicable and deemed the show cause notices as not maintainable.

4. Applicability of Extended Period of Limitation: The judge's decision to disallow the extended period of limitation was based on the finding that the show cause notices were issued in a manner that constituted a change of opinion and were not in compliance with the relevant circular. As a result, the judge allowed the appeal, set aside the impugned order, and ruled that the appellant was entitled to consequential benefits as per the law.

This comprehensive analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the judge's reasoning leading to the final decision in favor of the appellant.